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REPORTABLE IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.2086 OF 2014

(Arising out of SLP (C) No. 10924 of 2013)

Enercon (India) Ltd. & Ors.                         …

Appellants  

VERSUS

Enercon GMBH & Anr.                               

...Respondents

With

CIVIL APPEAL NO.2087 OF 2014 (Arising out of SLP (C) No. 10906 of 2013)

J U D G M E N T

SURINDER SINGH NIJJAR, J.

1. Leave granted.

2. These civil  appeals have been filed against the order  

and judgment dated 5th October, 2012, passed by the  

Bombay High Court in CWP Nos.7804 of 2009 and 7636  

of  2009.  The  Bombay  High  Court  by  the  impugned  

order dismissed both the aforesaid Civil Writ Petitions.

3. Appellants No.2 and 3 (members of the Mehra family)  1

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and  the  Respondent  No.1  (a  company  incorporated  

under the laws of Germany, having its registered office  

at  Aurich,  Germany)  entered  into  a  joint  venture  

business by setting up the Appellant No. 1-Company –  

Enercon (India) Ltd. (hereinafter referred to as “EIL”), in  

1994. EIL, having its registered office at Daman, was to  

manufacture  and  sell  Wind  Turbine  Generators  

(“WTGs”)  in  India.   One  Dr.  Alloys  Wobben  is  the  

Chairman of the Respondent No.1. Respondent No.2, a  

company incorporated under the laws of Germany, has  

the  patent  of  technology  in  connection  with  the  

aforesaid  WTGs.  In  furtherance  of  their  business  

venture, the parties entered into various agreements,  

which can be briefly noticed:  

Share Holding Agreement:

4.  On  12th January,  1994,  the  Appellant  Nos.  2  and  3  

entered into a Share Holding Agreement (“SHA”) with  

the  Respondent  No.1.  In  terms  of  the  SHA,  the  

Respondent  No.  1  was  to  hold  51%  shares  of  the  

Appellant No. 1-Company, and the Appellant Nos. 2 and  

3, collectively, were to hold 49% shares.  

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Technical Know How Agreement:

5. On the same day, i.e. 12th January, 1994, the Appellant  

No.  1  and  the  Respondent  No.  1  entered  into  a  

Technical Know-How Agreement (“TKHA”) by which the  

Respondent No. 1 agreed to transfer to the Appellant  

No.  1  the  right  and  the  technical  know-how  for  the  

manufacture  of  WTGs  specified  therein  and  their  

components.  Under  the  terms  of  the  TKHA,  the  

Respondent No. 1 has to supply special components to  

the Appellant No. 1. Under the TKHA, the Respondent  

No.  1  is  the  licensor  and  the  Appellants  are  the  

licensees.

Supplementary Shareholding Agreements:

6. The  SHA  was  subsequently  amended  by  two  

Supplementary  Share  Holding  Agreements  (“SSHAs”)  

dated 19th May, 1998 and  19th May, 2000. Pursuant to  

the said SSHAs, the shareholding of  Respondent No. 1  

in the Appellant No. 1-Company increased to 56% whilst  

the  shareholding  of  the  Appellant  Nos.  2  and  3  was  

reduced to 44%.  

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Supplementary Technical Know-How Agreement:

7. A  Supplementary  Technical  Know-How  Agreement  

(“STKHA”)  amending the  TKHA was executed  on 19th  

May, 2000, by which a further license to manufacture  

the  E-30  and  E-40  WTGs  was  granted  by  the  

Respondent No. 1 to the Appellants.

Heads of Agreement:

8. In April 2004, the period of the TKHA expired; however,  

the Respondent  No.  1  continued to  supply the WTGs  

and components to the Appellant No.1.  At this stage,  

there were discussions between the parties about the  

possibility  of  a  further  agreement  which  would  cover  

future technologies developed by Respondents.  On 23rd  

May,  2006,  these  negotiations  were  recorded  in  a  

document titled “Heads of Agreement”.   

Agreed Principles:

9. On  29th September,  2006,  the  Appellants  and  the  

Respondent No.  1 entered into what is  known as the  

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"Agreed  Principles"  for  the  use  and  supply  of  the  

windmill  technology.  The  second  page of  the  Agreed  

Principles, inter alia, provides as follows:

“The Agreed Principles as mentioned above, in their  form and substance,  would be the basis  of  all  the  final agreements which shall be finally executed.  

The agreed principles shall be finally incorporated into  the  A. IPLA “Draft enclosed” B. Successive Technology Transfer Agreement C. Name Use Licence Agreement D. Amendment to Existing Share Holding Agreement. The  above  agreements  will  be  made  to  the  satisfaction of all  parties. And then shall be legally  executed.”

IPLA   (dated 29  th   September, 2006):   

10. On  the  same  day,  i.e.  29th September,  2006,  

Intellectual  Property  License  Agreement  (“IPLA”)  was  

executed between the parties. It appears that Appellant  

No.2 has signed the IPLA on behalf of the Appellants No.  

2 and 3. However, the Appellants have contended that  

this IPLA is not a  concluded contract. According to the  

Appellants,  the  draft  IPLA  was  initialled  by  Appellant  

No.2  only  for  the  purpose  of  identification,  with  the  

clear understanding that the said draft still  contained  

certain discrepancies which had to be brought in line  5

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with  the  Agreed  Principles.   Thus,  the  case  of  the  

Appellant  is  that  the draft  IPLA  was not  a  concluded  

contract.       On the other hand, Respondent No.1 has  

taken the stand that IPLA is a  concluded contract and  

hence, binding on the parties. Both the parties refer to  

various  e-mails/letters  addressed  to  each  other  for  

substantiating  their  respective  stands.  It  would  be  

useful  to  notice  here  some  of  the  emails  and  other  

communication exchanged between the parties:

E-mails, letters & Text message:

i. 30.09.2006  :  A  handwritten  letter  was  addressed  by  

Appellant No.2 to Dr. Wobben, Chairman of Respondent  

No. 2. In this letter, Appellant No.2 admits signing the  

IPLA.  The  fact  that  IPLA  does  not  provide  for  E-82  

model is also referred to in this letter.    

ii. 02.10.2006:   Dr.  Wobben,  Chairman  of  Respondent  

No.2,  addressed  a  letter  to  Appellant  No.2,  stating  

therein his offer to acquire 6% of Equity shares of the  

Appellant No.1 Company which were being held by the  

Mehra Family, for 40 million Euros.   

iii. 04.10.2006  :  Email by one Ms. Nicole Fritsch, on  

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behalf of Respondent no.1, wherein it was inter  

alia stated as follows:

“…we  will  do  our  utmost  to  prepare/adapt  the  agreements  

according to  the agreed principles  until  19,  October  and will  

send the drafts to you.”  

iv. 18.10.2006  :  Ms.  Fritsch  wrote  a  letter  to  the  

Appellant  No.2,  stating  therein  that  IPLA  has  

been signed on 29th September, 2006 and also  

that  the  drafts  of  the  remaining  agreements  

have been prepared in the light of the Agreed  

Principles.  

v. 01.11.2006  :  SMS/text  message  sent  by  Dr.  

Wobben to the Appellant No.2,  wherein it  was  

stated that he wishes to buy 12% of shares held  

by Appellant No.2 for           40 million Euros.  

vi. 03.11.2006  : E-mail written by the Appellant No.2  

to    Dr. Wobben, wherein the aforesaid offer of  

acquisition  of  shares  of  the  Appellant  No.1  

company was rejected. Further, Appellant No.2  

wrote that it would be a prudent exercise to put  

together the IPLA and the relevant amendments  

to  the  SHA  in  good  shape,  so  that  Agreed  

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Principles get reflected in the documents at the  

time  of  their  signing.  Appellant  No.2  also  

highlighted certain discrepancies between IPLA  

and the Agreed Principles.

vii. 24.11.2006  :  E-mail  sent  by  Ms.  Fritsch  to  

Appellant No.2, wherein she apologised for the  

delay in sending outstanding drafts of the “Final  

IPLA, Shareholding  Agreement,  and  other  

Successive Agreements”.  It was also mentioned  

that  there  are  some  discrepancies  in  the  

contracts  and  the  Agreed  Principles  for  which  

the  Respondent  has  to  discuss  the  matter  

internally.

viii. 01.01.2007  : Ms. Fritsch wrote an email to the  

Appellant No.2, wherein it  was stated that the  

Respondent No.2 would be sending the revised  

drafts  of  the  outstanding  contracts  to  the  

Appellants, so as to let Appellant No.2 and their  

lawyers verify those drafts.

ix. 29.01.2007  : Ms. Fritsch forwarded the amended  

SHA of 1994, Corporate Name User Agreement,  

and Successive Technology Licence Agreement  

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to Appellant No.2.

x. 31.01.2007  : An email  was sent  to Respondent  

No.1  by  the  Appellant  No.1,  wherein  it  was  

categorically stated that the IPLA is not a “done  

deal,” the same being not in conformity with the  

Agreed Principles.  

11. The  Appellants  claim  that  Respondent  No.1,  in  

February,  2007,  unilaterally  decided  to  stop  all  

shipments of supplies to India in order to pressurize  

them to sell  the share holding as desired by    Dr.  

Wobben.  However in March, 2007, after discussions  

between  the  parties,  Respondent  No.1  resumed  

supplies.  Thereafter, the supplies were stopped once  

again in July, 2007.  This was followed by institution of  

the following legal proceedings:  

LITIGATION:

12. We may notice only those proceedings between the  

parties  that  have  a  bearing  on  the  issues  arising  

before us.

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Derivative Suit:

13.  Appellants No.2 and 3 filed a derivative suit (in Civil  

Suit No.2667 of 2007) on 11th September, 2007 before  

the  Bombay  High  Court  (“Bombay  Suit”),  seeking  

resumption of supplies, parts and components.  In this  

suit,  Respondent  No.1  has  taken out  an  Application  

under  Section 45 of  the  Arbitration  and Conciliation  

Act,  1996  (hereinafter  referred  to  as  the  ‘Indian  

Arbitration  Act,  1996’).   The  Bombay  Suit  and  the  

Application under Section 45 of the Indian Arbitration  

Act, 1996 are pending disposal.                   On 31st  

October, 2007, the Bombay High Court, by an interim  

order without prejudice to the individual contentions of  

the parties, directed the Respondent No.1 to resume  

the supplies to Appellant No.1 until further orders. It  

appears  that  initially  the  supplies  were  resumed  in  

compliance  of  the  aforesaid  order.  However,  the  

Appellants  claim  that  the  Respondent  no.1  after  

sometime stopped the supplies again.  Thereafter, a  

Contempt Petition was filed before the Bombay High  

Court at the instance of the Appellants for      non-

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compliance  of  the  aforesaid  order  by  Respondent  

No.1.         This  contempt  petition  is  pending  

adjudication.  

Nomination of Arbitrator :

14. On 13th March, 2008, a letter was sent on behalf of  

the Respondent No. 1 to the Appellant Nos. 2 and 3,  

wherein the Respondent No. 1 invoked the arbitration  

agreement, contained in Clause 18.1 of the IPLA.  The  

letter nominates Mr. V.V. Veedor QC as the licensors’  

arbitrator. It inter-alia stated that “Enercon and WPG  

are happy to allow EIL to nominate its arbitrator and  

for the two party (sic) nominated arbitrators to select  

the third  arbitrator,  subject  to  consultation with  the  

parties.  The third arbitrator will act as the Chairman  

of  the  Tribunal.”  In  the  aforesaid  letter,  the  

Respondent No.1 also identified the issues that require  

determination through arbitration.

Arbitration Claim Form:  

15. On 27th March, 2008, “Arbitration Claim Form” was  

issued  by  the  Respondents  seeking  several  

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declaratory reliefs in relation to the IPLA from the High  

Court of Justice,  Queens Bench Division, Commercial  

Court, United Kingdom (“the English High Court”).  The  

reliefs which were claimed included the constitution of  

Arbitral  Tribunal  under  the  IPLA.   Claim  form  was  

annexed to the letter dated 2nd April, 2008 sent by the  

UK Solicitors of Respondent No.1 to the Appellants.  

16. Meanwhile  on  31st March,  2008,  a  letter  was  

addressed by the Appellant No.2 on behalf of himself  

and  Appellant  No.3,  in  response  to  letter  of  

Respondent No.1 dated 13th March, 2008, wherein it  

was  stated  that  since  the  draft  IPLA  was  not  a  

concluded  contract,  there  is  no  question  of  a  valid  

arbitration  agreement  between  the  parties  and  as  

such,  there  is  no  question  of  nominating  any  

arbitrator.  

17. In response to the aforesaid, a letter was addressed  

by the UK Solicitors of Respondent to the Appellants  

on 2nd April, 2008, stating therein that in the event the  

Appellants  do not  nominate their  arbitrator  within  7  

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days of the receipt of the said letter, the Respondents  

shall  proceed  under  Section  17(2)  of  the  English  

Arbitration  Act,  1996  to  appoint  their  nominee  

arbitrator  Mr. V.V. Veeder, QC, as the sole arbitrator.  

The aforesaid letter was received by the Appellants on  

3rd April, 2008 in Daman.             The Arbitration Claim  

Form which  had  been  filed  before  the  English  High  

Court was also served on the Appellant No.1 in Daman  

on 4th April, 2008.   

Daman Suit:

18.  On 8th April, 2008, the Appellants filed Regular Suit  

No. 9 of 2008 (Daman Suit) before the Court of Civil  

Judge, Sr. Division, “Daman Trial Court” seeking, inter  

alia, a declaration to the effect that the draft IPLA was  

not  a  concluded  contract and correspondingly  there  

was no arbitration agreement between the parties to  

the draft IPLA.  On the same day, i.e. 8th April, 2008,  

the Daman Trial Court passed an order in the favour of  

the  Appellants,  wherein  the  Respondents  were  

directed  to  maintain  status  quo  with  regard  to  the  

proceedings  initiated  by  them before  the    English  

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High Court.

19. Meanwhile  on  11th April,  2008,  Appellant  No.1,  

without  prejudice,  nominated Mr.  Justice  B.P.  Jeevan  

Reddy, a former Judge of this court as arbitrator. On  

24th May,  2008,  Mr.  Justice  B.P.  Jeevan  Reddy  

intimated to the Solicitors of the Appellants that the  

arbitrators felt that there were inherent defects in the  

arbitration  clause  contained  in  the  draft  IPLA  and  

therefore, the same was unworkable. The letter also  

expressed the inability of the arbitrators to appoint the  

third arbitrator.  On 5th August, 2008, a joint letter was  

addressed by both the nominated arbitrators, wherein  

it was reiterated that they are unable to appoint the  

third and presiding arbitrator.  

20. Thereafter,  the  Respondents  filed  an  Application  

under     Section 45 of the Indian Arbitration Act in the  

Daman Suit. On the other hand, the Appellants moved  

an Application  for  interim injunction  ex-parte  in  the  

same  suit,  seeking  to  restrain  Respondents  from  

pursuing  the  proceedings  they  had  initiated  in  the  

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English  High  Court  (anti-arbitration  injunction).  The  

Daman Court dismissed the Application under Section  

45 of the Indian Arbitration Act, 1996 on 5th January,  

2009. On the other hand, the Application filed by the  

Appellants,  seeking  interim  reliefs  in  form  of  anti-

arbitration injunction was allowed on 9th January, 2009.  

Both  the  aforesaid  orders  of  the  Daman Trial  Court  

were  challenged  by  the  Respondents  by  filing  four  

appeals before the District Court of Daman (“Daman  

Appellate Court”).  

Daman Appellate Court :

21. The Daman Appellate Court allowed all the appeals  

of the Respondents by order dated 27th August, 2009  

and  set  aside  both  the  orders  of  the  Daman  Trial  

Court. The anti-arbitration injunction was vacated, and  

the  Application  under  Section  45  of  the  Indian  

Arbitration Act, 1996 was allowed. The aforesaid order  

dated  27th August,  2009  was  challenged  by  the  

Appellants herein by filing two writ petitions before the  

High Court of Bombay,        viz. Writ Petition No. 7636  

of  2009,  filed  in  respect  of  the  anti-arbitration  

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injunction and Writ Petition No. 7804 of 2009, filed in  

respect of Section 45 of the Indian Arbitration Act.  

Bombay High Court :

22. On  4th September,  2009,  the  Bombay  High  Court  

ordered  that  the  status  quo  order  dated  8th April,  

2008,  passed by the         Daman Trial  Court  be  

continued in Writ Petition No. 7636 of 2009.      On 9 th  

September,  2009, the Bombay High Court continued  

the  stay  of  the  reference  under  Section  45  of  the  

Indian Arbitration Act until the next date of hearing. In  

the course of hearing of the both writ  petitions, the  

Bombay High Court,  on 25th January,  2010,  directed  

that the interim order(s) granted earlier be continued  

until further orders.  

English Proceedings:

23. In  spite  of  the  aforesaid  interim  order(s),  the  

Respondents  filed Arbitration Claim Form 2011 Folio  

No.1399 before the English High Court, under Section  

18  of  the  English  Arbitration  Act,  1996  for  the  

constitution  of  an  Arbitral  Tribunal  under  the  

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provisions  of  IPLA.  The  following  two  grounds  were  

raised by the Respondents:-

A. that  the  anti-arbitration  injunction  passed  by  the  

Bombay High Court had fallen away;

B. that  the  Appellants  had  not  pursued  the  writ  

petitions before the Bombay High Court.

24. On  25th November,  2011,  the  English  High  Court  

passed an order in form of an anti-suit injunction that  

had  the  effect  of  restraining  the  Appellants  from  

prosecuting/arguing  the  writ  petitions  before  the  

Bombay High Court.  The Appellants were restrained  

from approaching  the  Bombay High  Court  to  clarify  

whether  ad-interim stay granted by it  was in  place.  

Meanwhile, on  15th February, 2012, the English High  

Court  passed  an  ex-parte  freezing  injunction  

restraining  the  Appellant  No.1  from disposing  of  its  

assets in excess of 90 Million Euros.

25.  On 23rd March, 2012, the English High Court (Eder,  

J.)  delivered  its  judgment,  wherein  the  freezing  

injunction  was  discharged.   It  was  inter-alia  held  in  

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Paragraph  51  of  the  judgment  that  anti-arbitration  

injunction of the Bombay High Court was in force.  On  

27th March, 2012, the English High Court discharged  

the  anti-suit  injunction  subject  to  the  undertakings  

given by Appellant No.1. It would be useful to notice  

here some of these undertakings:

(i) to apply forthwith to the Bombay High Court to  

have the hearing of the Writ Petitions expedited  

and to take all reasonable and necessary steps  

within  its  power  to  have  the  writ  petitions  

concluded as expeditiously as possible;

(ii) until the determination of the Application filed  

by the Respondents in the English High Court,  

not  to  seek  further  directions  in  relation  to  

prayer (c) of the Writ Petition No.7636 of 2009 –  

which is a prayer for interim relief.

