REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.7562    OF 2011 (Arising out of SLP(C) No.25624 of 2010)

YOGRAJ INFRASTRUCTURE LTD. … APPELLANT   

Vs.

SSANG YONG ENGINEERING AND  CONSTRUCTION CO. LTD.  … RESPONDENT

J U D G M E N T

ALTAMAS KABIR, J.

1. Leave granted.

2. The Appellant is a company incorporated under  

the Companies Act, 1956, while the Respondent is a

company incorporated under the laws of the Republic  

of Korea with its registered office at Seoul in  

Korea and its project office at New Delhi.

3. On  12th April,  2006,  the  National  Highways  

Authority  of  India,  New  Delhi  (NHAI)  awarded  a  

contract to the Respondent, SSang Yong Engineering  

and Construction Co. Ltd., hereinafter referred to  

as  “SSY”,  for  the  National  Highways,  Sector  II  

Project,  Package:  ABD-II/C-8,  for  upgradation  to  

Four Laning of Jhansi-Lakhnadon Section, KM 297 to  

KM 351 of NH 26 in the State of Madhya Pradesh.  

The  total  contract  amount  was  2,19,01,16,805/-.  

On  13th August,  2006,  SSY  entered  into  a  Sub-

Contract with the Appellant Company for carrying  

out the work in question.  The Work Order of the  

entire project was granted to the Appellant by the  

Respondent on back-to-back basis.  Clause 13 of the  

Agreement entered into between the Respondent and  

the Appellant provided that 92% of all payments for  

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the work done received by the Respondent from NHAI,  

would be passed on to the Appellant.  Clauses 27  

and 28 provided for arbitration and the governing  

law agreed to was the Arbitration and Conciliation  

Act, 1996.  On 31st October, 2006, the Appellant  

furnished  a  Performance  Bank  Guarantee  for   

6,05,00,000/-  to  the  Respondent  and  it  also  

invested about 88.15 crores in the project.  Three  

more Bank Guarantees, totaling 5,00,00,000/-, for  

release of mobilization advance were also furnished  

by  the  Appellant  on  29th May,  2009.   On  22nd  

September, 2009, the Respondent Company issued a  

notice of termination of the Agreement, inter alia,  

on the ground of delay in performing the work under  

the Agreement.

4. On account of the above, the Appellant filed an  

application before the District and Sessions Judge,  

Narsinghpur, Madhya Pradesh, under Section 9 of the  

Arbitration and Conciliation Act, 1996, praying for  

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interim  reliefs.   A  similar  application  under  

Section  9  of  the  above  Act  was  filed  by  the  

Appellant before the same Court on 30th December,  

2009, also for interim reliefs.  Ultimately, on 20th  

May,  2010,  the  dispute  between  the  parties  was  

referred to arbitration in terms of the Agreement  

and  a  Sole  Arbitrator,  Mr.  G.R.  Easton,  was  

appointed  by  the  Singapore  International  

Arbitration Centre on 20th May, 2010.  On 4th June,  

2010, the Appellant filed an application before the  

Sole Arbitrator under Section 17 of the aforesaid  

Act  being  SIAC  Arbitration  No.37  of  2010,  inter  

alia, for the following reliefs :

“a. restrain  the  SSY  from  encashing  Performance  Bank  Guarantee  No.101BGPGO63040001 dated 31.10.06 of  Syndicate Bank, Nehru Place, Delhi of  6.05 crores;

b. restrain the SSY from enchashing three  Bank Guarantees furnished towards the  mobilization  advance  bearing  numbers  101 BGFG 091490001 of  1 Crore, 101  BGFG  091490002  of  1  Crore  and  101  

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BGFG 091490003 of 3 Crores, totaling  to 5 Crores;

c. direct  SSY  to  release  a  sum  of   144,42,25,884/-  along  with  the  interest  @  36%  till  realization  of  nationalized  bank  of  India  for  the  aforesaid  amount  and  keep  it  alive  till passing of the final Award.

d. restrain SSY from removing, shifting,  alienating  or  transferring  in  any  manner either itself or through any of  its  agents/employees,  the  plant,  machineries, equipments, vehicles and  materials,  in  other  words  maintain  status-quo,  till  the  passing  of  the  final arbitral award;

e. grant  any  other  appropriate  interim  measures  of  protection  in  favour  of  the Cross-Claimant/applicant, which in  the esteemed opinion of this Hon’ble  Tribunal are just and proper in the  facts and circumstance of the case;”

5. The Respondent also filed an application under  

Section  17  of  the  above  Act  before  the  Sole  

Arbitrator on 5th June, 2010, for interim reliefs.  

