REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPERAL NO. 4628 OF 2018 [Arising out of SLP (C) No.31356 of 2016]

Union of India        .. Appellant(s)

Versus

Hardy Exploration and Production  (India) INC       .. Respondent(s)

J U D G M E N T

Abhay Manohar Sapre, J.

1) Leave granted.

2) This appeal arises from the final judgment and

order dated 27.07.2016 passed by the High Court of

Delhi at New Delhi in FAO No.59 of 2016 whereby the

Division  Bench  of  the  High  Court  dismissed  the

appeal filed by the Union of India (appellant herein)

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challenging  the  order  dated  09.07.2015  passed  by

the Single Judge in OMP No.693 of 2013 and order

dated 20.01.2016 in Review Petition No.400 of 2015

in OMP No.693 of 2013.  

3) In order to appreciate the controversy involved

in  the  appeal,  few  relevant  facts,  which  lie  in  a

narrow compass, need to be stated hereinbelow.

4) This appeal arises out of the proceedings (OMP

693/2013)  filed  by  the  appellant  (Union  of  India)

against the respondent-Company under Section 34 of

the  Arbitration  and  Conciliation  Act,  1996

(hereinafter  referred  to  as  “the  Act”)  wherein  the

appellant  had  challenged  the  legality,  validity  and

correctness of the award made by the arbitrators in

respondent's favour in one international commercial

arbitration proceeding between the appellant (Union

of India) and the respondent (foreign company).

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5) The  respondent  contested  the  appellant's

application by raising several objections.  One such

preliminary objection, which went to the root of the

application, was in relation to the maintainability of

appellant's application filed under Section 34 of the

Act in Courts in India.

6) According to the respondent, the Indian Courts

have  no  jurisdiction  to  entertain  the  appellant's

application  filed  under  Section  34  of  the  Act  to

challenge the legality and correctness of an award in

question.

7) The  Single  Judge  by  order  dated  09.07.2015

upheld  the  respondent's  preliminary  objection  and

held that keeping in view the terms of the agreement

in question coupled with the law laid down by this

Court  in  several  decisions  governing  the  issues

arising  in  the  case,  Indian  Courts  have  no

jurisdiction to entertain the application filed by the

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appellant under Section 34 of the Act to question the

legality and correctness of the award in question and

accordingly dismissed the appellant's application as

being not maintainable in Indian Courts.  

8) Since the appellant's application was dismissed

on the  ground of  lack of  jurisdiction of  the  Indian

Courts,  the  Single  Judge  did  not  consider  it

necessary to decide the issues arising in the case on

the merits.

9) The appellant (Union of India) felt aggrieved by

the  order  of  the  Single  Judge,  filed  appeal  under

Section 37(2) of the Act before the Division Bench of

the High Court at Delhi.  

10) By  impugned  judgment,  the  Division  Bench

concurred  with  the  reasoning  and  the  conclusion

arrived  at  by  the  Single  Judge  and  held  that  the

Indian Courts have no jurisdiction to entertain the

appellant's application under Section 34 of the Act to

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question  the  legality  of  award  rendered  in

international commercial arbitration proceedings.

11) It is against this order, the Union of India felt

aggrieved and has filed the present appeal by special

leave in this Court.

12) Heard  Mr.  Tushar  Mehta,  learned  Additional

Solicitor General for the appellant and Dr. Abhishek

Manu  Singhvi,  learned  senior  counsel  for  the

respondent.  

13) At  the  outset,  we  may  state  that  Mr.  Tushar

Mehta,  learned  ASG  appearing  for  the  appellant

(Union  of  India)  and  Dr.  Abhishek  Manu  Singhvi

learned senior counsel appearing for the respondent

very  ably  presented  their  respective  arguments  in

support of  their case. The arguments indeed lasted

for few months in intervals with lucidity.  

14) In  their  submissions,  both  the  learned  senior

counsel  argued  on  almost  every  issue,  which  has

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arisen  in  the  appeal  directly,  indirectly  and  even

remotely.