26.  The  Appellants  took  necessary  steps  for  an  

expeditious  listing  and  hearing  of  the  writ  petitions  

before the Bombay High Court.  However on 11th June,  

2012, the Respondents filed an Application before the  

English High Court for constituting an Arbitral Tribunal.  

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On  26th June,  2012,  since  the  High  Court  had  not  

disposed  of  early  hearing  Application  of  the  

Appellants,  the Appellants  approached this  Court  by  

Special Leave Petitions No.11676 and 11677 of 2012  

for  expeditious  hearing  of  the  writ  petitions.   This  

Court  vide  order  /judgment  dated  22nd June,  2012,  

requested the Bombay High Court to take up the writ  

petitions for hearing on 2nd July, 2012.  

Resumption of Writ Petitions before Bombay High Court:

27.  The hearing of the writ petitions in the Bombay High  

Court resumed on 2nd July, 2012.  On 3rd July, 2012, the  

English  High  Court  passed  an  order  by  consent,  

adjourning  the  Respondents’  Application  dated  11th  

June, 2012, until after the Bombay High Court delivers  

judgment in the writ petitions, and also vacating the  

hearing  listed  for  3rd-4th July,  2012.  On  5th October,  

2012,  the  Bombay  High  Court  dismissed  the  writ  

petitions by the order/judgment impugned before us,  

wherein it has been, inter alia, held as under:

A. The  scope of  the enquiry  under  the Writ  Petition  No.7804 of 2009 is restricted to the existence of the  arbitration agreement and not the main underlying  

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contract  (which  can  be  challenged  before  the  Arbitral Tribunal);

B. Prima facie, there is an arbitration agreement; C. The curial law of the arbitration agreement is India; D. London, designated as the venue in Clause 18.3 of  

the  draft  IPLA,  is  only  a  convenient  geographical  location;

E. London is not the seat; F. English  Courts  have  concurrent  jurisdiction  since  

the venue of arbitration is London.

English Proceedings :  

28. On  5th October,  2012,  the  English  Solicitors  of  

Respondent  No.1  addressed  a  letter  to  the  English  

Solicitors of Appellant No.1, in  relation to re-listing of  

their  Application  dated  11th June,  2012  for  

appointment of a third arbitrator/re-constitution of the  

Arbitral  Tribunal.  In  October,  2012,  the  parties  

communicated with each other for getting Applications  

of  both  the  parties  listed,  which,  apart  from  the  

Application  dated  11th June,  2012,  included  the  

following:

A. An Application notice issued by Appellant No.1 on  

16th October, 2012:

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Appellant No.1 as set out in Appendix A to the  

order dated 27th March, 2012 do not prevent it  

from filing a Special  Leave Petition before the  

Supreme Court of India and, if leave be granted,  

pursuing such appeals; or

ii. if the undertakings (contrary to Appellant No.1’s  

contention),  do  prevent  Appellant  No.1  from  

filing  Special  Leave  Petitions  before  the  

Supreme Court  of India or pursuing the same,  

then, a variation of the Undertakings to permit  

such Special Leave Petitions to be filed and, if  

leave be granted, to permit such appeals to be  

pursued.

B. An Application notice issued by the Respondents on  

17th October, 2012 for:

i. a  declaration  that  Appellant  No.1  would  be  

breaching  the  Undertakings  by  filing  Special  

Leave Petitions to the Indian Supreme Court.

ii. an anti-suit injunction to restrain Appellant No.1  

from filing Special Leave Petitions; and

iii. expedition for the hearing of the Respondent’s  

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Application issued on 11th June, 2012.

29. In the aforesaid Applications, the English High Court  

(Cooke, J.) in its judgment dated 30th November, 2012  

observed inter alia as follows:

“Paragraph 32: There  are  two  critical  issues  with  which the Damman (sic) Court and the Bombay High  Court have been concerned.  First, is there a binding  arbitration agreement?  Secondly, is the seat of the  putative arbitration in London?  What has arisen out  of the Bombay High Court decision in addition is the  question  whether  there  is  room  for  a  supervisory  jurisdiction in the English Courts where the  seat is  not in England under the provisions of s.2(4) of the  English Arbitration Act.”

“Paragraph 60: If the Supreme Court of India were,  in  due  course,  to  consider  that  the  Bombay  High  Court was wrong in its conclusion as to the  seat of  the arbitration or that there was a prima facie valid  arbitration or that the English Court had concurrent  supervisory  jurisdiction,  it  would  be  a  recipe  for  confusion  and  injustice  if,  in  the  meantime,  the  English Court were to conclude that England was the  seat of  the  putative  arbitration,  and  to  assume  jurisdiction over EIL and the putative arbitration, and  to  conclude  that  there  was  a  valid  arbitration  agreement, whether on the basis of a good arguable  case or the balance of probabilities.  Further, for it to  exercise its powers, whether under s.2(1) or 2(4) or  s.18  of  the  Arbitration  Act  in  appointing  a  third  arbitrator,  would  create  real  problems,  should  the  Supreme Court decide differently.

Paragraph 61: These  are  the  very  circumstances  which  courts  must  strive  to  avoid  in  line  with  a  multitude  of  decisions  of  high  authority,  from  the  Abidin Daver (1984) AC 398 onwards, including  E.I.   Dupont de Nemours v. Agnew [1987] 2 Lloyd’s Rep   

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585.  The underlying rationale of Eder J.’s judgment  leads inexorably, in my view, to the conclusion that  the  issues  to  be  determined  in  India,  which  could  otherwise  fall  to  be  determined  here  in  England,  must be decided first by the Indian Courts and that,  despite  the  delay  and  difficulties  involved,  the  decision  of  the  Indian  Supreme  Court  should  be  awaited.”

30.  From 3rd December  to  14th December,  2012,  the  

learned  counsel for the parties made efforts to finalize  

a draft of the Form of Order and the accompanying  

undertaking(s)  to  be  submitted  to  the  English  High  

Court;  and  ultimately,  parties  agreed  to  a  short  

hearing  before  the  English  High  Court.   After  a  

hearing,  on  19th December,  2012  the  parties  again  

made efforts to finalize the Form of Order.  Ultimately  

on 15th February, 2013, the English High Court passed  

an order declaring that the undertakings given on 27th  

March,  2012  (dealt  with  earlier  in  Para  25  of  this  

judgment)  do  not  prevent  the  defendant  (Appellant  

herein)  from  filing  and  pursuing  the  Special  Leave  

Petitions  and,  if  leave  be  granted,  the  Substantive  

Appeals.  The English High Court further ordered the  

Appellant No.1 herein to give some fresh undertaking  

which  will  supersede  and  replace  the  undertakings  

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given earlier on 27th March, 2012.  These undertakings  

restrain  the  Appellants  herein  from  seeking  an  

injunction against the Respondents save if this Court  

determines that the seat of the arbitration is in India.  

It  was further  directed that  the Appellants  shall  not  

seek an injunction restraining the Respondents from  

pursuing  proceedings  instituted  in  the  English  High  

Court  against  the  Appellant  on  various  grounds  

enumerated in the said undertakings.   

31. Thereafter  in  February,  2013,  the  order/judgment  

dated 5th October, 2012 passed by the Bombay High  

Court was challenged in this court by way of present  

appeals.

Submissions:     

32.  We have heard the learned senior counsel for the  

parties.

I. Re: Concluded Contract:

33. The first submission of Mr. Rohinton Nariman is that  

there can be no arbitration agreement in the absence  

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of a concluded contract.  It was submitted that IPLA is  

not a concluded contract since it is not in consonance  

with the Agreed Principles. It was submitted that the  

parties  merely  entered  into  the  ‘Agreed  Principles’  

on 29th September,  2006,  to which a draft IPLA was  

annexed.          Mr. Nariman submitted that the Agreed  

Principles formed the fundamental basis on which the  

final IPLA “was to be made to the satisfaction of all  

parties and then to be legally finally executed”.  Mr.  

Nariman  reiterated  that  there  are  certain  

discrepancies between the Agreed Principles and the  

IPLA. By its letter           dated 3rd November, 2006,  

Appellant pointed out material discrepancies between  

the  IPLA  and  the  Agreed  Principles.  These  

discrepancies have been accepted to  be present by  

the Respondents  in the letter  dated 24th November,  

2006.  In fact, the Respondents have never contended  

that IPLA is in accordance with the Agreed Principles.  

The  Respondents  have  by  their  letters  

dated  29th October,  2006  and  24th November,  2006  

accepted the primacy of the Agreed Principles.   

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34. Further,  the  Appellants  have  relied  upon  the  

correspondence prior and subsequent to the signing of  

the IPLA to demonstrate that there is  no  concluded  

contract. According to the learned senior counsel, the  

Respondents  have  deliberately  not  dealt  with  the  

correspondence  subsequent  to  the  IPLA  except  to  

submit that the same refers to agreements other than  

the  IPLA.   This,  according  to  the  learned  senior  

counsel,  is  incorrect  in  view  of  the  fact  that  email  

dated  24th November,  2006  refers  to  “final  IPLA”.  

According to Mr.  Nariman, the outstanding contracts  

had to be in consonance with the Agreed Principles;  

therefore, there is no plausible explanation as to why  

only the IPLA should not be in consonance with the  

Agreed Principles.   The subsequent  correspondence,  

therefore, necessarily refers to all the four agreements  

mentioned in the Agreed Principles.

35. Mr. Nariman also pointed out that the reliance upon  

prior contracts/agreements or correspondence is  not  

permissible to determine whether IPLA is concluded or  

not.  On the contrary, subsequent correspondence and  

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contracts  can  be  looked  into  for  the  purpose  of  

determining  whether  the  substantive  contract  

containing arbitration agreement is  concluded or not.  

He relied on  Godhra Electricity Co. Ltd. And Anr.  

Vs.  The State of Gujarat and Anr.  1    According to  

Mr.  Nariman,  subsequent  correspondence  in  this  

regard clearly demonstrates  the unconcluded nature  

of the IPLA.

36.  Mr. Nariman submitted that under Clause 12 of the  

IPLA, the duration of the IPLA was till the expiry of the  

last of the patents, and since the patents portfolio was  

absent, the duration of IPLA could not be ascertained.  

He  pointed  out  that  the  Respondents  have  wrongly  

contended that the IPLA has been  concluded as the  

parties have duly signed the same. According to Mr.  

Nariman, mere signing of a document will not make it  

a  concluded document, if  in law, the contract is not  

concluded. In this context, reliance was placed upon  

British Electrical vs.  Patley Pressings,2  Harvey  

1 (1975) 1 SCC 199 2 [1953] 1 WLR 280

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vs. Pratt,3 Bushwall vs.  Vortex,4 Kollipara vs.  

Aswathanarayana  5   and  Dresser  Rand vs.  Bindal  

Agro.6

II. Re: Existence of Arbitration Agreement  

37.   As noticed above, the primary submission of the  

Appellants, is that IPLA is not a concluded contract.  It  

was then submitted that since there is no  concluded  

contract,  there  is  no  question  of  an  arbitration  

agreement coming into existence.  In any event, the  

challenge  to  the  existence  of  the  substantive  

agreement is a matter required to be determined by  

the  Court  seized  of  the  matter  in  the  exercise  of  

jurisdiction under Section 45 of the Indian Arbitration  

Act,  1996.   Reliance  was  placed  upon  Chloro  

Controls  (I)  Pvt.  Ltd. Vs.  Severn  Trent  Water  

Purification Inc. & Ors.7   According to              Mr.  

Nariman,  it  is  no  longer  open  to  contend  that  the  

question whether the contract is concluded or not can  

3 [1965] 1 W.L.R. 1025 4 [1976] 1 WLR 591 5 (1968) 3 SCR 387 6 (2006) 1 SCC 751 7 (2013) 1 SCC 641

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be gone into by the Arbitral Tribunal.

III. Re: Un-workability of Arbitration Agreement

38.  It  was  submitted  that  Clause  18.1  of  the  IPLA  is  

incapable of being performed and therefore, there can  

be no reference to arbitration under Section 45 of the  

Indian Arbitration Act, 1996.  It was submitted that the  

High  Court  has  held  that  “each  of  the  licensors  

(Respondents)  has  to  appoint  an  arbitrator  and  the  

licensee (Appellant No.1) is to appoint one arbitrator  

…………………………….  making  it  in  all  three  

arbitrators”.   As  such,  the  High  Court  has  misread  

Clause  18.3  of  the  IPLA  to  mean  that  each  of  the  

licensors (Respondent No.1 and Respondent No.2) has  

a right to appoint an arbitrator and that the Appellant  

No.1 also has the right to appoint an arbitrator. The  

construction of Clause 18.1 of the IPLA in the aforesaid  

manner,  according  to  learned  senior  counsel,  is  

contrary to the expressed terms of Clause 18.1 in the  

light  of  the  definition  of  licensor  and  licensors  

contained therein as well as certain other provisions of  

the  IPLA.  Mr.  Nariman  also  pointed  out  that  the  

Respondents, however, have not sought to sustain the  

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aforesaid reasoning of the High Court.  

39. He further submitted that even though an arbitration  

clause can be construed by the Court in such a way as  

to  make  it  workable  when  there  is  a  defect  or  an  

omission,  nonetheless,  such  an  exercise  would  not  

permit the Court to rewrite the clause. In support of  

the submissions, he relied upon Shin Satellite Public  

Co.  Ltd. Vs.  Jain Studio Ltd.  8    He also  submitted  

that the reconstruction of the arbitration clause in the  

present  case  cannot  be  achieved  without  doing  

violence to the language to the arbitration clause; and  

that  this  would  not  be  permissible  in  law.  For  this  

proposition,  reliance was placed upon  Bushwall Vs.  

Vortex (supra).  He submitted that the submissions  

made by the Respondents fly in the face of Section 45  

of  the  Indian  Arbitration  Act,  1996  which  does  not  

permit the Court to make a reference to arbitration if  

the arbitration agreement relied upon is incapable of  

being performed.

IV. Re:   Seat   of Arbitration.   

8 (2006) 2 SCC 628 30

Page 31

40. Mr. Nariman submitted that for the purposes of fixing  

the  seat of  arbitration  the  Court  would  have  to  

determine the territory that will have the closest and  

most  intimate  connection  with  the  arbitration.  He  

pointed out that in the present case provisions of the  

Indian Arbitration Act, 1996 are to apply; substantive  

law of the contract  is  Indian law; law governing the  

arbitration is Indian Arbitration law; curial law is that of  

India; Patents law is that of India; IPLA is to be acted  

upon in India; enforcement of the award is to be done  

under  the  Indian  law;  Joint  Venture  Agreement  

between  the  parties  is  to  be  acted  upon  in  India;  

relevant assets are in India.  Therefore, applying the  

ratio  of  law in  ‘Naviera Amazonica Peruana S.A.  

Vs.  Compania  Internacional  De  Seguros  Del  

Peru  9  ’,  the  seat of  arbitration would be India.   The  

submission  is  also  sought  to  be  supported  by  the  

Constitution Bench decision of this Court in “Bharat  

Aluminium  Company Vs.  Kaiser  Aluminium  10    

(“BALCO”).  Mr.  Nariman  submitted  that  the  

interpretation proposed by the Respondents that the  

9 1988 (1) Lloyd’s Rep 116 10 (2012) 9 SCC 552

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venue London must be construed as  seat is  absurd.  

Neither  party  is  British,  one  being  German and  the  

other being Indian.  He submits that the Respondents  

have accepted that the choice of law of the underlying  

agreement is Indian. But, if ‘venue of arbitration’ is to  

be  interpreted  as  making  London  the  seat of  

arbitration it would:           (a) make the English Act  

applicable when it  is  not  chosen by the parties;  (b)  

would  render  the  parties’  choice  of  the  Indian  

Arbitration Act, 1996 completely nugatory and otiose.  

It  would exclude the application of Chapter V of the  

Indian  Arbitration  Act,  1996  i.e.  the  curial  law  

provisions and Section 34 of the Indian Arbitration Act,  

1996. On the other hand, interpretation propounded  

by the Appellants would give full and complete effect  

to the entire clause as it stands.  

41. Mr. Nariman also submitted that there are even more  

clear  indicators  within  the  arbitration  clause  which  

show that the parties intended to be governed only by  

the Indian Arbitration Act, 1996. The clause uses the  

word  Presiding Arbitrator and  not  Chairman; this  

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language is expressly used in Sections 11 and 29 of  

the  Indian  Arbitration  Act,  1996  as  distinct  from  

Section 30 of the English Arbitration Act, 1996.   

42.  Mr. Nariman gave another reason as to why London  

can’t be the seat of the Arbitration. According to him,  

if the interpretation propounded by the Respondents is  

accepted, it would lead to utter chaos, confusion and  

unnecessary  complications.   This  would  result  in  

absurdity  because  the  Indian  Arbitration  Act,  1996  

would  apply  to  the  process  of  appointment  under  

Section 11; English Arbitration Act, 1996 would apply  

to the arbitration proceedings (despite the choice of  

the  parties  to  apply  Chapter  V  to  the  Part  I  of  the  

Indian Arbitration Act, 1996); challenge to the award  

would be under English Arbitration Act, 1996 and not  

under the Part  I  of the Indian Arbitration Act,  1996;  

Indian Arbitration Act, 1996 (Section 48) would apply  

to the enforcement of the award.

43. Lastly,  it  was  submitted  by  Mr.  Nariman  that  

provisions of Section 18 of the English Arbitration Act,  

1996 are derogable and in any event the parties have  

chosen  the  Indian  Court  for  constitution  of  Arbitral  

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Tribunal.

V. Re: Anti Suit Injunction

44. It  was  submitted  on  behalf  of  the  Appellants  that  

since  the  seat of  arbitration  is  India,  the  Courts  of  

England would have no jurisdiction.   Appellants rely  

upon  Oil & Natural Gas Commission Vs.  Western  

Company  of  North  America  11  .  Reliance  was  also  

placed upon  Modi Entertainment Network & Anr.  

Vs.  W.S.G.  Cricket  Pte.  Ltd.  12  ,  in  support  of  the  

submission  that  in  exercising  discretion  to  grant  an  

anti-suit  injunction,  the Court  must be satisfied that  

the defendant is amenable to the personal jurisdiction  

of the Court and that if the injunction is declined the  

ends  of  justice  will  be  defeated.   The  Court  is  also  

required to take due notice of the principle of comity  

of  Courts,  therefore,  where more than one forum is  

available,  the  Court  would  have  to  examine  as  to  

which is forum conveniens.  