After  considering  both  the  applications,  the  

Arbitrator  passed  an  interim  order  on  29th June,  

2010, in the following manner :

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“1. The  respondent  is  to  immediately  release,  for  use  by  the  Claimant,  the  items  of  plant,  machinery  and  equipment  (PME)  numbered  1,5,7,8,10,19,20,21,22,23  and 32, as listed in Annexure A (Machinery  Details)  of  the  Claimant’s  Application  dated 5 June 2010.

2. The  respondent  is  restrained  from  creating any third party interest in, or  otherwise  selling,  leasing  or  charging,  the PME or other assets presently located  at the work site and/or the camp site and  which are owned by the respondent, without  the permission of this Tribunal.

3(i). The claimant is permitted to use  the aggregates, which have been identified  in  Annexure  D  (engineer’s  Statement  of  Materials at Site for September 2009) of  the  Claimant’s  Application  dated  5  June  2010 as a total quantity of 274,580 cubic  metres, for the carrying out of the works  in  accordance  with  the  terms  and  conditions of the Main Agreement and the  Agreement  dated  13  August,  2006  between  the parties.

3(ii) The  respondent  is  to  give  the  Claimant  access  to  the  aggregate  stockpiles  where  the  abovementioned  quantity of material is currently held.

The above interim orders are made with the  objective  of  enabling  the  construction  work on the project to continue while the  disputes between the parties are resolved  in  these  arbitration  proceedings  (ref.  Terms or Reference dated 23 June 2010).

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The parties have liberty at short notice,  if  any  of  the  above  directions  require  clarification  or  amendment  in  order  to  ensure proper implementation.

The  respondent  has  leave  (until  6  July  2010)  to  make  a  further  application  for  the provision of security by the claimant  in relation to the PME and aggregates.”    

6. Aggrieved by the aforesaid interim order passed  

by the learned Arbitrator, the Appellant herein,  

which  was  the  respondent  before  the  learned  

Arbitrator, filed Appeal No.2 of 2010 on 2nd July,  

2010  before  the  learned  District  Judge,  

Narsinghpur,  under  Section  37(2)(b)  of  the  

Arbitration and Conciliation Act, 1996, for setting  

aside the same.  On behalf of the respondent it was  

contended in the said appeal that the same was not  

maintainable  before  the  learned  District  Judge,  

Narsinghpur,  since  the  seat  of  the  arbitration  

proceedings  was  in  Singapore  and  the  said  

proceedings were governed by the laws of Singapore.  

Accepting the submissions advanced on behalf of the  

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respondent,  the  learned  District  Judge  dismissed  

the appeal as not maintainable on 23rd July, 2010,  

without deciding the matter on merits.

7. The appellant then moved Civil Revision No.304  

of 2010, before the High Court on 26th July, 2010.  

The same was dismissed by the High Court on 31st  

August,  2010,  against  which  the  Special  Leave  

Petition (now appeal) has been filed.

8. Appearing for the Company, Ms. Indu Malhotra,  

learned Senior Advocate, submitted that the stand  

taken on behalf of the respondent that the PMEs had  

to remain on site even in case of termination of  

the Agreement, was without any basis, since after  

the Agreement dated 13th August, 2006, the parties  

had agreed in the Meeting held on 23rd September,  

2006 that in case of termination of the Agreement  

between the parties, the respondent would transfer  

the PMEs to the appellant.  Ms. Malhotra further  

clarified that Clause 4 of the Agreement related  

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only to the PMEs and not to the aggregates, since  

it had been admitted by the respondent that in case  

the  aggregates  were  not  made  available  to  them,  

they could buy the same from the open market.  It  

was  further  clarified  that  there  were  only  two  

machines  out  of  35  machines  which  formed  the  

subject matter of the interim application, i.e.,  

Hotmix  Plant  and  Crusher,  which  were  in  the  

possession of the appellant and the value thereof  

would be approximately 7 crores and a sum of 7.20  

crores had already been deducted by the respondent  

towards the repayment of the Arab Bank Loan for the  

said  PMEs.   Ms.  Malhotra  submitted  that  it  was  

incorrect  to  say  that  the  Project  was  stopped  

because of the Stay Order passed by this Court as  

the respondent had further subcontracted the work  

to Khara and Tarakunde Infrastructure Pvt. Ltd.,  

Ramdin  Ultratech  Pvt.  Ltd.  and  others.   Ms.  