15) Learned  counsel,  in  support  of  their

submissions,  cited  almost  every  decision  of  this

Court including English Courts decisions which dealt

with the subject and the issues arising in this case

and  made  sincere  attempt  to  either  distinguish

or/and place reliance on them to show how and why

these decisions apply to the facts of the case at hand

or how and why they do not apply.

16) Learned  counsel  for  the  parties  mainly  cited

these cases:

Foreign  Cases:  Naviera  Amazonica  Peruana  S.A.

vs. Compania Internacional De Seguros Del Peru

(1988)  (1)  Lloyd's  Law  Reports  116,  Hiscox  vs.

Outhwaite (1992)  1  AC  562,  Union  of  India  vs.

McDonnell  Douglas  Corpn. (1993)  2  Lloyd’s  Law

Rep. 48, C vs. D (2007) EWCA Civ 1282 (CA), C vs. D

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(2008) 1 Lloyd’s Law Rep 239, Braes of Doune Wind

Farm  (Scotland)  Limited  vs.  Alfred  McAlpine

Business Services Limited (2008) EWHC 426 (TCC),

Shashoua and Ors. vs. Sharma (2009) EWHC 957

(Comm.), Sulamerica Cia Nacional De Seguros S.A.

&  Ors.  vs.  Enesa  Engenharia  SA  &  Ors., (2012)

EWCA  Civ  638,  (1)  Enercon  GMBH  (2)  Wobben

Properties GMBH vs.  Enercon (India)  Ltd. (2012)

EWHC 3711 (Comm),  Govt. of  India vs.  Petrocon

India Ltd. (2016) SCC Online MYFC 35.

Indian Cases: National Thermal Power Corporation

vs.  Singer  Co.  And  Ors. (1992)  3  SCC  551,

Sumitomo  Heavy  Industries  Ltd.  vs  ONGC  Ltd.

and Ors. (1998) 1 SCC 305, Sundaram Finance Ltd.

vs.  NEPC  India  Ltd. (1999)  2  SCC  479,  Bhatia

International vs. Bulk Trading S.A. and Anr.(2002)

4 SCC 105, Venture Global Engineering vs. Satyam

Computer Services Ltd. & Anr.  (2008) 4 SCC 190,

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Indtel Technical Services Pvt. Ltd. vs. W.S. Atkins

Rail Ltd., (2008) 10 SCC 308, Bank of India & Anr.

vs.  K.  Mohan  Das  &  Ors., (2009)  5  SCC  313,

Citation Infowares  Ltd.  vs.  Equinox  Corporation

(2009) 7 SCC 220,  State of Rajasthan & Anr. vs.

Ferro  Concrete  Construction  (P)  Ltd. (2009)  12

SCC 1,  Videocon Industries Limited vs. Union of

India  and  Anr. (2011)  6  SCC  161,  Dozco  India

Private  Ltd.  vs.  Doosan  Infracore  Co.  Limited

(2011)  6  SCC 179,  Yograj  Infrastructure  Limited

vs. Ssang Yong Engineering and Construction Co.

Limited (2011)  9  SCC  735,  Bharat  Aluminium

Company  vs.  Kaiser  Aluminium  Technical

Services  INC (2012)  9  SCC  552,  Enercon  (India)

Ltd. & Ors. vs. Enercon GMBH & Anr. (2014) 5 SCC

1,  Reliance Industries Limited and Anr. Union of

India (2014)  7  SCC  603,  Harmony  Innovation

Shipping Ltd.  vs.  Gupta Coal  India Ltd.  & Anr.,

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(2015)  9  SCC  172,  Union  of  India  vs.  Reliance

Industries  and  Ors.(2015)  10  SCC  213,  Bharat

Aluminum  Company  vs.  Kaiser  Aluminum

Technical Services INC (2016) 4 SCC 126,  Eitzen

Bulk  A/S  & Ors.  vs.  Ashapur  Minechem Ltd.  &

Anr. (2016)  11  SCC  508,  Imax  Corporation  vs

E-City Entertainment(India) Pvt. Ltd. (2017) 5 SCC

331, Roger Shashoua and Ors. vs. Mukesh Sharma

& Ors., 2017 (14) SCC 722.