11 1987 SCR (1) 1024 12 (2003) 4 SCC 341

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45. According  to  Mr.  Nariman,  all  the  tests  which  

authorise the Indian Courts to exercise jurisdiction to  

grant  the  necessary  relief,  as  laid  down  are  being  

satisfied by the Appellants.  According to Mr. Nariman,  

the  English  Courts  are  not  available  to  the  

Respondents since London is only a venue. Therefore,  

an  injunction  ought  to  be  issued  restraining  the  

Respondents  from  pursuing  proceedings  before  the  

English  Court.   Mr.  Nariman  pointed  out  that  the  

Respondents have given up the contention that Indian  

and English Courts have concurrent jurisdiction.

46. Reliance is placed on the judgment of this Court in  

Harshad Chiman Lal Modi Vs.  DLF Universal  13  , in  

support of the submission that since Respondent No.1  

has share holding in a company which has registered  

office within the territorial limits of the Daman Court,  

therefore  relief  can  be  necessarily  granted  to  the  

Appellants  for  restraining  Respondent  No.1  for  

13 (2005) 7 SCC 791 35

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proceeding in the English Courts. It was also pointed  

out  that  Respondent  No.1  has  approached  the  

Company  Law  Board  under  Section  397  of  the  

Companies  Act;  the  Delhi  High  Court  alleging  

infringement of its intellectual property rights; and the  

Madras High Court against the orders passed by the  

Intellectual Property Appellate Board, revoking patents  

in the name of Dr. Wobben in India.  Therefore, it has  

already submitted to the jurisdiction of Courts in India.  

Mr. Nariman, however, points out that in view of the  

orders of the English Court dated 15th February, 2013,  

restraining the Appellants from seeking an injunction  

against the Respondents save if this Court determines  

the seat of the arbitration is India, the Appellants shall  

not  seek any injunction  from this  Court,  unless  this  

Court  determines  that  the  seat of  arbitration  is  in  

India.

Respondents’ Submissions:

47. Dr. Abhishek Manu Singhvi, learned senior counsel,  

appeared  for  Respondents  No.1  and  2.  Dr.  Singhvi  

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submitted  that  the      over-riding  principle  for  the  

Courts  in  Arbitration  is  to  see  whether  there  is  an  

intention  to  arbitrate.  According  to  Dr.  Singhvi,  the  

Appellants attack the existence of the main contract,  

but it is only the arbitration clause that the court has  

to concern itself with. The court in this case, according  

to Dr. Singhvi,  is not required to determine whether  

there  is  a  concluded  contract,  under  the  Indian  

Contract  Act,  1872.   The  court  has  to  see  whether  

there  is  a  valid  Arbitration  Agreement.  Dr.  Singhvi  

emphasised that it is for the arbitrator to decide the  

question with regard to the                    formation of  

the  underlying  contract  (IPLA).  Further,  

learned  senior  counsel  submitted  that  the  

status of IPLA will not nullify the arbitration clause.  

48. The  Respondent,  according  to  the  learned  senior  

counsel, has to establish the existence of arbitration  

agreement.  Dr.  Singhvi,  in  this  context,  relied  upon  

Section 7 of the Indian Arbitration Act, 1996 which has  

three  constituents,  viz.  (i)  Intention  to  arbitrate;  (ii)  

Existence  of  a  dispute;  (iii)  Existence  of  some legal  

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relationship.  Further,  it  was  submitted  that  an  

agreement under Section 7 of  the Indian Arbitration  

Act, 1996 does not require any offer and acceptance.  

49. It was further submitted that Section 16 of the Indian  

Arbitration Act, 1996 is a drastic departure since the  

Arbitral  Tribunal  can  rule  on  its  own  jurisdiction.  

Further, it was submitted under Section 16(a) of the  

Indian  Arbitration  Act,  1996  the  existence  of  the  

arbitration clause in the contract would be treated as  

an agreement independent of the contract.  Learned  

senior counsel also brought to our attention Section 45  

of  the  Indian  Arbitration  Act,  1996  and  its  

interpretation by this court in Chloro Controls India  

Pvt. Ltd. v. Severn Trent Water Purification Inc  

(supra). In the aforesaid case, this Court, in Para 120,  

relied  upon  the  earlier  judgment  of  National  

Insurance Company Ltd. V. Bhogara Polyfab Pvt.  

Ltd.14,  and  categorised  the  issues  that  have  to  be  

decided under Section 45 as follows:  

A. The issues which the Chief Justice/his designate will   have to decide: the question as to whether there is  

14 (2009) 1 SCC 267 38

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an arbitration agreement. B. The  issues  which  the  Chief  Justice/his  designate  

may choose to decide or leave them to be decided  by the Arbitral Tribunal:  the question as to whether  the  claim is  a  dead  claim (long-barred)  or  a  live  claim.

C. The  issues  which  the  Chief  Justice/his  designate  should  leave  exclusively to  the  Arbitral  Tribunal.  The  question  concerning  the  merits  or  any  claim  involved in the arbitration.

50. Dr.  Singhvi  then submitted that  leaving  aside the  

question of  un-workability of the arbitration clause for  

the moment, the intention of the parties in the instant  

case may be determined from  the following clauses of  

IPLA:

“17 GOVERNING LAW 17.1  This  Agreement  and  any  dispute  of  claims  arising out of or in connection with its subject matter  are governed by and construed in accordance with  the Law of India.

18. DISPUTES AND ARBITRATION 18.1 All disputes, controversies or differences which  may  arise  between  the  Parties  in  respect  of  this  Agreement  including  without  limitation  to  the  validity,  interpretation,  construction  performance  and  enforcement  or  alleged  breach  of  this  Agreement,  the  Parties  shall,  in  the  first  instance,  attempt  to  resolve  such  dispute,  controversy  or  difference  through  mutual  consultation.  If  the  dispute,  controversy  or  difference  is  not  resolved  through  mutual  consultation  within  30  days  after  

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commencement of discussions or such longer period  as the Parties may agree in writing, any Party may  refer dispute(s), controversy(ies) or difference(s) for  resolution to an arbitral tribunal to consist of three  (3) arbitrators, of who one will be appointed by each  of the Licensor and the Licensee and the arbitrator  appointed by Licensor shall also act as the presiding  arbitrator.   

18.2 *    * *

18.3  A  proceedings  in  such  arbitration  shall  be  conducted in  English.  The  venue of  the arbitration  proceedings shall be in London. The arbitrators may  (but  shall  not  be  obliged  to)  award  costs  and  reasonable  expenses  (including  reasonable-fees  of  counsel) to the Party (ies) that substantially prevail  on  merit.  The  provisions  of  Indian  Arbitration  and  Conciliation Act, 1996 shall apply.

The  reference  of  any  matter,  dispute  or  claim  or  arbitration  pursuant  to  this  Section  18  or  the  continuance  of  any  arbitration  proceedings  consequent thereto or both will in no way operate as  a waiver of the obligations of the parties to perform  their respective obligations under this Agreement.”  

51. Dr. Singhvi also drew our attention to the fact that  

the Heads of the Agreement have been accepted to be  

final and binding and that the parties have irrevocably  

accepted  the  Arbitration  Agreement  contained  in  

Clause 18. It was also brought to our notice that the  

said document has been signed by the Appellant No.1  

and Respondent No.1.

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52. Learned  Senior  Counsel  also  submitted  that  an  

arbitration agreement would include the following:

a. Intention to arbitrate; b. Intention  to  settle  by  Arbitration  after  failure  of  

ADR i.e. negotiations/conciliation/mediation. C. Some law (i.e. proper law) to settle the Disputes  

(which in this case is Indian Law)  D. Does the arbitration clause cover all disputes or  

is there a carve out? In this case the clause  covers all disputes.

E. Substantive  Law  to  Arbitrate.  Here  it  is  the  Indian Arbitration Act, 1996.  

It  was  further  submitted  that  since  all  the  essential  

elements of the arbitration are present, clumsy drafting will not  

make any difference in interpretation of the Arbitration clause.

53. The next submission of Dr. Singhvi,  broadly put, is  

that  the  arbitration  clause  is  not  un-workable.  The  

crucial  question  in  this  context  is  not  whether  the  

Arbitration Clause could be differently drafted, but the  

clause  has  to  be  seen  in  the  manner  it  has  been  

drafted. Dr. Singhvi submitted that in fact there is no  

mismatch between different parts of the clause. The  

clause,  according  to  Dr.  Singhvi,  talks  of  three  41

Page 42

arbitrators: one by the licensee, one by the licensor.  

The implication is that the third one is to be appointed  

by the two arbitrators.  Dr.  Singhvi  submits  that  the  

sentence “the third  arbitrator  shall  be appointed by  

the two arbitrators” seems to have been missed out  

by the draftsman. This can be supplied by the Court to  

make the arbitration clause workable.

54. It was further submitted that the missing sentence in  

the arbitration clause can be supplied with the aid of  

some of the provisions of the Indian Arbitration Act,  

1996. In this context, learned senior counsel brought  

to  our  attention  Sections  10  (1)  and  (2)  read  with  

section 11 of the Indian Arbitration Act, 1996.  Section  

10 (1) and 2 read as:    

“10. Number of arbitrators. (1) The parties are free to determine the number of  arbitrators, provided that such number shall not be  an even number.

(2) Failing  the  determination  referred  to  in  sub-  section (1), the arbitral tribunal shall consist of a sole  arbitrator.”

Section 11(1) & (2) reads as:  Appointment of arbitrators.

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Studios Ltd.,  (supra)  Visa International Ltd. v.  

Continental  Resources  (USA)  Ltd.,16 Jagdish  

Chander  v.  Ramesh  Chander  &  Ors.,17 Smt.  

Rukmanibai  Gupta v.  Collector,  Jabalpur  &  

Ors.,18 and  Nandan Biometrix Ltd.  v.  D.I. Oils.19  

After  taking  us  through  the  afore  cited  cases,  Dr.  

Singhvi submitted that the parties in the instant case  

had expressed an intention to arbitrate and that there  

is no contrary intention.   

56. The next submission of Dr. Singhvi is that the IPLA is  

final. It was submitted that IPLA was to succeed the  

Know How Agreement  that  contained  an Arbitration  

Clause.  Learned  Senior  counsel  brought  to  our  

attention  following  provisions  of  the  Heads  of  

Agreement on a Proposed IPLA dated 23.05.2006:

“1.6  The Parties have discussed intensively the most  appropriate structure and arrangements reflected in  the  draft  IPLA  dated  22,  May  2006  attached  as  ANNEX 1 (“Draft IPLA”). This draft IPLA expresses the  final views of the parties and provides for detailed  terms whereunder Enercon will make available to EIL  the  benefit  of  all  its  technology  including  patents,  design rights, copyrights, trademarks and know how  

16 (2009) 2 SCC 55, Paras 24-25 17 (2007) 5 SCC 719, pp. 7-8 18 (1980) 4 SCC 556, pp. 6-7  19 (2009) 4 SCC 495 , pp. 26-30 & 40

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relating to the Products, including but not limited to: …………………………………………………………………….”

“3. GOVERNING LAW AND JURISDICTION   

3.1 This paragraph is legally binding.

3.2 This Heads of Agreement is (and all negotiations  and  any  legal  agreement  prepared  in  connection  with  IPLA  shall  be  governed  by  and  construed  in  accordance with the law of Germany.

3.3 The parties irrevocably agree that Clause 18 of  the  proposed  draft  IPLA  shall  apply  to  settle  any  dispute or claim that arises out or in connection with  this memorandum of understanding and negotiations  relating to the proposed IPLA.”   

“4.1 This Heads of Agreement represents the good  faith  intentions  of  the  parties  to  proceed  with  the  proposed IPLA on the basis of the Draft IPLA but is  not legally binding and creates no legal obligations  on  either  party.  Its  sole  purpose is  to  set  out  the  principles on which the parties intend in good faith to  negotiate legally definitive agreements.”

57. Learned Senior Counsel  also pointed out the email  

sent  on  27.06.2006  by  Nicole  Fritsch  on  behalf  of  

Respondents to the Appellant No.2 and also the email  

sent by Appellant No.2 on 16.09.2006 to Nicole Fritsch  

in context of the submission that IPLA is final. These  

emails have already been noticed in the earlier part of  

this judgment.   

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58. It  was  also  pointed  out  that  the  Appellant  by  his  

letter dated 30th September, 2006 expressly admitted  

to having signed the IPLA. Thus, it was submitted that  

the Appellant  cannot  get  out  of  the contract  unless  

there is coercion and/or fraud. To argue that there is  

now a presumption of validity in favour of IPLA being a  

concluded contract, reliance was sought to be placed  

upon  Grasim Industries  Ltd.  & Anr.  v. Agarwal  

Steel20 and  J.K.  Jain v. Delhi  Development  

Authority.21   

59. Dr.  Singhvi  also  brought  to  our  notice  that  the  

execution and finality of the IPLA is also demonstrated  

by  the  fact  that  first  page  of  Heads  of  Agreement  

dated  23rd May,  2006  reads  as  “A  PROPOSED  

INTELLECTUAL  PROPERTY  LICENSE  AGREEMENT.”  

Whereas, the word proposed or draft is conspicuously  

absent in the IPLA dated 29th September, 2006. This,  

according to the learned senior  counsel,  shows that  

the  IPLA  was  a  concluded  contract.      Dr.  Singhvi  

further submitted that on 29th September, 2006 three  

20 (2010) 1 SCC 83, p6 21 (1995) 6 SCC 571

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drafts, viz. Successive Technical Transfer Agreement,  

Name Use License Agreement and amendments to the  

existing  Shareholders  Agreement  were  ready  and  

available to the parties, but at that point of time these  

agreements  were  under  discussion  and  being  

negotiated.  Admittedly,  none  of  these  agreements  

were initialled, let alone signed by the parties. This,  

according to Dr. Singhvi, is a clear indication that the  

parties were aware of the documents that were to be  

finalised  between  them and  also  of  the  documents  

that were required to be executed. This fact was also  

relied upon to support the contention that IPLA is a  

final  and  concluded agreement  that  was  knowingly  

and  willingly  executed  by  Appellant  No.2.  To  add  

credibility to this submission, learned senior counsel  

pointed  out  that  ‘E-82  Model’  is  expressly  excluded  

from  the  product  description  in  the  IPLA.  This  

according to Dr. Singhvi, is a deviation from the earlier  

agreement,  and  it  has  been  acknowledged  by  the  

Appellant. Dr. Singhvi also pointed out the difference  

as to the provision of royalty between the IPLA and  

earlier draft to support his contention.   

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60. The  next  set  of  submissions  made  by  Dr.  Singhvi  

relate  to  the  seat of  arbitration.   Learned  senior  

counsel  submitted  that  the  court  has  to  determine  

where the centre of gravity for arbitration is situated.  

The terms that are normally used to denote  seat are  

“venue”,  “place” or “seat”. According to the learned  

senior  counsel,  the  court  cannot  adopt  a  semantic  

approach.   It  was  also  submitted  that  under  sub  

sections (1),  (2) and (3) of Section 20 of Arbitration  

Act,  1996  the  term  ‘place’  connotes  different  

meanings. Under Section 20(1), place means  seat of  

arbitration, whereas under section 20(3), place would  

mean venue. Therefore, the expression “the venue of  

arbitration  proceedings”  will  have  reference  only  to  

the  seat of arbitration. It  was submitted that all  the  

surrounding  circumstances  would  also  show  that  

parties intended to designate England as the  seat of  

arbitration.  

61. It  was  also  submitted  that  all  the  proceedings  

between  the  parties  would  indicate  that  there  is  

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nothing to indicate India as the choice of the  seat of  

arbitration.  Learned  senior  counsel  relied  upon  

Shashoua v. Sharma,22 Dozco India Pvt. Ltd. V.  

Doosan  Infracore  Company  Ltd.  23   Videocon  

Industries  v.  Union  of  India,  24   Yograj    

Infrastructure  Ltd.  V.  Ssang  Yong  Engineering  

and  Construction  Ltd.  25   National  Agricultural    

Coop. Marketing Federation India (supra).    

62. It  was  further  submitted  that  three  potential  laws  

that govern an arbitration agreement are as follows :

1. The proper law of the contract ; 2. The law governing the arbitration agreement ;  3. The  law  governing  the  conduct  of  the       

arbitration  also  known as  curial  law or  lex arbitri.

63. Reliance  was  placed  upon  the  following  except  of  

Naviera Amazonica Peruana SA (supra):  

“……..in the majority of cases all three will be same  

but (1) will often be different from (2) and (3). And  

occasionally, but rarely, (2) may also differ from (3).”  

22 (2009) 2 LLR 376 23 (2011) 6 SCC 179 (Paras 4,15 and 18) 24 (2011) 6 SCC 161 (Paras 3 and Paras 20 to 23) 25 (2011) 9 SCC 735 (Paras 46-52)

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64. The next submission of Dr. Singhvi is that law of the  

seat dictates the curial law, and that the proper law of  

the arbitration agreement does not overwhelm law of  

the  seat. Laying particular emphasis on  Naviera, Dr.  

Singhvi  submitted  that  intention  of  the  parties  is  

important to determine the seat. If place is designated  

then curial law will be that of such place. Dr. Singhvi  

relied on the ratio of Naviera and submitted that the  

proper law, law of arbitration and the curial law have  

all  been expressly mentioned in the present case. It  

was also submitted that in the present case London as  

venue has to be interpreted having conferred London  

the status of seat, unless some contrary intention has  

been expressed.  

65. According to Dr.  Singhvi,  closest connection test is  

completely irrelevant when the parties have specified  

all  the  three  laws  applicable  in  a  contract.  Further,  

close  connection  test  is  to  be  applied  only  when  

nothing has been mentioned in  the agreement.  The  

effort  of  the  court  is  always  to  find  the  essential  

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venue.  He  relied  upon  Dicey,  Morris  &  Collins26 to  

submit that in most cases, seat is sufficiently indicated  

by the country chosen as the place of the arbitration.  

Dr. Singhvi submitted that the proper law and law of  

arbitration cannot override curial law.  

66. Dr. Singhvi relied heavily on the ratio of the law laid  

down in  Naviera (supra).  Reliance  was  also  placed  

upon the cases of            C vs. D.  27      and Union of  

India v/s McDonnel.  28      He also relied upon the ratio  

of  Balco in support of the submission that London is  

the seat of arbitration. Particular reference was made  

to  Paras 75,76,  96,  100,  104,  113,  116 and 117 of  

BALCO’s judgment to submit that since the  seat is  

outside India,  only  those provisions  of  Part  I  of  the  

Indian Arbitration Act, 1996 will be applicable, which  

are not inconsistent with the English Law, i.e., English  

Arbitration Act, 1996.

Anti-Suit injunction:

67. Dr. Singhvi submitted that the prayer of Appellants  26 Dicey, Morris & Collins Fifteenth Edition at 16-035. 27 (2007) 2 Lloyd’s Law Reports 367 28 (19993) 2 Lloyd’s Rep 48

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for an anti suit injunction is subject to determination  

by  this  court  that  the  seat is  India.  Dr.  Singhvi,  

however,  argued  that  such  an  injunction  be  denied  

even if this court holds that the  seat of arbitration is  

India  since  there  is  no  occasion  that  warrants  the  

grant of such an injunction.  The Respondents relied  

upon  the  judgment  of  this  court  in  Modi  

Entertainment  Network   v.    W.S.G.  Cricket  Pte.    

Ltd. (supra) to submit that the present case does not  

fall within any, let alone all, of the parameters set out  

in the aforesaid case that determine the grant of an  

anti-suit injunction.   

68. Mr. C.U. Singh, learned senior advocate, appeared  

for  Respondent  no.2.  Mr.  Singh  adopts  the  

submissions  made  before  this  court  by  Dr.  Singhvi.  

Besides, Mr. Singh submitted that after the enactment  

of  the  Indian  Arbitration  Act,  1996  the  distinction  

between the seat and the venue has blurred. The term  

that has been used by the Parliament is ‘place’ which  

denotes  the  place  of  physical  sitting  of  the  Arbitral  

Tribunal.  This  is  the  place  which  governs  the  curial  

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law.  However,  Arbitrators  have  been  given  the  

flexibility to hold meetings anywhere.  He also relied  

upon the  judgment  of  this  court  in  Chloro (supra)  

(Paras 80-83) to submit that the approach of the court  

is  to make the arbitration clause workable.  Reliance  

was also placed upon  Reva Electric Car Company  

P. Ltd. v. Green Mobil  .  29  

Issues :  

69. We have anxiously considered the submissions of  

the  learned  counsel  for  the  parties.  We  have  also  

considered the written submissions.  

The issues that arise for consideration of this Court are :  

(i) Is the IPLA a valid and concluded contract? (ii) Is  it  for  the  Court  to  decide  issue  No.  (i)  or  

should it be left to be considered by the Arbitral  Tribunal?  

(iii) Linked to (i)  and (ii)  is  the issue whether the  Appellants can refuse to join arbitration on the  plea that there is no concluded IPLA?

(iv) Assuming that the IPLA is a concluded contract;  is  the  Arbitration  Clause  18.1  vague  and  unworkable,  as  observed  by  both  the  Arbitrators  i.e.  Mr.  V.V.  Veeder  QC  and  Mr.  

29 (2012) 2 SCC 93 53

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Justice B.P. Jeevan Reddy? (v) In  case  the  arbitration  clause  is  held  to  be  

workable, is the seat of arbitration in London or  in India?  

(vi) In the event it is held that the seat is in India,  would the English Courts have the concurrent  jurisdiction  for  taking  such  measures  as  required  in  support  of  the  arbitration  as  the  venue for  the  arbitration  proceedings  is  London?  

(vii) Linked  to  (v)  &  (vi)  is  the issue  whether  the  Appellants  are  entitled  for  an  anti-suit  injunction?   

These, of course, are only broad based issues; many  

other supplementary questions will have to be examined  

in order to give a definitive determination.

Our Conclusions :

Issues (i), (ii) and (iii)

70. Is the IPLA a valid and a concluded contract? Is it for  

the  Court  to  decide  this  issue  or  have  the  parties  

intended to let the arbitral tribunal decide it?

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71. The Bombay High Court upon consideration of the  

factual as well as the legal issues has concluded that  

“there can be no escape for the Appellants from the  

consequences  flowing  from the  signing  of  the  IPLA;  

and the signing of the IPLA by the parties is therefore  

a  strong  circumstance  in  arriving  at  a  prima  facie  

conclusion  as  enunciated  in  Shin-Etsu  Chemicals  

Co.  Ltd.’s  case for  referring  the  parties  to  

arbitration.”

72. The Daman Trial Court on the basis of the material  

on record came to the conclusion that IPLA was not a  

concluded contract for the want of free consent, and  

was  executed  due  to  undue  influence,  fraud,  

misrepresentation and mistake. It further held that the  

plaintiffs  (the  Appellants  herein)  would  suffer  heavy  

economic  loss  if  the  arbitration  is  held  at  London.  

These findings were reversed by the Daman Appellate  

Court. It was held that since IPLA has been signed by  

the parties,  there was a valid arbitration agreement  

for reference of the disputes to arbitration. It was also  

held that assuming that there was some defect in the  

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methodology for  appointment of  the arbitrators  that  

would  not  come  in  the  way  of  enforcement  of  the  

arbitration  agreement.  The  Daman  Appellate  Court  

has further held that since the parties had  agreed to  

London being the  seat of  arbitration,  the Appellants  

(plaintiffs) could not raise a grievance as regards the  

jurisdiction of the English Courts.   

73. Mr. R.F. Nariman, learned senior counsel, appearing  

for the Appellants has vehemently argued that there is  

neither a  concluded IPLA between the parties nor is  

there a legally enforceable arbitration agreement.  In  

any  event,  the  arbitration  can  not  proceed  as  the  

arbitration  clause  itself  is  unworkable.   As  noticed  

earlier,  learned senior counsel has submitted that in  

the absence of a concluded contract, there can be no  

arbitration agreement. In short, the submission is that  

there can be no severability of the arbitration clause  

from  the  IPLA.  Since  the  IPLA  is  not  a  concluded  

contract there can be no arbitration agreement.  

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74. On the other hand, Dr.  Singhvi has submitted, as  

noticed  earlier,  that  the  intention  of  the  parties  to  

arbitrate is  clear.  Even if  the existence of  the main  

contract is under dispute, the court is concerned only  

with  the  arbitration  agreement  i.e.  the  arbitration  

clause.  The  submission  of  Dr.  Singhvi  is  that  the  

absence of IPLA will not nullify the arbitration clause.  

75. We  find  considerable  merit  in  the  submissions  

made by     Dr. Singhvi.  It  cannot be disputed that  

there is a legal relationship between the parties of a  

long standing. Section 44 of the Indian Arbitration Act,  

1996 applies to arbitral awards of differences between  

persons  arising  out  of  legal  proceedings.  Such  a  

relationship may be contractual  or not,  so long it  is  

considered as commercial under the laws in force in  

India.  Further,  that  legal  relationship  must  be  in  

pursuance of an agreement, in writing, for arbitration,  

to which the New York Convention applies. The court  

can decline to make a reference to arbitration in case  

it finds that the arbitration agreement is null and void,  

inoperative or incapable of being performed. There are  

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no pleadings to that effect in the plaint.  The Daman  

Trial Court findings that the contract is null and void  

and not based on free consent were rendered in the  

absence of relevant pleadings.  There is a mention in  

one  of  the  e-mails  that  Dr.  Wobben  has  taken  

advantage of  his  friendship  with  Mr.  Yogesh Mehra.  

But that seems to be more of a sulk than a genuine  

grievance.   Even if  one accepts the truth of  such a  

statement, the same is not reflected in the pleadings.  

Therefore,  no  serious  note  could  be  taken  of  that  

statement at this stage.  The Daman Appellate Court  

upon reconsideration of the pleadings found that there  

is no plea to the effect that the agreement is null, void  

or incapable of being performed.  Justice Savant has  

not examined the pleadings as the issue with regard  

to  the  underlying  contract  has  been  left  to  be  

examined by the Arbitral Tribunal.  Before us also, it is  

not  the  plea  of  the  Appellants  that  the  arbitration  

agreement  is  without  free  consent,  or  has  been  

procured  by  coercion,  undue  influence,  fraud,  

misrepresentation or was signed  under a mistake. In  

other words, it is not claimed that the agreement is  

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null and  void,  inoperative  and  incapable of  being  

performed as it  violates any of the provisions under  

Sections 14,  15,  16,  17,  18,  19,  19A and 20 of  the  

Indian Contract Act, 1872.  The submission is that the  

matter cannot be referred to arbitration as the IPLA,  

containing the arbitration clause/agreement, is not a  

concluded contract. This, in our opinion, would not fall  

within  the  parameters  of  an  agreement  being  “null   

and  void,  inoperative  or  incapable  of  being  

performed”, in terms of Sections 14, 15, 16, 17, 18, 19  

and  20  of  the  Indian  Contract  Act,  1872.   These  

provisions  set  out  the  impediments,  infirmities  or  

eventualities that would render a particular provision  

of a contract or the whole contract  void or  voidable.  

Section 14 defines  free consent;  Section  15 defines  

coercion in  causing  any  person  to  enter  into  a  

contract. Section 16 deals with undue influence. Fraud  

in relation to a contract is defined under     Section 17;  

whereas  misrepresentation is  defined  and  explained  

under  Section  18.  Section  19  states  that  “when  

consent to an agreement is caused by coercion, fraud  

or  misrepresentation,  the  agreement  is  a  contract  

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voidable at the option of the party whose consent was  

so  caused”.  Section  19A  gives  the  party  who  was  

unduly influenced to enter into a contract an option  

similar to the one provided by the preceding section.  

Section 20 makes an agreement void where both the  

parties thereto are under a mistake as to a matter of  

fact. In  our  opinion,  all  the  aforesaid  eventualities  

refer to fundamental legal impediments. These are the  

defences to resist a claim for specific performance of a  

concluded contract; or to resist a claim for damages  

for  breach  of  a  concluded  contract.  We  agree  with  

Savant,  J.  that  the  issue  as  to  whether  there  is  a  

concluded contract between the parties can be left to  

the Arbitral Tribunal, though not for the same reasons.  

76. In our opinion, all the issues raised by the Appellants  

about  the non-existence of a concluded contract pale  

into insignificance in the face of “Heads of Agreement  

on the proposed IPLA dated 23rd May, 2006”. Clause 3  

of the Heads of Agreement provides as under:-

“3. Governing Law and Jurisdiction

3.1 This paragraph is legally binding.

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3.2 This  Heads  of  Agreement  is  (and  all  negotiations and any legal agreements prepared in  connection with the IPLA shall be) governed by and  construed in accordance with the law of Germany.

3.3 The parties irrevocably agree that Clause 18 of  the  proposed  draft  IPLA  shall  apply  to  settle  any  dispute or claim that arises out of or in connection  with  this  memorandum  of  understanding  and  negotiations relating to the proposed IPLA.”

77. A bare perusal of this clause makes it abundantly  

clear  that  the  parties  have  irrevocably  agreed  that  

clause 18 of  the proposed IPLA shall  apply to settle  

any dispute or claim that arises out of or in connection  

with  this  Memorandum  of  Understanding  and  

negotiations relating to IPLA. It must also be noticed  

here that the relationship between the parties formally  

commenced on 12th January,  1994 when the parties  

entered into the first SHA and TKHA.  Even under that  

SHA,  Article  XVI  inter  alia  provided for  resolution of  

disputes by arbitration. The TKHA also contained an  

identically  worded  arbitration  clause,  under  Article  

XIX. This intention to arbitrate has continued without  

waiver.  In  the  face  of  this,  the  question  of  the  

concluded  contract becomes  irrelevant,  for  the  

purposes  of  making  the  reference  to  the  Arbitral  

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Tribunal. It must be clarified that the doubt raised by  

the Appellant is that there is no  concluded IPLA, i.e.  

the substantive contract.  But this can have no effect  

on the existence of a binding Arbitration Agreement in  

view of Clause 3.  The parties have irrevocably agreed  

to resolve all the disputes through Arbitration.  Parties  

can  not  be  permitted  to  avoid  arbitration,  without  

satisfying the Court that it  would be  just and  in the  

interest  of  all  the  parties not  to  proceed  with  

arbitration.  Furthermore  in  arbitration  proceedings,  

courts  are  required  to  aid  and  support  the  arbitral  

process, and not to bring it to a  grinding halt.  If  we  

were to  accept the submissions of  Mr.  Nariman,  we  

would  be  playing  havoc  with  the  progress  of  the  

arbitral process. This would be of no benefit to any of  

the  parties  involved  in  these  unnecessarily  

complicated and convoluted proceedings.      

78. In the facts of this case, we have no hesitation in  

concluding  that  the  parties  must  proceed  with  the  

Arbitration.   All  the  difficulties  pointed  out  by  Mr.  

Rohinton Nariman can be addressed by the Arbitral  

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Tribunal.

79. Further,  the  arbitration  agreement  contained  in  

clause 18.1 to 18.3 of IPLA is very widely worded and  

would  include  all  the  disputes,  controversies  or  

differences concerning the legal relationship between  

the parties.   It  would include the disputes arising in  

respect  of  the  IPLA  with  regard  to  its validity,  

interpretation,  construction,  performance,  

enforcement or its  alleged breach. Whilst interpreting  

the  arbitration  agreement  and/or  the  arbitration  

clause, the court must be conscious of the overarching  

policy  of  least  intervention  by  courts  or  judicial   

authorities  in  matters  covered  by  the  Indian  

Arbitration Act, 1996. In view of the aforesaid, it is not  

possible  for  us  to  accept  the  submission  of  Mr.  

Nariman that the arbitration agreement will perish as  

the IPLA has not been  finalised. This is also because  

the arbitration clause (agreement) is independent of  

the underlying  contract,  i.e.  the IPLA containing  the  

arbitration  clause.  Section  16  provides  that  the  

Arbitration clause forming part of a contract shall be  

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treated  as  an  agreement  independent of  such  a  

contract.   

80. The  concept  of  separability  of  the  arbitration  

clause/agreement  from the  underlying  contract  is  a  

necessity to ensure that the intention of the parties to  

resolve the disputes by arbitration does not evaporate  

into  thin  air  with  every  challenge  to  the  legality,  

validity, finality or breach of the underlying contract.  

The  Indian  Arbitration  Act,  1996,  as  noticed  above,  

under Section 16 accepts the concept that the main  

contract  and  the  arbitration  agreement  form  two  

independent  contracts.   Commercial  rights  and  

obligations  are  contained  in  the  underlying,  

substantive, or the main contract.  It is followed by a  

second contract, which expresses the agreement and  

the  intention  of  the  parties  to  resolve  the  disputes  

relating to the underlying contract through arbitration.  

A remedy is elected by parties outside the normal civil  

court remedy.  It is true that support of the National  

Courts  would  be  required  to  ensure  the  success  of  

arbitration,  but  this  would  not  detract  from  the  

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legitimacy  or  independence  of  the  collateral  

arbitration  agreement,  even  if  it  is  contained  in  a  

contract,  which is claimed to be void or voidable or  

unconcluded by one of the parties.    

81. The  scope  and  ambit  of  provision  contained  in  

Section 16 of the Indian Contract Act has been clearly  

explained in  Reva Electric Car  (supra),  wherein it  

was inter alia observed as follows:

“54. Under Section 16(1),  the legislature makes it  clear  that  while  considering  any  objection  with  respect to the existence or validity of the arbitration  agreement, the arbitration clause which formed part  of the contract, has to be treated as an agreement  independent of the other terms of the contract. To  ensure  that  there  is  no  misunderstanding,  Section  16(1)(b)  further  provides  that  even  if  the  Arbitral  Tribunal concludes that the contract is null and void,  it  should  not  result,  as  a  matter  of  law,  in  an  automatic  invalidation  of  the  arbitration  clause.  Section 16(1)(a)  presumes the existence of  a valid  arbitration  clause  and  mandates  the  same  to  be  treated as an agreement independent of the other  terms of the contract. By virtue of Section 16(1)(b), it  continues  to  be  enforceable  notwithstanding  a  declaration  of  the  contract  being null  and void.  In  view of the provisions contained in Section 16(1) of  the Arbitration and Conciliation Act,  1996, it  would  not  be  possible  to  accept  the  submission  of  Mr.  Ahmadi that with the termination of the MoU on 31- 12-2007, the arbitration clause would also cease to  exist.”

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The aforesaid reasoning has also been approved by a  

two  Judge  bench  of  this  Court  in  T  oday  Homes  and    

Infrastructure Pvt.  Ltd.  vs. Ludhiana Improvement  

Trust and Anr.,30 wherein it was inter alia held as under:

“14. The same reasoning was adopted by a member  of this Bench (S.S. Nijjar, J.), while deciding the case  of  Reva  Electric  Car  Company  Private  Limited  Vs.  Green  Mobil  [(2012)  2  SCC  93],  wherein  the  provisions  of  Section 16(1)  in  the backdrop of  the  doctrine of  kompetenz kompetenz were considered  and it was inter alia held that under Section 16(1),  the legislature makes it clear that while considering  any objection with regard to the existence or validity  of the arbitration agreement, the arbitration clause,  which formed part of the contract, had to be treated  as an agreement independent of the other terms of  the  contract.  Reference  was  made  in  the  said  judgment to the provisions of Section 16(1)(b) of the  1996  Act,  which  provides  that  even  if  the  arbitral  tribunal concludes that the contract is null and void,  it  should  not  result,  as  a  matter  of  law,  in  an  automatic  invalidation  of  the  arbitration  clause.  It  was also held that Section 16(1)(a) of the 1996 Act  presumes the existence of a valid arbitration clause  and  mandates  the  same  to  be  treated  as  an  agreement  independent  of  the  other  terms  of  the  contract.  By virtue of Section 16(1)(b) of the 1996  Act,  the  arbitration  clause  continues  to  be  enforceable,  notwithstanding a declaration that the  contract was null and void.”

In  view  of  the  aforesaid,  we  are  not  inclined  to  accept  the  

submission  of  Mr.  Nariman  that  Arbitration  Agreement  will  

perish as the IPLA has not been finalised.

30 2013 (7) SCALE 327 66

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Issue (iv)

82. We now come to the next issue that even if there is a  

valid arbitration agreement/clause, can the parties be  

denied the benefit of the same on the ground that it is  

unworkable?  Both the Arbitrators, as noticed above,  

are of the opinion that the parties cannot proceed to  

arbitration  as  the  arbitration  clause  is  unworkable.  

The Bombay High Court has taken the view that the  

arbitration clause is workable as two Arbitrators are to  

be appointed by the licensors and one by the licensee.  

We  are  not  inclined  to  agree  with  the  aforesaid  

finding/conclusion  recorded  by  the  High  Court.  

Respondent No.1 is the licensor and Respondent No.2  

is undoubtedly 100% shareholder of Respondent No.1,  

but  that  is  not  the  same  as  being  an  independent  

licensor.  It would also be relevant to point out here  

that before this  Court the Respondent has not even  

tried to support the aforesaid conclusion of the High  

Court.  

83. In our opinion, the Courts have to adopt a pragmatic  

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        We entirely agree with the aforesaid observation.  

This view of ours is also supported by the following  

judgments which were relied upon by Dr. Singhvi:

In Visa International Limited (supra), it was inter  

alia held that:  

“25….No party can be allowed to take advantage of  inartistic  drafting  of  arbitration  clause  in  any  agreement as long as clear intention of parties to go  for  arbitration  in  case  of  any  future  disputes  is  evident from the agreement and material on record  including surrounding circumstances.

26. What is required to be gathered is the intention  of  the  parties  from the  surrounding  circumstances  including the conduct of the parties and the evidence  such  as  exchange  of  correspondence  between  the  parties….”