17) The  argument  of  both  the  learned  senior

counsel  mainly  centered  around  to  one  question

which,  in  our  opinion,  does  arise  in  the  appeal,

namely, when the arbitration agreement specify the

“venue”  for  holding  the  arbitration  sittings  by  the

arbitrators but does not specify the “seat”, then on

what basis and by which principle, the parties have

to decide the place of  “seat” which has a material

bearing for determining the applicability of laws of a

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particular  country  for  deciding  the  post  award

arbitration proceedings.

18) Several other ancillary questions connected with

the  main  question  were  also  urged  by  the  learned

senior counsel with the aid of law laid down in the

aforementioned  cases  and  the  terms  of  the

arbitration agreement in question.

19) Learned counsel for the parties also addressed

the Court by pointing out that some decisions which

have bearing over the questions arising in this appeal

have been rendered by the Constitution Bench, some

by  Three  Judge  Bench  and  remaining  by  the  Two

Judge Bench.  

20) One  of  the  arguments  of  Dr.  Singhvi,  learned

senior  counsel  was  that  the  decision  rendered  by

Three Judge Bench in the case of   Sumitomo Heavy

Industries Ltd. vs. ONGC Ltd. & Others (supra)  on

which  great  reliance  was  placed  by  Mr.  Tushar

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Mehta,  learned  ASG  has  lost  its  efficacy,  though

approved by another recent decision of Three Judge

Bench in  Bharat Aluminum Company vs. Kaiser

Aluminum Technical Services INC  (supra), for the

reason  that  it  was  rendered  under  the  Arbitration

Act, 1940 which now stands repealed by Arbitration

Act, 1996 and secondly, it was rendered in relation to

Section  9  of  the  Foreign  Awards  (Recognition  and

Enforcement)  Act,  1961  which  also  now  stands

repealed by 1996 Act.  

21) It was his submission that while approving the

ratio  of  Sumitomo Heavy  Industries  Ltd.  (supra)

these two factors which have some relevance on its

efficacy do not seem to have been examined in the

case of  Bharat Aluminum Company (supra) .  

22) Dr. Singhvi also urged that what is the effect of

UNCITRAL Model Law, when they are made part of

the arbitration agreement for deciding the question of

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“seat” has also not been so far decided in any of the

earlier decisions.

23) In our opinion, though, the question regarding

the  “seat”  and  “venue”  for  holding  arbitration

proceedings  by  the  arbitrators  arising  under  the

Arbitration  Agreement/International  Commercial

Arbitration  Agreement  is  primarily  required  to  be

decided keeping in view the terms of the arbitration

agreement  itself,  but  having regard to  the  law laid

down  by  this  Court  in  several  decisions  by  the

Benches of variable strength as detailed above, and

further taking into consideration the aforementioned

submissions  urged  by  the  learned  counsel  for  the

parties and also keeping in view the issues involved

in the appeal, which frequently arise in  International

Commercial  Arbitration  matters,   we  are  of  the

considered view that this is a fit case to exercise our

power  under Order VI Rule 2 of the Supreme Court

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Rules, 2013 and refer this case (appeal ) to be dealt

with by the larger Bench of this Court for its hearing.

24) It is for this reason, we refrain from recording

our  findings  on  any  of  the  issues  arising  in  the

appeal  and  leave  the  questions/issues  to  be  dealt

with by the appropriate larger Bench.

25) We, accordingly direct the Registry to place the

matter before the Hon'ble the Chief Justice of India

for  constituting  the  appropriate  Bench  for  hearing

and disposal of this appeal.

.………………………………..J (R.K. AGRAWAL)

             ..………………………………J.      (ABHAY MANOHAR SAPRE)

New Delhi, May 01, 2018

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