Similar  position  of  law  was  reiterated  in  Nandan  

Biomatrix  Ltd. (supra),  wherein  this  court  observed  

inter alia as under:

28. This  Court  in  Rukmanibai  Gupta v.  Collector,  Jabalpur has held (at SCC p. 560, para 6) that what is  required to be ascertained while construing a clause  is “whether the parties have agreed that if disputes  arise between them in respect of the subject-matter  of  contract  such  dispute  shall  be  referred  to  arbitration,  then  such  an  arrangement  would  spell  out an arbitration agreement”.

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29. In  M.  Dayanand  Reddy v.  A.P.  Industrial   Infrastructure Corpn. Ltd., this Court has held that:  (SCC p. 142, para 8) “8.  …  an  arbitration  clause  is  not  required  to  be   stated in any particular form. If the intention of the  parties  to  refer  the  dispute  to  arbitration  can  be  clearly ascertained from the terms of the agreement,  it  is  immaterial  whether  or  not  the  expression  arbitration  or  ‘arbitrator’  or  ‘arbitrators’  has  been  used in the agreement.”

(original emphasis supplied) 30. The  Court  is  required,  therefore,  to  decide  whether the existence of an agreement to refer the  dispute to arbitration can be clearly ascertained in  the facts and circumstances of the case. This, in turn,  may depend upon the intention of the parties to be  gathered  from  the  correspondence  exchanged  between the parties, the agreement in question and  the surrounding circumstances. What is required is to  gather the intention of the parties as to whether they  have agreed for resolution of  the disputes through  arbitration.  What  is  required  to  be  decided  in  an  application  under  Section  11  of  the  1996  Act  is:  whether there is an arbitration agreement as defined  in the said Act.”

84. It  is  a  well  recognized  principle  of  arbitration  

jurisprudence in almost all the jurisdictions, especially  

those  following  the  UNCITRAL  Model  Law,  that  the  

Courts  play  a  supportive  role  in  encouraging  the  

arbitration to proceed rather than letting it come to a  

grinding  halt.   Another  equally  important  principle  

recognized  in  almost  all  jurisdictions  is  the  least  

intervention by  the  Courts.   Under  the  Indian  

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that  :  “Notwithstanding  anything  contained  in  any  

other  law  for  the  time  being  in  force,  in  matters  

governed  by  this  Part,  no  judicial  authority  shall  

intervene  except  where  so  provided  in  this  Part”.  

Keeping  in  view the  aforesaid,  we find  force  in  the  

submission of Dr. Singhvi that the arbitration clause as  

it stands cannot be frustrated on the ground that it is  

unworkable.   

85. Dr.  Singhvi  has  rightly  submitted  that  the  un-

workability  in  this  case  is  attributed  only  to  the  

machinery provision.  And the arbitration agreement,  

otherwise, fulfils the criteria laid down under Section  

44 of the Indian Arbitration Act, 1996. Given that two  

Arbitrators have been appointed, the missing line that  

“the  two  Arbitrators  appointed  by  the  parties  shall  

appoint  the  third  Arbitrator”  can  be  read  into  the  

arbitration clause. The omission is so obvious that the  

court can legitimately supply the missing line. In these  

circumstances,  the  Court  would  apply  the  officious  

bystander principle, as explained by MacKinnonn, LJ in  

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Shirlaw v. Southern Foundries,32 to interpret  the  

clause.  In Shirlaw, it was held that:

"prima facie that which in any contract is left to  be  implied  and  need  not  be  expressed  is  something  so  obvious  that  it  goes  without  saying; so that, if, while the parties were making  their  bargain,  an  officious  bystander  were  to  suggest  some  express  provision  for  it  in  their  agreement, they would testily suppress him with  a common 'Oh, of course!”  

In  construing  an  arbitration  clause,  it  is  not  

necessary  to  employ  the  strict  rules  of  interpretation  

which may be necessary to construe a statutory provision.  

The court would be well  within its rights to set right an  

obvious omission without necessarily leaving itself open to  

the criticism of having reconstructed the clause.  

Further,  we  find  support  in  this  context  from  the  

following extract of Halsbury’s Laws of England (Vol. 13,  

Fourth Edition, 2007 Reissue):

“The  words  of  a  written  instrument  must  in  general  be  taken  in  their  ordinary  or  natural  sense  notwithstanding  the  fact  that  such  a  construction  may  appear  not  to  carry  out  the  purpose which  it  might  otherwise be supposed  the  parties  intended  to  carry  out;  but  if  the  provisions  and  expressions  are  contradictory,  and there are grounds, appearing on the face of  the  instrument,  affording  proof  of  the  real  

32 [1937 S. 1835] 72

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intention of the parties, that intention will prevail  against the obvious and ordinary meaning of the  words;  and  where  the  literal  (in  the  sense  of  ordinary, natural or primary) construction would  lead to an absurd result, and the words used are  capable of being interpreted so as to avoid this  result,  the  literal  construction  will  be  abandoned.”   

86. Mr. Rohinton Nariman had very fairly submitted that  

it  is  permissible  for  the  Court  to  construe  the  

arbitration clause in a particular manner to make the  

same workable when there is a defect or an omission  

in it.  His only caveat was that such an exercise would  

not permit the Court to re-write the contract.  In our  

opinion,  in  the  present  case,  the  crucial  line  which  

seems to be an omission or an error can be inserted  

by the Court.   In this context, we find support from  

judgment of this court in  Shin Satellite Public Co.  

Ltd.  (supra),  wherein  the  ‘offending  part’  in  the  

arbitration  clause  made  determination  by  the  

arbitrator final and binding between the parties and  

declared that  the parties  have waived the  rights  to  

appeal  or  an  objection  against  such  award  in  any  

jurisdiction.  The  Court,  inter-alia,  held  that  such  an  

objectionable  part  is  clearly  severable  being  

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independent of the dispute that has to be referred to  

be resolved through arbitration. By giving effect to the  

arbitration clause, the court specifically noted that the  

“it cannot be said that the Court is doing something  

which  is  not  contemplated  by  the  parties  or  by  

‘interpretative  process’,  the  Court  is  rewriting  the  

contract which is in the nature of ‘novatio’ (sic). The  

intention of the parties is explicit and clear; they have  

agreed that the dispute, if any, would be referred to  

an arbitrator. To that extent, therefore, the agreement  

is legal, lawful and the offending part as to the finality  

and restraint  in  approaching  a  Court  of  law can be  

separated and severed by using a 'blue pencil'.”

87. There is another reason which permits us to take the  

aforesaid view and accept the submission made by Dr.  

Singhvi  that  while  construing  the  arbitration  

agreement/clause the same can be construed to make  

it  workable,  as  such  an  approach  is  statutorily  

provided  for.   For  this  submission,  Dr.  Singhvi  has  

rightly relied upon the provision contained in Sections  

10  and  11  of  the  Indian  Arbitration  Act,  1996.  The  

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object of these two provisions is to avoid failure of the  

arbitration  agreement  or  the  arbitration  clause  if  

contained in  contract.  Under  Section 10(1),  there  is  

freedom given to the parties to determine the number  

of Arbitrators, provided that such number shall not be  

an even number.  The arbitration clause in this case  

provides that the arbitral tribunal shall consist of three  

arbitrators.  Further, it must also be noticed that the  

Respondents have been trying to seek adjudication of  

disputes  by  arbitration.  As  noted  earlier,  the  

Respondent No.2 in its email dated 13th March, 2008  

clearly  offered  that  the  third  and  the  presiding  

arbitrator be appointed by the respective arbitrators of  

the  Appellants  and  the  Respondents.  On  the  other  

hand,  the  attitude  of  the  Appellants  is  to  avoid  

arbitration at any cost.

88. In this context, reliance placed by Dr. Singhvi upon  

MMTC Limited  (supra) is  justified.  In  MMTC, the  

provisions contained in Sections 10(1) and (2) of the  

Indian  Arbitration  Act,  1996  have  been  held  to  be  

machinery provisions by this Court. It was further held  

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that the validity of an arbitration agreement does not  

depend on the number of arbitrators specified therein.  

The  Court  declined  to  render  the  arbitration  

agreement invalid on the ground that it provided an  

even  number  of  arbitrators.   In  the  present  case,  

Mr.  Rohinton  Nariman  had  rightly  not  even  

emphasised  that  the  arbitration  agreement  itself  is  

illegal.  The learned sr. counsel only emphasised that  

the  arbitrators  having  expressed  the  view  that  the  

arbitration clause is unworkable, the parties ought not  

to be sent to the arbitration.   

Similarly, other provisions contained in Sections 8, 11 and  

45 of the Indian Arbitration Act, 1996 are machinery provisions  

to ensure that parties can proceed to arbitration provided they  

have expressed the intention to Arbitrate. This intention can be  

expressed by the parties, as specifically provided under Section  

7 of the Indian Arbitration Act, 1996 by an exchange of letters,  

telex,  telegrams or  other  means of  telecommunication  which  

provide a record of the agreement.  Such intention can even be  

expressed in the pleadings of the parties such as statements of  

claim and defence, in which the existence of the agreement is  

alleged by one party and not denied by the other.  In view of the  

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above, we are of the opinion that the parties can be permitted  

to proceed to arbitration.   

Issue No. V/Re:   Seat   

89. This now clears the decks for the crucial  question,  

i.e., is the ‘seat’ of arbitration in London or in India.  

This is necessarily so as the location of the  seat will  

determine  the  Courts  that  will  have  exclusive  

jurisdiction  to  oversee  the  arbitration  proceedings.  

Therefore,  understandably,  much  debate  has  been  

generated before us on the question whether the use  

of  the  phrase  “venue  shall  be  in  London”  actually  

refers  to  designation  of  the  seat of  arbitration  in  

London.   

90. We find much substance in the submissions of Mr.  

Nariman  that  there  are  very  strong  indicators  to  

suggest that the parties always understood that the  

seat of arbitration would be in India and London would  

only  be  the  “venue”  to  hold  the  proceedings  of  

arbitration.  We find force in the submission made by  

learned senior counsel for the Appellants that the facts  

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of the present case would make the ratio of law laid  

down in Naviera Amazonica Peruana S.A. (supra)  

applicable in the present case.  Applying the  closest  

and the intimate connection to arbitration, it would be  

seen that the parties had agreed that the provisions of  

Indian  Arbitration  Act,  1996  would  apply  to  the  

arbitration proceedings.  By making such a choice, the  

parties have made the curial law provisions contained  

in Chapters III,  IV, V and VI of the Indian Arbitration  

Act, 1996 applicable. Even Dr. Singhvi had submitted  

that Chapters III, IV, V and VI would apply if the seat of  

arbitration is in India.                 By choosing that Part I  

of  the Indian Arbitration Act,  1996 would apply,  the  

parties have made a choice that the seat of arbitration  

would be in India.  Section 2 of the Indian Arbitration  

Act, 1996 provides that Part I “shall apply where the  

place of arbitration is in India”.  In Balco, it has been  

categorically held that Part I of the Indian Arbitration  

Act,  1996,  will  have  no  application,  if  the  seat of  

arbitration is not in India.  In the present case, London  

is mentioned only as a “venue” of arbitration which, in  

our opinion, in the facts of this case can not be read as  

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the “seat” of arbitration.   

91. We are fortified in taking the aforesaid view since all  

the  three  laws  applicable  in  arbitration  proceedings  

are Indian laws.  The law governing the Contract, the  

law governing the arbitration agreement and the law  

of arbitration/Curial law are all stated to be Indian.  In  

such  circumstances,  the  observation  in  Naviera  

Amazonica  Peruana  S.A.  (supra) would  become  

fully  applicable.  In  this  case,  the Court  of  Appeal in  

England considered the agreement which contained a  

clause providing for  the jurisdiction of  the courts  in  

Lima, Peru in the event of judicial dispute; and at the  

same  time  contained  a  clause  providing  that  the  

arbitration would be governed by the English law and  

the procedural law of arbitration shall be the English  

law. The Court of Appeal summarised the state of the  

jurisprudence on this topic. Thereafter, the conclusions  

which  arose from the material  were summarised as  

follows:

“All  contracts  which  provide  for  arbitration  and  contain  a  foreign  element  may  involve  three  potentially  relevant  systems  of  law:  (1)  the  law  governing  the  substantive  contract;  (2)  the  law  

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governing  the  agreement  to  arbitrate  and  the  performance  of  that  agreement;  (3)  the  law  governing  the  conduct  of  the  arbitration.  In  the  majority of cases all three will be the same. But (1)  will  often  be  different  from  (2)  and  (3).  And  occasionally, but rarely, (2) may also differ from (3).”

It  was  observed  that  the  problem about  all  these  

formulations,  including  the  third,  is  that  they  elide  the  

distinction between the legal localisation of arbitration on  

the  one  hand  and  the  appropriate  or  convenient  

geographical locality for hearings of the arbitration on the  

other hand.

92.   On the facts of the case, it was observed in Naviera  

Amazonica  case (supra) that  since  there  was  no  

contest on Law 1 and Law 2, the entire issue turned on  

Law  3,  “the  law  governing  the  conduct  of  the  

arbitration”. This is usually referred to as the  curial or  

procedural  law,  or  the  lex  fori.  Thereafter,  the  Court  

approvingly  quoted  the  following  observation  from  

Dicey  &  Morris  on  the  Conflict  of  Laws (11th  Edn.):  

“English  Law  does  not  recognise  the  concept  of  a  

delocalised arbitration or of arbitral procedures floating  

in the transnational firmament, unconnected with any  

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municipal  system  of  law”.  It  is  further  held  that  

“accordingly  every  arbitration  must  have  a  ‘seat’  or  

‘locus arbitri’  or ‘forum’ which subjects  its  procedural  

rules to the municipal law which is there in force”. The  

Court thereafter culls out the following principle:

“Where  the  parties  have  failed  to  choose  the  law  governing  the  arbitration  proceedings,  those  proceedings must be considered, at any rate prima  facie, as being governed by the law of the country in  which the arbitration is held, on the ground that it is  the  country  most  closely  connected  with  the  proceedings.”

The aforesaid classic statement of the conflict of law rules as  

quoted in  Dicey & Morris on the Conflict of Laws (11th Edn.),  

Vol. 1, was approved by the House of Lords in James Miller &  

Partners Ltd.   v.    Whitworth Street Estates (Manchester)    

Ltd.33 Mustill,  J.  in  Black  Clawson  International  Ltd. v.  

Papierwerke  Waldhof-Aschaffenburg  A.G.  34  ,   a  little  later  

characterised  the  same proposition  as  “the  law of  the  place  

where the reference is conducted, the lex fori”. The position of  

law in India is the same.

93. The Court in  Naviera Amazonica, also, recognised  

33 [1970] 1 Lloyd’s Rep. 269; [1970] A.C.583 34 [1981] 2 Lloyd’s Rep. 446 at P. 453

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the  proposition  that  “there  is  equally  no  reason  in  

theory  which  precludes  parties  to  agree  that  an  

arbitration shall be held at a place or in country X but  

subject to the procedural laws of Y”. But it points out  

that  in  reality  parties  would  hardly  make  such  a  

decision  as  it  would  create  enormous  unnecessary  

complexities.  Finally  it  is  pointed  out  that  it  is  

necessary  not to confuse the legal seat of arbitration  

with the geographically convenient place or places for  

holding  hearings.  In  the  present  case,  Dr.Singhvi,  it  

seems  to  us,  is  confusing  the  geographically  

convenient place, which is London, with the legal seat  

which, in our opinion, is undoubtedly India.   

94. Further,  on  examination  of  the  facts  in  Naviera  

Amazonica case, the Court of Appeal observed that  

there  is  nothing  surprising  in  concluding  that  these  

parties  intended  that  any  dispute  under  this  policy  

should be arbitrated in London. But it would always be  

open to the Arbitral Tribunal to hold hearings in Lima if  

this was thought to be convenient, even though the  

seat or  forum  of  the  arbitration  would  remain  in  

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London.  In the present case, with the utmost ease,  

“London” can be replaced by India, and “Lima” with  

London.  

95. Having  chosen  all  the  three  applicable  laws  to  be  

Indian  laws,  in  our  considered  opinion,  the  parties  

would  not  have  intended  to  have  created  an  

exceptionally  difficult  situation,  of  extreme  

complexities,  by  fixing  the  seat of  arbitration  in  

London.   

In view of the above, we are unable to accept the submissions  

made by Dr. Singhvi that in this case, the term “venue” ought  

to be read as seat.   

96.   We are also unable to accept the submission made  

by           Dr. Singhvi that in this case the venue should  

be understood as reference to place in the manner it  

finds  mention  in  Section  20(1),  as  opposed  to  the  

manner  it  appears  in  Section  20(3),  of  the  Indian  

Arbitration Act, 1996.  Such a submission cannot be  

accepted since the parties have agreed that Curial law  

would be the Indian Arbitration Act, 1996.  

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97.   In  Balco,  it  has  been  clearly  held  that  concurrent  

jurisdiction is vested in the Courts of seat and venue, only when  

the  seat of  arbitrations is  in India (Para 96).   Reason for the  

aforesaid  conclusion  is  that  there  is  no  risk  of  conflict  of  

judgments of different jurisdictions, as all courts in India would  

follow the Indian Law. Thus, the reliance placed by D. Singhvi on  

Balco in this context is misplaced.   

98. It is correct that, in virtually all jurisdictions, it is an  

accepted  proposition  of  law  that  the  seat normally  

carries  with  it  the  choice  of  that  country’s  

arbitration/Curial law.  But this would arise only if the  

Curial  law is  not  specifically  chosen by the parties.  

Reference can be made to  Balco (supra),  wherein  

this Court considered a number of judgments having a  

bearing on the issue of whether the  venue is  to be  

treated as seat.  However, the court was not required  

to decide any controversy akin to the one this court is  

considering  in  the  present  case.  The  cases  were  

examined only to demonstrate the difficulties that the  

court will face in a situation similar to the one which  

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was considered in Naviera Amazonica (supra).  

99.We also  do  not  agree  with  Dr.  Singhvi  that  parties  

have not indicated they had chosen India to be the  

seat of arbitration.  The judgments relied upon by Dr.  

Singhvi do not support the proposition canvassed. In  

fact,  the  judgment  in  the  case  Braes  of  Doune  

Wind  Farm  (Scotland)  Limited Vs.  Alfred  

McAlpine  Business  Services  Limited  35  ,  has  

considered  a  situation  very  similar  to  the  factual  

situation in the present case.

100.    In Braes of Doune, the English & Wales High  

Court considered two Applications relating to the first  

award of an arbitrator. The award related to an EPC  

(engineering, procurement and construction) contract  

dated 4th November, 2005 (the EPC contract) between  

the claimant (the employer) and the defendant (the  

contractor),  whereby  the  contractor  undertook  to  

carry out works in connection with the provision of 36  

35 [2008]EWHC 426 (TCC) 85

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WTGs at a site some 18 km from Stirling in Scotland.  

This award dealt with enforceability of the clauses of  

the  EPC  contract  which  provided  for  liquidated  

damages for delay. The claimant applied for leave to  

appeal  against  this  award  upon  a  question  of  law  

whilst the defendant sought, in effect,  a declaration  

that the court had no jurisdiction to entertain such an  

Application and for leave to enforce the award. The  

Court considered the issue of jurisdiction which arose  

out  of  application  of  Section  2  of  the  English  

Arbitration Act, 1996 which provides that:

“2.  Scope of application of provisions.—(1) The  provisions of this Part  apply where the  seat of the  arbitration  is  in  England  and  Wales  or  Northern  Ireland.”

101.   The  Court  notices  the  singular  importance  of  

determining the location of  juridical  seat in  terms of  

Section 3, for the purposes of Section 2, in the following  

words of Akenhead, J.:  

“15. I must determine what the parties agreed was  the  ‘seat’  of  the  arbitration  for  the  purposes  of  Section 2 of the Arbitration Act, 1996. This means by  Section 3 what the parties agreed was the ‘juridical’  seat. The word ‘juridical’ is not an irrelevant word or  a word to be ignored in ascertaining what the ‘seat’  is.  It  means  and  connotes  the  administration  of  

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justice  so  far  as  the  arbitration  is  concerned.  It  implies that there must be a country whose job it is  to administer, control or decide what control there is  to be over an arbitration.”

  (emphasis supplied)

102.  Thus, it would be evident that if the “juridical seat”  

of  the arbitration was in Scotland,  the English courts  

would have no jurisdiction to entertain an Application  

for leave to appeal. The contractor argued that the seat  

of  the  arbitration  was  Scotland  whilst  the  employer  

argued  that  it  was  England.  There  were  to  be  two  

contractors involved with the project.

The material clauses of the EPC contract were:

“1.4.1. The contract shall be governed by and  construed  in  accordance  with  the  laws  of  England and Wales and, subject to Clause 20.2  (Dispute Resolution), the parties agree that the  courts  of  England  and  Wales  have  exclusive  jurisdiction to settle any dispute arising out of  or in connection with the contract.

(a)  … any  dispute  or  difference  between  the  parties to  this  agreement arising out  of  or in  connection  with  this  agreement  shall  be  referred to arbitration.

(b)  Any reference  to  arbitration shall  be to  a  single  arbitrator  …  and  conducted  in  accordance  with  the  Construction  Industry  Model  Arbitration  Rules,  February  1998  Edn.,  subject to this clause (Arbitration Procedure)….

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(c)  This  arbitration  agreement  is  subject  to  English law and the seat of the arbitration shall  be  Glasgow,  Scotland.  Any  such  reference  to  arbitration shall be deemed to be a reference to  arbitration within the meaning of the Arbitration  Act, 1996 or any statutory re-enactment.”

103.  The  arbitration  was  to  be  conducted  under  the  

arbitration  rules  known  colloquially  as  the  “CIMAR  

Rules”. Rule 1 of the aforesaid Rules provided that:

“1.1. These Rules are to be read consistently with  the  Arbitration  Act,  1996  (the  Act),  with  common  expressions having the same meaning.”

“1.6. (a) a single arbitrator is to be appointed, and (b) the  seat of  the  arbitration  is  in  England  and  Wales or Northern Ireland.”

The Court was informed by the parties in arguments that the  

Scottish Court’s powers of control or intervention would be, at  

the  very  least,  seriously  circumscribed  by  the  parties’  

agreement in terms as set out in para 6 of the judgment. It was  

further  indicated  by  the  counsel  that  the  Scottish  Court’s  

powers of intervention might well be limited to cases involving  

such extreme circumstances as the dishonest procurement of  

an award.   In  construing  the EPC,  the Court  relied  upon the  

principles stated by the Court of Appeal in Naviera Amazonica  

Peruana S.A.

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104.    Upon consideration of the entire material, the  

Court formed the view that it does have jurisdiction to  

entertain  an  Application  by  either  party  to  the  

contract in question under Section 69 of the English  

Arbitration  Act,  1996.  The  Court  gave  the  following  

reasons for the decision:  

“(a) One needs to consider what, in substance, the  parties  agreed  was  the  law  of  the  country  which  would juridically control the arbitration.

(b)  I  attach  particular  importance  to  Clause  1.4.1.  The parties agreed that essentially the English (and  Welsh) courts  have ‘exclusive jurisdiction’  to settle  disputes.  Although this is ‘subject to’  arbitration, it  must  and  does  mean  something  other  than  being  mere verbiage. It is a jurisdiction over disputes and  not simply a court in which a foreign award may be  enforced. If it is in arbitration alone that disputes are  to be settled and the English courts have no residual  involvement in that process, this part of Clause 1.4.1  is  meaningless  in  practice.  The  use  of  the  word  ‘jurisdiction’ suggests some form of control.

(c)  The second part of  Clause 1.4.1 has some real  meaning  if  the  parties  were  agreeing  by  it  that,  although the  agreed disputes  resolution process  is  arbitration, the parties agree that the English court  retains such jurisdiction to address those disputes as  the  law  of  England  and  Wales  permits.  The  Arbitration Act, 1996 permits and requires the court  to entertain applications under Section 69 for leave  to  appeal  against  awards  which  address  disputes  which have been referred to arbitration. By allowing  such applications and then addressing the relevant  questions of law, the court will settle such disputes;  even if the application is refused, the court will  be  applying  its  jurisdiction  under  the  Arbitration  Act,  

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1996  and  providing  resolution  in  relation  to  such  disputes.

(d)  This  reading  of  Clause  1.4.1  is  consistent  with  Clause 20.2.2(c) which confirms that the arbitration  agreement  is  subject  to  English  law  and  that  the  ‘reference’  is  ‘deemed  to  be  a  reference  to  arbitration within the meaning of the Arbitration Act,  1996’. This latter expression is extremely odd unless  the  parties  were  agreeing  that  any  reference  to  arbitration was to be treated as a reference to which  the Arbitration Act, 1996 was to apply. There is no  definition in the Arbitration Act, 1996 of a ‘reference  to arbitration’, which is not a statutory term of art.  The  parties  presumably  meant  something  in  using  the expression and the most obvious meaning is that  the parties  were agreeing that  the Arbitration Act,  1996  should  apply  to  the  reference  without  qualification.

(e)  Looked  at  in  this  light,  the  parties’  express  agreement that  the ‘seat’  of  arbitration was to  be  Glasgow, Scotland must relate to the place in which  the  parties  agreed  that  the  hearings  should  take  place.  However,  by  all  the  other  references  the  parties  were  agreeing  that  the  curial  law  or  law  which governed the arbitral proceedings … establish  that, prima facie and in the absence of agreement  otherwise,  the  selection  of  a  place  or  seat for  an  arbitration will determine what the curial law or ‘lex  fori’ or ‘lex arbitri’ will be, [we] consider that, where  in substance the parties agree that the laws of one  country will  govern and control a given arbitration,  the place where the arbitration is to be heard will not  dictate what the governing or controlling law will be.

(f) In the context of this particular case, the fact that,  as both parties seemed to accept in front of me, the  Scottish courts would have no real control or interest  in the arbitral  proceedings other than in a criminal  context,  suggests that they can not have intended  that the arbitral proceedings were to be conducted  as  an  effectively  ‘delocalised’  arbitration  or  in  a  

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‘transnational firmament’, to borrow Kerr, L.J.’s words  in Naviera Amazonica.

(g)  The  CIMAR Rules  are  not  inconsistent  with  my  view.  Their  constant  references  to  the  Arbitration  Act, 1996 suggest that the parties at least envisaged  the possibility that the courts of England and Wales  might play some part in policing any arbitration. For  instance, Rule 11.5 envisages something called ‘the  court’  becoming  involved  in  securing  compliance  with a peremptory order of the arbitrator. That would  have to be the English court, in practice.”

105.     In our opinion, Mr. Nariman has rightly relied  

upon  the  ratio  in  Braes  of  Doune  case (supra).  

Learned senior  counsel  has  rightly  pointed out  that  

unlike the situation in Naviera Amazonica (supra), in  

the  present  case  all  the  three  laws:  (i)  the  law  

governing  the  substantive  contract;  (ii)  the  law  

governing  the  agreement  to  arbitrate  and  the  

performance of that agreement (iii) the law governing  

the  conduct  of  the  arbitration  are  Indian.  Learned  

senior  counsel  has  rightly  submitted that  the curial  

law of England would become applicable only if there  

was clear designation of the seat in London. Since the  

parties have deliberately chosen London as a venue,  

as a neutral place to hold the meetings of arbitration  

only, it cannot be accepted that London is the seat of  91

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arbitration.  We  find  merit  in  the  submission  of  Mr.  

Nariman  that  businessmen  do  not  intend  absurd  

results.  If  seat is  in  London,  then  challenge  to  the  

award would also be in London. But the parties having  

chosen Indian Arbitration Act, 1996 - Chapter III, IV, V  

and  VI;  Section  11  would  be  applicable  for  

appointment of arbitrator in case the machinery for  

appointment  of  arbitrators  agreed  between  the  

parties breaks down. This would be so since the ratio  

laid down in Bhatia will apply, i.e., Part I of the Indian  

Arbitration Act, 1996 would apply even though seat of  

arbitration  is  not  in  India.  This  position  has  been  

reversed  in  Balco,  but  only  prospectively.   Balco  

would  apply  to  the  agreements  on  or  after  6th  

September, 2012. Therefore, to interpret that London  

has been designated as the seat would lead to absurd  

results.   

106.    Learned senior counsel has rightly submitted  

that in fixing the seat in India, the court would not be  

faced with the complications which were faced by the  

English High Court in the Braes of Doune (supra). In  

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that case, the court understood the designation of the  

seat to be in Glasgow as venue, on the strength of the  

other factors intimately connecting the arbitration to  

England.  If one has regard to the factors connecting  

the dispute to India and the absence of any factors  

connecting  it  to  England,  the  only  reasonable  

conclusion  is  that  the  parties  have  chosen  London,  

only  as  the  venue  of  the  arbitration.  All  the  other  

connecting  factors  would  place  the  seat firmly  in  

India.  

107.    The submission made by Dr. Singhvi would  

only be worthy of acceptance on the assumption that  

London  is  the  seat.  That  would  be  to  put  the  cart  

before the horse. Surely, jurisdiction of the courts can  

not be rested upon unsure or insecure foundations. If  

so, it will  flounder with every gust of the wind from  

different directions. Given the connection to India of  

the entire dispute between the parties, it is difficult to  

accept that parties have agreed that the  seat  would  

be London and that  venue is  only a misnomer. The  

parties having chosen the Indian Arbitration Act, 1996  

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as  the  law  governing  the  substantive  contract,  the  

agreement  to  arbitrate  and the performance of  the  

agreement and the law governing the conduct of the  

arbitration;  it  would,  therefore,  in  our  opinion,  be  

vexatious  and  oppressive  if  Enercon  GMBH  is  

permitted to  compel  EIL  to  litigate  in  England.  This  

would  unnecessarily  give  rise  to  the  undesirable  

consequences so pithily pointed by Lord Brandon and  

Lord Diplock in  Abidin Vs.  Daver.36 It was to avoid  

such  a  situation  that  the  High  Court  of  England  &  

Wales,  in  Braes  of  Doune,  construed  a  provision  

designating Glasgow in  Scotland as the  seat  of  the  

arbitration  as  providing  only  for  the  venue  of  the  

arbitration.  

108.    At  this  stage,  it  would  be  appropriate  to  

analyse  the  reasoning  of  the  Court  in  Braes  of  

Doune in support of construing the designated  seat  

by  the  parties  as  making  a  reference  only  to  the  

venue of arbitration.  In that case, the Court held that  

there was no supplanting of the Scottish law by the  

English law, as both the seat under Section 2 and the  

“juridical seat” under Section 3,  were held to be in  36 [1984] AC 398

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England.   It  was  further  concluded,  as  observed  

earlier,  that  where  in  substance  the  parties  agreed  

that the laws of one country will govern and control a  

given arbitration, the place where the arbitration is to  

be heard will not dictate what the governing law  will  

be.  

109.    In Braes of  Doune,  detailed  examination  

was undertaken by the court to discern the intention  

of  the  parties  as  to  whether  the  place  mentioned  

refers  to  venue or  the  seat of  the  arbitration.  The  

factual situation in the present case is not as difficult  

or complex as the parties herein have only designated  

London as a venue. Therefore, if one has to apply the  

reasoning  and logic  of  Akenhead,  J.,  the conclusion  

would be irresistible that the parties have designated  

India as the seat. This is even more so as the parties  

have not agreed that the courts in London will have  

exclusive  jurisdiction to  resolve  any  dispute  arising  

out of or in connection with the contract, which was  

specifically  provided  in  Clause  1.4.1  of  the  EPC  

Contract  examined  by  Akenhead,  J.  in  Braes  of  

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Doune. In the present case, except for London being  

chosen as a convenient  place/venue for holding the  

meetings of the arbitration, there is  no other factor  

connecting the arbitration proceedings to London.   

110. We also do not find much substance in the submission of  

Dr.  Singhvi  that  the  agreement  of  the  parties  that  the  

arbitration  proceedings  will  be  governed  by  the  Indian  

Arbitration Act, 1996 would not be indicative of the intention of  

the parties  that the  seat of  arbitration is  India.  An argument  

similar to the argument put forward before us by Dr. Singhvi  

was rejected in  C vs. D by the Court of Appeal in England as  

well as by Akenhead, J. in Braes of Doune. Underlying reason  

for the conclusion in both the cases was that it would be rare for  

the law of the arbitration agreement to be different from the law  

of the seat of arbitration.     

111.C v. D37 the Court of Appeal in England was examining  

an appeal by the defendant insurer from the judgment  

of Cooke, J. granting an anti-suit injunction preventing it  

from challenging an arbitration award in the US courts.  

The insurance policy provided that “any dispute arising  37 [2007] EWCA Civ 1282  

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under this policy shall be finally and fully determined in  

London,  England  under  the  provisions  of  the  English  

Arbitration  Act,  1950  as  amended”.  However,  it  was  

further provided that “this policy shall be governed by  

and construed in accordance with the internal laws of  

the State of New York….” A partial award was made in  

favour of the claimants. It was agreed that this partial  

award  is,  in  English  law  terms,  final  as  to  what  it  

decides.  The  defendant  sought  the  tribunal’s  

withdrawal of its findings. The defendant also intimated  

its intention to apply to a Federal Court applying the US  

Federal Arbitration Law governing the enforcement of  

arbitral award, which was said to permit  vacatur of an  

award  where  arbitrators  have  manifestly  disregarded  

the law. It  was in consequence of such an intimation  

that                               the claimant sought and  

obtained an interim anti-suit injunction. The Judge held  

that parties had agreed that any proceedings seeking  

to attack or set aside the partial award would only be  

those  permitted  by  the  English  law.  It  was  not,  

therefore,  permissible for the defendant to bring any  

proceedings  in  New York  or  elsewhere  to  attack  the  

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partial award. The Judge rejected the arguments to the  

effect that the choice of the law of New York as the  

proper law of the contract amounted to an agreement  

that the law of England should not apply to proceedings  

post award. The Judge also rejected a further argument  

that the separate agreement to arbitrate contained in  

Condition V(o) of the policy was itself governed by New  

York  Law  so  that  proceedings  could  be  instituted  in  

New  York.  The  Judge  granted  the  claimant  a  final  

injunction.

112. The Court of Appeal noticed the submission on behalf  

of the defendant as follows:

“14.  The  main  submission  of  Mr  Hirst  for  the  defendant  insurer  was  that  the  Judge  had  been  wrong to hold that the arbitration agreement itself  was  governed  by  English  law  merely  because  the  seat of the arbitration was London. He argued that  the arbitration agreement itself was silent as to its  proper law but that its proper law should follow the  proper law of the contract as a whole, namely, New  York law, rather than follow from the law of the seat  of the arbitration, namely, England. The fact that the  arbitration itself was governed by English procedural  law did not mean that it followed that the arbitration  agreement itself had to be governed by English law.  The proper law of the arbitration agreement was that  law with  which the agreement had the most close  and  real  connection;  if  the  insurance  policy  was  governed by New York law, the law with which the  arbitration agreement had its closest and most real  

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connection was the law of New York. It would then  follow that, if New York law permitted a challenge for  manifest disregard of the law, the court in England  should not enjoin such a challenge.”

113.Justice Longmore of Court of Appeal observed:  

“16.  I  shall  deal  with  Mr  Hirst’s  arguments  in  due  course but, in my judgment, they fail to grapple with  the central point at issue which is whether or not, by  choosing London as the  seat of the arbitration, the  parties  must  be  taken  to  have  agreed  that  proceedings  on  the  award  should  be  only  those  permitted by English law. In my view they must be  taken to have so agreed for the reasons given by the  Judge. The whole purpose of the balance achieved by  the Bermuda Form (English arbitration but applying  New York law to issues arising under the policy) is  that judicial remedies in respect of the award should  be those permitted by English law and only those so  permitted. Mr Hirst could not say (and did not say)  that English judicial remedies for lack of jurisdiction  on procedural irregularities under Sections 67 and 68  of the Arbitration Act, 1996 were not permitted; he  was  reduced  to  saying  that  New  York  judicial  remedies were also permitted. That, however, would  be  a  recipe  for  litigation  and  (what  is  worse)  confusion which cannot have been intended by the  parties. No doubt New York law has its own judicial  remedies  for  want  of  jurisdiction  and  serious  irregularity but it could scarcely be supposed that a  party  aggrieved  by  one  part  of  an  award  could  proceed in one jurisdiction and a party aggrieved by  another part of an award could proceed in another  jurisdiction.  Similarly,  in  the  case  of  a  single  complaint about an award, it could not be supposed  that  the  aggrieved  party  could  complain  in  one  jurisdiction and the satisfied party be entitled to ask  the other jurisdiction to declare its satisfaction with  the award. There would be a serious risk of parties  rushing  to  get  the  first  judgment  or  of  conflicting  decisions  which  the  parties  cannot  have  contemplated.

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17. It follows from this that a choice of  seat for the  arbitration must be a choice of forum for remedies  seeking to attack the award.”

(emphasis supplied)

On the facts of the case, the Court held that the  

seat of  the arbitration was in England and accordingly  

entertained the challenge to the award.

114.  The cases relied upon by Dr.  Singhvi  relate to the  

phrase “arbitration in  London”  or  expressions  similar  

thereto.  The  same cannot  be equated with  the term  

“venue of arbitration proceedings shall be in London.”  

Arbitration  in  London  can  be  understood  to  include  

venue as well as seat; but it would be rather stretching  

the  imagination  if  “venue of  arbitration  shall  be  in  

London”  could  be  understood  as  “seat of  arbitration  

shall  be London,” in the absence of  any other factor  

connecting  the  arbitration  to  London.  In  spite  of  Dr.  

Singhvi’s seemingly attractive submission to convince  

us, we decline to entertain the notion that India would  

not be the natural forum for all remedies in relation to  

the  disputes,  having  such  a  close  and  intimate  

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connection with India. In contrast, London is described  

only as a  venue  which Dr. Singhvi says would be the  

natural forum.

115. In Shashoua, such an expression was understood as  

seat instead of  venue, as the parties had agreed that  

the  ICC  Rules would  apply  to  the  arbitration  

proceedings.  In  Shashoua, the ratio in  Naviera and  

Braes Doune has  been  followed.   In  this  case,  the  

Court  was  concerned  with  the  construction  of  the  

shareholders’  agreement  between  the  parties,  which  

provided  that  “the  venue of  the  arbitration  shall  be  

London,  United  Kingdom”.  It  provided  that  the  

arbitration proceedings should be conducted in English  

in  accordance  with  the  ICC  Rules  and  that  the  

governing  law  of  the  shareholders’  agreement  itself  

would  be  the  law  of  India.  The  claimants  made  an  

Application  to  the  High  Court  in  New  Delhi  seeking  

interim measures of protection under Section 9 of the  

Indian Arbitration Act, 1996, prior to the institution of  

arbitration proceedings. Following the commencement  

of the arbitration, the defendant and the joint venture  

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company raised a challenge to the jurisdiction of the  

Arbitral  Tribunal,  which  the  panel  heard  as  a  

preliminary  issue.  The  Tribunal  rejected  the  

jurisdictional objection.

116.The  Tribunal  then  made  a  costs  award  ordering  the  

defendant  to  pay  $140,000  and  £172,373.47.  The  

English Court gave leave to the claimant to enforce the  

costs award as a judgment. The defendant applied to  

the High Court of Delhi under Section 34(2)(a)(iv) of the  

Arbitration Act, 1996 to set aside the costs award. The  

claimant  had  obtained  a  charging  order,  which  had  

been made final, over the defendant’s property in UK.  

The defendant applied to the Delhi High Court for an  

order directing the claimants not to take any action to  

execute the charging order, pending the final disposal  

of the Section 34 petition in Delhi seeking to set aside  

the  costs  award.  The  defendant  had  sought  

unsuccessfully  to  challenge  the  costs  award  in  the  

Commercial Court under Section 68 and Section 69 of  

the English Arbitration Act, 1996 and to set aside the  

order giving leave to enforce the award.

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117.Examining  the  fact  situation  in  the  case,  the  Court  

observed as follows:  

“The  basis  for  the  court’s  grant  of  an  anti-suit  injunction  of  the  kind  sought  depended  upon  the  seat of the arbitration. An agreement as to the seat  of an arbitration brought in the law of that country as   the  curial  law  and  was  analogous  to  an  exclusive   jurisdiction clause. Not only was there agreement to  the curial law of the  seat, but also to the courts of  the  seat having  supervisory  jurisdiction  over  the  arbitration,  so  that,  by  agreeing  to  the  seat,  the  parties agreed that any challenge to an interim or   final award was to be made only in the courts of the   place designated as the seat of the arbitration.

Although, ‘venue’ was not synonymous with ‘seat’, in  an arbitration clause which provided for arbitration to  be conducted in accordance with the Rules of the ICC  in Paris (a supranational body of rules), a provision  that ‘the venue of arbitration shall be London, United  Kingdom’ did amount to the designation of a juridical  seat….”

In para 54, it is further observed as follows:  

“There was a little debate about the possibility of the  issues  relating  to  the  alleged  submission  by  the  claimants  to  the  jurisdiction  of  the  High  Court  of  Delhi being heard by that Court, because it was best  fitted to determine such issues under the Indian law.  Whilst  I  found  this  idea  attractive  initially,  we  are  persuaded  that  it  would  be  wrong  in  principle  to  allow this and that  it  would create undue practical   problems in any event. On the basis of what I have   already  decided,  England  is  the  seat  of  the   arbitration and since this  carries with it  something   akin to an exclusive jurisdiction clause, as a matter   of  principle  the  foreign  court  should  not  decide   matters  which  are  for  this  Court  to  decide  in  the   

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context of an anti-suit injunction.”                                          (emphasis supplied)

If the aforesaid observations are applied to the facts  

of the present case, it would be apparent that the Indian  

Courts would have jurisdiction in the nature of exclusive  

jurisdiction over the disputes between the parties.  

118.In  Shashoua  case (supra), Cooke, J.  concluded that  

London  is  the  seat,  since  the  phrase  “venue of  

arbitration shall  be London,  U.K.”  was accompanied  

by  the  provision  in  the  arbitration  clause  for  

arbitration  to  be  conducted  in  accordance  with  the  

Rules of ICC in Paris (a supranational body of rules). It  

was also noted by Cooke, J. that “the parties have not  

simply provided for the location of hearings to be in  

London……”  In  the  present  case,  parties  have  not  

chosen a supranational body of  rules to govern the  

arbitration;  Indian  Arbitration  Act,  1996  is  the  law  

applicable to the arbitration proceedings.

119.Also,  in  Union  of  India v.  McDonnell  Douglas  

Corpn.,  the  proposition  laid  down  in  Naviera  

Amazonica  Peruana  S.A. was  reiterated.  In  this  

case, the agreement provided that: 104

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“The  arbitration  shall  be  conducted  in  accordance  with the procedure provided in the Indian Arbitration  Act  of  1940  or  any  re-enactment  or  modification  thereof.  The  arbitration  shall  be  conducted  in  the  English language. The award of the arbitrators shall  be made by majority decision and shall be final and  binding  on  the  parties  hereto.  The  seat of  the  arbitration  proceedings  shall  be  London,  United  Kingdom.”

120.Construing the aforesaid clause, the Court held as follows:  

“On the contrary, for the reasons given, it seems to  me that by their agreement the parties have chosen  English  law  as  the  law  to  govern  their  arbitration  proceedings, while contractually importing from the  Indian  Act  those  provisions  of  that  Act  which  are  concerned  with  the  internal  conduct  of  their  arbitration and which are not inconsistent with the  choice of English arbitral procedural law.”

121.The same question was again considered by the High  

Court of Justice, Queen’s Bench Division, Commercial  

Court  (England)  in  SulameRica  CIA  Nacional  De  

Seguros SA   v.   Enesa Engenharia SA - Enesa  .   The  

Court noticed that the issue in this case depends upon  

the weight to be given to the provision in Condition 12  

of  the  insurance  policy  that  “the  seat of  the  

arbitration shall be London, England.” It was observed  

that this necessarily carried with it the English Court’s  

supervisory jurisdiction over the arbitration process. It  

was  observed  that  “this  follows  from  the  express  105

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terms of the Arbitration Act, 1996 and, in particular,  

the provisions of Section 2 which provide that Part I of  

the Arbitration Act, 1996 applies where the seat of the  

arbitration  is  in  England  and  Wales  or  Northern  

Ireland.  This  immediately  establishes  a  strong  

connection between the arbitration agreement itself  

and the law of England. It is for this reason that recent  

authorities have laid stress upon the locations of the  

seat of  the  arbitration  as  an  important  factor  in  

determining  the  proper  law  of  the  arbitration  

agreement.” The Court thereafter makes a reference  

to the observations made in        C v. D by the High  

Court as well as the Court of Appeal. The observations  

made  in  paragraph  12  have  particular  relevance  

which are as under:

“In the Court of Appeal, Longmore, L.J.,  with whom  the other two Lord Justices agreed,  decided (again  obiter) that, where there was no express choice of  law for the arbitration agreement, the law with which  that  agreement  had  its  closest  and  most  real  connection was more likely to be the law of the seat  of arbitration than the law of the underlying contract.  He referred to Mustill,  J.  (as he then was) in  Black  Clawson International  Ltd. v.  Papierwerke  Waldhof- Aschaffenburg A.G. as saying that it would be a rare  case in which the law of the arbitration agreement  was not the same as the law of the place or seat of  the  arbitration.  Longmore,  L.J.  also  referred  to  the  speech of Lord Mustill  (as he had then become) in  

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Channel  Tunnel  Group  Ltd. v.  Balfour  Beatty  Construction Ltd. and concluded that the Law Lord  was saying that, although it was exceptional for the  proper law of the underlying contract to be different  from the proper law of the arbitration agreement, it  was  less  exceptional  (or  more  common)  for  the  proper law of that underlying contract to be different  from  the  curial  law,  the  law  of  the  seat of  the  arbitration. He was not expressing any view on the  frequency or otherwise of the law of the arbitration  agreement differing from the law of the  seat of the  arbitration.  Longmore,  L.J.  agreed  with  Mustill,  J.’s  earlier dictum that it would be rare for the law of the  separable arbitration agreement to be different from  the law of the seat of the arbitration. The reason was

‘that  an  agreement  to  arbitrate  will  normally  have  a  closer  and  more  real  connection with the place where the parties  have  chosen  to  arbitrate,  than  with  the  place of the law of the underlying contract,  in  cases  where  the  parties  have  deliberately  chosen  to  arbitrate,  in  one  place, disputes which have arisen under a  contract  governed  by  the  law  of  another  place’. (C case, Bus LR p. 854, para 26)”

122.Upon  consideration  of  the  entire  matter,  it  was  

observed  in  SulameRica supra that  “In  these  

circumstances it is clear to me that the law with which  

the agreement to arbitrate has its closest and most real  

connection is the law of the seat of arbitration, namely,  

the law of England”. It was thereafter concluded by the  

High Court that the English law is the proper law of the  

agreement to arbitrate.

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The aforesaid observations make it  abundantly clear that the  

submissions made by Dr. Singhvi cannot be supported either in  

law or in facts. In the present case, all the chosen laws are of  

India,  therefore,  it  cannot be said the laws of  England would  

have any application.   

123.We also do not find any merit in the submission of Dr.  

Singhvi  that  the  close  and  the  most  intimate  

connection test is wholly irrelevant in this case.  It is  

true that the parties have specified all the three laws.  

But  the  Court  in  these  proceedings  is  required  to  

determine  the  seat of  the  arbitration,  as  the  

Respondents  have  taken  the  plea  that  the  term  

“venue”  in  the  arbitration  clause  actually  makes  a  

reference to the “seat” of the arbitration.   

124.It is accepted by most of the experts in the law relating  

to  international  arbitration  that  in  almost  all  the  

national  laws,  arbitrations  are  anchored  to  the  

seat/place/situs of arbitration.  Redfern and Hunter on  

International  Arbitration  (5th Edn.,  Oxford  University  

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Press, Oxford/New York 2009), in para 3.54 concludes  

that “the seat of the arbitration is thus intended to be  

its  centre  of  gravity.”   In  Balco,  it  is  further noticed  

that  this  does  not  mean  that  all  proceedings  of  the  

arbitration are to be held at the seat of arbitration.  The  

Arbitrators are at liberty to hold meetings at a place  

which  is  of  convenience  to  all  concerned.   This  may  

become  necessary  as  Arbitrators  often  come  from  

different countries.  Therefore, it may be convenient to  

hold all or some of the meetings of the arbitration in a  

location  other  than  where  the  seat of  arbitration  is  

located. In  Balco, the relevant passage from  Redfern  

and Hunter, has been quoted which is as under:

“The preceding discussion has been on the basis that   there is only one ‘place’ of arbitration.  This will be   the place chosen by or on behalf of the parties; and  it will be designated in the arbitration agreement or   the terms of reference or the minutes of proceedings   or in some other way as the place or ‘seat’ of the   arbitration.  This does not mean, however, that the   Arbitral  Tribunal  must  hold  all  its  meetings  or   hearings  at  the  place  of  arbitration.   International   commercial  arbitration  often  involves  people  of   many  different  nationalities,  from  many  different   countries.  In these circumstances, it is by no means  unusual for an Arbitral Tribunal to hold meetings—or   even hearings—in a place other than the designated   place of arbitration, either for its own convenience or   for  the  convenience  of  the  parties  or  their   witnesses…   It  may  be  more  convenient  for  an  Arbitral Tribunal sitting in one country to conduct a   

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hearing in another country — for  instance,  for the   purpose of taking evidence….  In such circumstances   each move of the Arbitral Tribunal does not of itself   mean that the seat of arbitration changes.  The seat   of arbitration remains the place initially agreed by or   on behalf of the parties.”  

These observations have also been noticed in Union  

of India Vs. McDonald Duglas Corporation (supra).

125.In  the  present  case,  even  though  the  venue of  

arbitration  proceedings  has  been  fixed  in  London,  it  

cannot be presumed that the parties have intended the  

seat to  be  also  in  London.   In  an  International  

Commercial  Arbitration,  venue  can often  be different  

from the seat of arbitration.  In such circumstances, the  

hearing  of  the  arbitration  will  be  conducted  at  the  

venue fixed by the parties,  but  this  would not  bring  

about a change in the seat of the arbitration.  This is   

precisely the ratio in Braes of Dounne.  Therefore, in  

the present case, the seat would remain in India.  

126.In  Naviera  Amazonica  Peruana S.A.  (supra),  the  

Court of Appeal observed that it would always be open  

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to the Arbitral Tribunal to hold the hearings in Lima if  

this were thought to be convenient,  even though the  

seat  or  forum  of  the  arbitration  would  remain  in   

London.

Issue No. VI/ Re: Concurrent Jurisdicion:

127.Having held that the seat of arbitration is in India, in  

our  opinion,  the  Bombay  High  Court  committed  an  

error in concluding that the Courts in England would  

have concurrent jurisdiction.  Holding that the Courts  

in England and India will have concurrent jurisdiction,  

as  observed  on  different  occasions  by  Courts  in  

different  jurisdictions,  would  lead  to  unnecessary  

complications and inconvenience.  This, in turn, would  

be  contrary  to  underlying  principle  of  the  policy  of  

dispute resolution through arbitration.  The whole aim  

and objective of arbitration is to enable the parties to  

resolve  the  disputes  speedily, economically  and  

finally. The kind of difficulties that can be caused by  

Courts  in  two  countries  exercising  concurrent  

jurisdiction over the same subject matter have been  

very  succinctly  set  down  by  Lord  Brandon  in  

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Abdin Vs. Daveu (supra)– as follows:-

“In  this  connection  it  is  right  to  point  out  that,  if  concurrent  actions  in  respect  of  the  same  subject  matter proceed together in two different countries,  as  seems likely  if  a  stay is  refused in  the present  case,  one  or  other  of  the  two  undesirable  consequences  may follow:  first,  there  may be  two  conflicting judgments of the two courts concerned; or  secondly,  there  may  be  an  ugly  rush  to  get  one  action decided ahead of the other in order to create  a situation of  res judicata or  issue estoppel  in  the  latter.”

Lord Diplock said in the same case:   "comity demands that such a situation should not be  permitted to occur as between courts of two civilised  and friendly states"; it would be, he said, "a recipe  for  confusion  and  injustice".  As  Bingham  LJ  said  in Dupont  No  1  the  policy  of  the  law  must  be  to  favour the litigation of issues only once in the most  appropriate  forum.  The  interests  of  justice  require  that  one  should  take  into  account  as  a  factor  the  risks  of  injustice  and  oppression  that  arise  from  concurrent  proceedings  in  different  jurisdictions  in  relation to the same subject matter.”  

128.Once the seat of arbitration has been fixed in India, it  

would  be  in  the  nature  of  exclusive  jurisdiction to  

exercise the supervisory powers over the arbitration.  

This view of ours will find support from the judgment  

of the Court of Appeal in England in recognizing the  

difficulties that the parties will face in case the Courts  

in  India  and  England  have  concurrent  jurisdiction.  

Cooke J. in his judgment in  (1) Enercon GMBH (2)  112

Page 113

Wobben  Properties  GMBH Vs.  Enercon  (India)  

Ltd., dated  30th November,  2012,  (2012)  EWHC  

3711(Comm), observed as under:

“14.  A lifting of the stay in this country and an   appoint  of  a  third  arbitrator  under  s.  18  of  the   English Act would, if the Indian proceedings continue   and  the  Supreme  Court  decides  the  matter   differently  from  the  Bombay  High  Court  and  this   court,  give  rise  to  the  possibility  of  conflicting   judgments with all  the chaos that might entail.   In   practice,  therefore,  the question of  lifting  the stay   here and the grant of the anti-suit injunction against   EIL are closely interconnected.

15. It  cannot, in my judgment, be right that  both  English  and  Indian  courts  should  be  free  to   reach inconsistent  judgments  on the same subject   matter, whether or not the current ultimate result in   India, which allows for an English court to appoint an   arbitrator by virtue of s.2(4) of the English Act, will or   will  not  involve  any  inconsistent  judgment,  and  whether there is or is not a current issue estoppels   which  would  debar  Enercon  from  contending  that   London  is  the  seat  of  the  arbitration,  which  is  its   primary case, giving rise, as it says, to the court’s   power  to  appoint  an  arbitrator  under  s.18  of  the   English  Act  by  virtue  of  s.2(1)  of  that  Act  and by  reference to s.3 of that Act.

xx xxx xx xxx xx

56. Comity and the avoidance of inconsistent   judgments require that I should refrain from deciding   matters  which  are  possibly  going  to  be  decided  further in India.  It would be a recipe for confusion   and injustice if I were not to do so.  Issue estoppels is   already said to arise on the question of the seat of   arbitration  and  curial  law,  and  that  raises  very   difficult questions for the court to decide.  If the stay   was lifted, then I could decide the matter differently   

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from Savant J. or from a later final decision on appeal   in the Supreme Court of India, if  that matter went   ahead.   The  Indian  courts  are  seised  and  should   reach, in my judgment, a concluded decision, albeit   on an expedited basis.

xx xxx xx xxx xx

60. If the Supreme Court in India were, in due   course, to consider that the Bombay High Court was   wrong  in  its  conclusion  as  to  the  seat  of  the   arbitration  or  that  there  was  a  prima  facie  valid   arbitration or that the English court had concurrent   supervisory  jurisdiction,  it  would  be  a  recipe  for   confusion  and  injustice  if,  in  the  meantime,  the   English court were to conclude that England was the   seat  of  the  putative  arbitration,  and  to  assume  jurisdiction over EIL and the putative arbitration, and   to  conclude  that  there  was  a  valid  arbitration   agreement, whether on the basis of a good arguable   case or the balance of probabilities.  Further, for it to   exercise its powers, whether under s.2(1) or 2(4) or   s.18  of  the  Arbitration  Act  in  appointing  a  third   arbitrator,  would  create  real  problems,  should  the  Supreme Court decide differently.

61. These are the very circumstances which  courts must strive to avoid in line with a multitude of   decisions  of  high authority,  from the Abidin  Daver   [1984]  AC  398  onwards,  including  E.I.  Dupont  de  Nemours v.  Agnew [1987]2 Lloyd’s  Rep 585.   The   underlying  rationale  of  Eder  J.’s  judgment  leads   inexorably,  in  my view,  to  the conclusion that  the   issues  to  be  determined  in  India,  which  could  otherwise  fall  to  be  determined  here  in  England,   must be decided first by the Indian courts and that,   despite  the  delay  and  difficulties  involved,  the  decision  of  the  Indian  Supreme  Court  should  be   awaited.

62. It is also fair to point out in this context   that, even if I were to decide the seat issue here on   the basis of full argument (which I have not heard)   

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whether in the way that Eder J. did or otherwise, the   possibility  or  likelihood  of  one  side  or  another   wishing to appeal with subsequent delay might then   arise in the context of the English proceedings.  But,   if I did make such a decision, in line with Eder J., I   would be making a determination which is directly   contrary to that of Savant J. and it seems to me that   that is inappropriate as a matter of comity, whether   or not there is any issue estoppels.

63. Moreover,  it  would  be  a  recipe  for   confusion and injustice,  and to  back it  up with an   anti-suit injunction would merely fan the flames for a   continued battle, which is contrary to the principles   of  comity  when  the  position  is  unclear  and  the   agreement itself is governed by Indian law.”

129.In  our  opinion,  these  observations  of  Justice  Cooke  

foresee the kind of intricate complexities that may arise  

in  case  the  Courts  of  India  and  England  were  to  

exercise the concurrent jurisdiction in these matters.

130.We are unable to agree with the conclusion reached by  

Justice  Savant  that  the  Courts  in  England  would  

exercise  concurrent  jurisdiction in the matter.  Having  

concluded that the  seat of  arbitration is  in India,  the  

conclusions reached by the Bombay High Court seem  

to  be  contrary  in  nature.   In  Paragraph  45,  it  is  

concluded  that  the  law  relating  to  arbitration  

agreement is  the Indian Arbitration Act.   Interpreting  115

Page 116

Clause 18.3, it is observed as follows:-

“45. ……………….The said clause provides that the  provisions of the Indian Arbitration and Conciliation  Act, 1996 shall apply. If the said clause is read in the  ordinary  and  natural  sense,  the  placement  of  the  words  that  "the  Indian  Arbitration  and  Conciliation  Act shall apply" in the last clause 18.3 indicates the  specific intention of the parties to the application of  the Indian Arbitration Act, not only to the Arbitration  Agreement but  also that  the curial  law or the Lex  Arbitri  would  be  the  Indian  Arbitration  Act.  The  application of the Indian Arbitration Act therefore can  be said to permeate clause-18 so that in the instant  case laws (2) and (3) are same if the classification as  made by the learned authors is to be applied. The  reference  to  the Indian Arbitration Act  is  therefore  not merely a clarification as to the proper law of the  arbitration agreement as is sought to be contended  on behalf of the Respondents. It has to be borne in  mind  that  the  parties  are  businessmen and  would  therefore  not  include  words  without  any  intent  or  object behind them. It is in the said context, probably  that  the  parties  have  also  used  the  word  "venue"  rather  than  the  word  "seat"  which  is  usually  the  phrase which is used in the clauses encompassing an  Arbitration Agreement. There is therefore a clear and  unequivocal indication that the parties have agreed  to  abide  by  the  Indian  Arbitration  Act  at  all  the  stages, and therefore, the logical consequence of the  same would be that in choosing London as the venue  the  parties  have  chosen  it  only  as  a  place  of  arbitration and not the seat of arbitration which is a  juristic concept.”

131.This  conclusion is  reiterated in Paragraph 46 in the  

following words:-

“46.  The  proposition  that  when  a  choice  of  a  particular  law is  made,  the  said  choice  cannot  be  

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restricted to only a part of the Act or the substantive  provision of that Act only. The choice is in respect of  all  the substantive and curial  law provisions of the  Act. The said proposition has been settled by judicial  pronouncements in the recent past…….”

132.Having  said  so,  learned  Judge  further  observes  as  

follows:-

“49. Though  in  terms  of  interpretation  of  Clause  18.3, this Court has reached a conclusion that the lex  arbitri  would  be  the  Indian  Arbitration  Act.  The  question would be, whether the Indian Courts would  have exclusive jurisdiction. The nexus between the  "seat"  or  the  "place"  of  arbitration  vis-à-vis  the  procedural law i.e. the lex arbitri  is well  settled by  the  judicial  pronouncements  which  have  been  referred  to  in  the  earlier  part  of  this  judgment.  A  useful reference could also be made to the learned  authors  Redfern  and  Hunter  who  have  stated  thus :-

“the place or  seat of the arbitration is not  merely  a  matter  of  geography.  It  is  the  territorial link between the arbitration itself  and  the  law  of  the  place  in  which  that  arbitration is legally situated....”

The choice of  seat also has the effect of conferring  exclusive jurisdiction to the Courts wherein the seat  is situated.”  

Here the Bombay High Court accepts that the seat carries with  

it,  usually,  the  notion  of  exercising  jurisdiction  of  the  Courts  

where the seat is located.  

133.Having said so, the High Court examines the question  

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whether the English Courts can exercise jurisdictions in  

support of arbitration between the parties, in view of  

London being the  venue  for the arbitration meetings.  

In  answering  the  aforesaid  question,  the  High  Court  

proceeds  on  the  basis  that  there  is  no  agreement  

between  the  parties  as  regards  the  seat  of  the  

arbitration, having concluded in the earlier part of the  

judgment that the parties have intended the seat to be  

in India.  This conclusion of the High Court is contrary  

to the observations made in Shashoua (supra) which  

have been approvingly quoted by this Court in Balco in  

(Paragraph 110).  On the facts of the case, the Court  

held that the seat of the arbitration was in England and  

accordingly entertained the challenge to the award.

134.In  A Vs. B38  again the Court of Appeal in England  

observed that:-

“…..an agreement as to the seat of an arbitration is   analogous  to  an  exclusive  jurisdiction  clause.  Any  claim  for  a  remedy……as  to  the  validity  of  an   existing interim or final award is agreed to be made   only in the courts of the place designated as the seat   of arbitration.”  

                                         (emphasis supplied)

38 [2007] 1 Lloyds Report 237 118

Page 119

135. In  our  opinion,  the  conclusion  reached  by  Justice  

Savant  that  the  Courts  in  England  would  have  

concurrent  jurisdiction  runs  counter  to  the  settled  

position of law in India as well as in England and is,  

therefore, not sustainable. The Courts in England have  

time and again reiterated that an agreement as to the  

seat is analogous to an exclusive jurisdiction clause.  

This  agreement  of  the  parties  would  include  the  

determination by the court as to the intention of the  

parties.  In  the present case, Savant,  J.  having fixed  

the  seat in India erred in holding that the courts in  

India  and  England  would  exercise  concurrent  

jurisdiction. The natural forum for all remedies, in the  

facts of the present case, is only India.         

Issue (vii)/Re: Anti-Suit Injunction:

136.Having held that  the Courts  in England would have  

concurrent jurisdiction, the Bombay High Court on the  

basis thereof concludes as follows:-

“In  view  of  the  conclusion  that  this  Court  has  reached, namely that the English Courts would have  concurrent  jurisdiction  to  act  in  support  of  arbitration, the case of the Appellants for an anti suit  

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injunction does not stand to scrutiny. However, in so  far  as  the  aspect  of  forum  non-conveniens  is  concerned,  in  my  view,  since  the  Appellants  have  agreed to London as the  venue for arbitration, they  cannot  be  heard  to  complain  that  the  Courts  at  London  are  forum  non-conveniens  for  them.  The  Appellants  have  appeared  before  the  said  Courts,  and therefore, the case of forum non- conveniens is  bereft of any merit.”

137.The aforesaid conclusion again ignores the principle  

laid  down  by  this  Court  in  Oil  &  Natural  Gas  

Commission Vs.  Western  Company  of  North  

America (supra), wherein it is held as follows:-

“As per the contract, while the parties are governed  by the Indian Arbitration Act and the Indian Courts  have the exclusive jurisdiction to affirm or set aside  the  award  under  the  said  Act,  the Respondent  is  seeking to violate the very arbitration clause on the  basis  of  which  the  award  have  been  obtained  by  seeking confirmation of the award in the New York  Court under the American Law. This amounts to an  improper  use  of  the  forum  in  American  (sic) in  violation  of  the  stipulation  to  be  governed  by  the  Indian law, which by necessary implication means a  stipulation  to  exclude  the  USA  Court  to  seek  an  affirmation  and  to  seek  it  only  under  the  Indian  Arbitration Act from an Indian Court. If the restraint  order  is  not  granted,  serious  prejudice  would  be  occasioned and a party violating the very arbitration  clause on the basis of which the award has come into  existence will  have secured an order enforcing the  order from a foreign court in violation of that very  clause..”

138.Again in the case of  Modi Entertainment Network  

& Anr. (supra), it was held that :- 120

Page 121

“24(1).  In exercising discretion to grant an anti-suit  injunction the court must be satisfied of the following  aspects:  (a) the defendant, against whom injunction  is sought, is amenable to the personal jurisdiction of  the court;  (b) if the injunction is declined, the ends  of  justice  will  be  defeated  and  injustice  will  be  perpetuated; and  (c) the  principle  of  comity  —  respect for the court in which the commencement or  continuance  of  action/proceeding  is  sought  to  be  restrained — must be borne in mind.”

139.In Paragraph 24(2) of the same decision, this Court  

further observed that :-

“24(2). In a case where more forums than one are  available,  the  court  in  exercise  of  its  discretion  to  grant anti-suit injunction will examine as to which is  the  appropriate  forum  (forum  conveniens)  having  regard to  the convenience  of  the parties  and may  grant  anti-suit  injunction  in  regard  to  proceedings  which are oppressive or vexatious or in a forum non- conveniens.”

140.Examining these aspects, Eder, J. in fact also came to  

the conclusion that the anti-suit injunction granted by  

the English Court needed at-least to be stayed during  

the pendency of proceedings in India.  The reasons  

given by Eder, J. in support of the conclusions are as  

under:-

“48. Bearing  these general  principles  in  mind and  recognising the permissive nature of CPR Part 62.5,  the important point, in my view, is that the claimants  did  not  pursue  their  applications  in  the  original  proceedings that they issued in this court in March  2008.  On  the  contrary,  they  engaged  fully  (albeit  perhaps reluctantly) in the Indian proceedings before  the  Daman court.  When they  lost  at  first  instance  

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before Judge Shinde, they appealed to the DCC with  the result indicated above. That is the choice they  made. Having made that choice and now some years  down the line, it seems to me that the English court  should at least be extremely cautious to intervene at  this  stage and,  in  Mr  Edey QC's  words,  to  "wrest"  back the proceedings to  England.  To do so at this  stage  when  those  proceedings  are,  in  effect,  still  pending would give rise to the "recipe for confusion  and injustice" which Lord Diplock specifically warned  against  in The  Abidin  Daver as  referred  to  in  the  passage of the judgment of Hobhouse J which I have  quoted above. For that reason alone, I have decided  somewhat reluctantly that I should follow the course  suggested by Mr Edey QC ie that these proceedings  should be stayed at least for the time being pending  resolution of the Writ Petitions currently before the  BHC……”

141.It must be noticed that Respondent No. 1 was initially  

having 51 per cent shareholding of the Appellant No.1  

company,  which  was  subsequently  increased  to  56  

per  cent.   This  would  be  an  indicator  that  the  

Respondent No. 1 is actively carrying on business at  

Daman.  This Court considered the expression “carries  

on business” as it  occurs  in Section 20 of  the Civil  

Procedure Code in the case of  Dhodha House Vs.  

S.K. Maingi39 and observed as follows:-

“46. The expression “carries on business” and the  expression “personally works for gain” connote two  different  meanings.  For the purpose of carrying on  

39 (2006) 9 SCC 41 122

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business only presence of a man at a place is not  necessary.  Such  business  may  be  carried  on  at  a  place through an agent or a manager or through a  servant.  The owner  may not  even visit  that  place.  The phrase “carries on business” at a certain place  would,  therefore,  mean  having  an  interest  in  a  business at  that  place,  a  voice  in  what  is  done,  a  share in the gain or loss and some control thereover.  The  expression  is  much  wider  than  what  the  expression in normal parlance connotes, because of  the  ambit  of  a  civil  action  within  the  meaning  of  Section 9 of the Code…..”  

142.The fact that Daman trial court has jurisdiction over  

the matter is supported by the judgment of this Court  

in  Harshad Chiman Lal Modi (supra),  which was  

relied upon by Mr.  Nariman.   The following excerpt  

makes it very clear:-

“16………..The  proviso  to  Section  16,  no  doubt,  states  that  though  the  court  cannot,  in  case  of  immovable  property  situate  beyond  jurisdiction,  grant a relief in rem still it can entertain a suit where  relief sought can be obtained through the personal  obedience  of  the  defendant……  The  principle  on  which  the  maxim  was  based  was  that  the  courts  could  grant  relief  in  suits  respecting  immovable  property situate abroad by enforcing their judgments  by  process  in  personam i.e.  by  arrest  of  the  defendant or by attachment of his property.”

143.This  apart,  we  have  earlier  noticed  that  the  main  

contract,  the IPLA is to be performed in India.  The  

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governing  law  of  the  contract  is  the  law  of  India.  

Neither party is English.  One party is Indian, the other  

is German.  The enforcement of the award will be in  

India.  Any interim measures which are to be sought  

against the assets of Appellant No. 1 ought to be in  

India as the assets are situated in India.  We have also  

earlier  noticed  that  Respondent  No.1  has  not  only  

participated in the proceedings in the Daman courts  

and  the  Bombay  High  Court,  but  also  filed  

independent proceedings under the Companies Act at  

Madras  and Delhi.   All  these factors  would  indicate  

that  Respondent  No.1  does  not  even  consider  the  

Indian Courts as forum-non-conveniens. In view of the  

above,  we  are  of  the  considered  opinion  that  the  

objection raised by the Appellants to the continuance  

of the parallel  proceedings in England is not wholly  

without  justification.  The  only  single  factor  which  

prompted  Respondent  No.1  to  pursue  the  action  in  

England  was  that  the  venue  of  the  arbitration  has  

been  fixed  in  London.   The  considerations  for  

designating a convenient venue for arbitration can not  

be understood as conferring concurrent jurisdiction on  

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the English Courts over the arbitration proceedings or  

disputes in general.  Keeping in view the aforesaid, we  

are inclined to restore the anti-suit injunction granted  

by the Daman Trial Court.

144. For the reasons recorded above, Civil Appeal No.2087  

of 2014 @ SLP (C) No.10906 of 2013 is dismissed. The  

findings  recorded  by  the  Appellate  Court  that  the  

parties can proceed to arbitration are affirmed. The  

findings  recorded  by  the  Trial  Court  dismissing  the  

Application under Section 45 are set aside. In other  

words,  the Application filed  by the Respondents  for  

reference of the dispute to arbitration under Section  

45 has been correctly allowed by the Appellate Court  

as well as by the High Court. The findings of the High  

Court  are  affirmed  to  that  extent.  All  the  disputes  

arising between the parties in relation to the following  

agreements  viz.  SHA,  TKHA,  SSHAs  and  STKHA,  

Agreed Principles and IPLA, including the controversy  

as  to  whether  IPLA  is  a  concluded contract  are  

referred to the Arbitral Tribunal for adjudication.  

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145.In the normal circumstances, we would have directed  

the parties to approach the two learned arbitrators,  

namely  Mr.  V.V.  Veeder,  QC  and  Mr.  Justice  B.P.  

Jeevan Reddy to appoint the third arbitrator who shall  

also act as the presiding arbitrator. However, keeping  

in view the peculiar facts and circumstances of this  

case and the inordinate delay which has been caused  

due  to  the  extremely  convoluted  and  complicated  

proceedings indulged in by the parties,  we deem it  

appropriate  to  take  it  upon  ourselves  to  name  the  

third arbitrator. A perusal of the judgment of Eder, J.  

gives  an  indication  that  a  list  of  three  names  was  

provided from which the third arbitrator could possibly  

be appointed. The three names are Lord Hoffmann, Sir  

Simon  Tuckey  and  Sir  Gordon  Langley.  We  hereby  

appoint  Lord  Hoffmann  as  the  third  arbitrator  who  

shall act as the Chairman of the Arbitral Tribunal.

146.  In view of the above, Regular Civil Suit No. 9 of 2008,  

pending  before  the  Court  of  Civil  Judge,  Senior  

Division,  Daman;  and the  Application under  Section  

45 of the Arbitration Act, 1996 filed in the Civil Suit  

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No.2667 of 2007 and Contempt Petition in relation to  

Civil Suit No.2667 of 2007 pending before the Bombay  

High  Court  at  the  instance  of  the  Appellants  are  

stayed. Parties are at liberty to approach the Court for  

the  appropriate  orders,  upon  the  final  award  being  

rendered  by  the  Arbitral  Tribunal.  This  will  not  

preclude the parties from seeking interim measures  

under Section 9 of the Indian Arbitration Act, 1996.    

147. Civil Appeal No.2086 of 2014 @ SLP (C) No.10924 of  

2013 is partly allowed as follows:

a. The conclusion of  the Bombay High Court  that  

the seat of the arbitration is in India is upheld;

b. The  conclusion  that  the  English  Courts  would  

have  concurrent  jurisdiction  is  overruled  and  

consequently set aside;

c. The conclusion of  the Bombay High Court  that  

the  anti-suit  injunction  granted  by  the  Daman  

Trial Court has been correctly vacated by Daman  

Appellate Court is overruled and hence set aside.

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d. Consequently,  the  Respondents  are  restrained  

from  proceeding  with  any  of  the  actions  the  

details of which have been given in the judgment  

of Eder, J. dated 23rd March, 2012 and the order  

dated 27th March, 2012 as well as the judgment  

of  Justice  Cooke  dated  30th November,  2012.  

These matters include:

All  or  any  of  the  proceedings/  applications/  

reliefs  claimed  by  the  Respondents  in  the  

Arbitration Claim 2011 Folio 1399, including but  

not limited to:               

(1) Application under Section 18 of the English  

Arbitration Act, 1996;  

(2)  Injunctions  pursuant  to  Section  44  of  the  

English Arbitration Act, 1996 and /or Section 37  

of the Senior Courts Act, 1981.

The Respondents are also restrained from  

approaching the English Courts for seeking any  

declaration/relief/clarification and/or to institute  

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any proceedings that may result in delaying or  

otherwise affect the constitution of the arbitral  

tribunal and its proceedings thereafter.  

148. In  view  of  the  above,  the  parties  are  directed  to  

proceed to arbitration in accordance with law.   

………………………………..J. [Surinder Singh Nijjar]  

……..…………………………………J. (Fakkir Mohamed Ibrahim  

Kalifulla] New Delhi February 14, 2014.

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