Malhotra contended that apart from the Hotmix Plant  

and Crusher all the remaining PMEs had been removed  

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by the respondent after the passing of the order  

29th June, 2010.

9. On  the  question  of  the  applicable  law  in  

respect of the arbitral proceedings, Ms. Malhotra  

contended  that  the  Arbitration  and  Conciliation  

Act, 1996, enacted in India is the applicable law  

of  arbitration.   Ms.  Malhotra  submitted  that  in  

terms  of  the  Agreement  arrived  at  between  the  

parties, it is only the Indian laws to which the  

Agreement would be subjected.  She pointed out that  

Clause  28  of  the  Agreement  provides  that  the  

Agreement would be subject to the laws of India and  

that  during  the  period  of  arbitration,  the  

performance of the Agreement would be carried out  

without  interruption  and  in  accordance  with  its  

terms  and  provisions.   Accordingly,  having  

explicitly  agreed  that  the  Agreement  would  be  

subject  to  the  laws  of  India,  from  the  very  

commencement  of  the  arbitration  till  its  

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conclusion, the law applicable to the arbitration  

would  be  the  Indian  law.   In  other  words,  all  

interim  measures  sought  to  be  enforced  would  

necessarily have to be in accordance with Sections  

9 and 37(2)(b) of the 1996 Act.   

10. Ms. Malhotra submitted that Clause 27.1, which  

forms part of Clause 27 of the agreement, which is  

the  arbitration  clause,  provides  that  the  

proceedings of arbitration shall be conducted in  

accordance with the SIAC Rules.  In other words,  

the provisions of SIAC Rules would apply only to  

the  arbitration  proceedings,  but  not  to  appeals  

from such proceedings.  Ms. Malhotra submitted that  

the right to appeal from an interim order under  

Section 37(2)(b) is a substantive right provided  

under the 1996 Act and was not governed by the SIAC  

Rules.   

11. Ms. Malhotra also urged that Rule 1.1 of the  

SIAC Rules, which, inter alia, provides that where  

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the parties agreed to refer their disputes to the  

SIAC for arbitration, it would be deemed that the  

parties had agreed that such arbitration would be  

conducted in accordance with the SIAC Rules.  If,  

however, any of the SIAC Rules was in conflict with  

a  mandatory  provision  of  the  applicable  law  of  

arbitration  from  which  the  parties  could  not  

derogate, that provision from the applicable law of  

the  arbitration  shall  prevail.   Ms.  Malhotra  

submitted that Rule 32 of the SIAC Rules is one of  

such  Rules  which  provides  that  if  the  seat  of  

arbitration is Singapore, then the applicable law  

of  arbitration  under  the  Rules  would  be  the  

International Arbitration Act, 2002, of Singapore.  

However, Section 37(2)(b) of the 1996 Act being a  

substantive and non-derogable provision, providing  

a right of appeal to parties from a denial of an  

interim  measure,  such  a  provision  protects  the  

interest  of  parties  during  the  continuance  of  

arbitration and as a consequence, Rule 32 of the  

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SIAC Rules which does not provide for an appeal, is  

in direct conflict with a mandatory non-derogable  

provision contained in Section 37(2)(b) of the 1996  

Act.

12. Ms. Malhotra then went on to submit that Part I  

of the 1996 Act had not been excluded by Clause 27  

of the Agreement and the 1996 Act would, therefore,  

apply  to  the  said  Agreement.   Ms.  Malhotra  

submitted that in the decision of this Court in  

Bhatia International Vs. Bulk Trading S.A. [(2002)  

4 SCC 105], which was reiterated in Venture Global  

Engg. Vs.  Satyam Computer Services Ltd. [(2008) 4  

SCC 190] and  Citation Infowares Ltd. Vs.  Equinox  

Corporation [(2009) 7 SCC 220], it has been clearly  

held that where the operation of Part I of the 1996  

Act is not expressly excluded by the arbitration  

clause, the said Act would apply.  In any event, in  

the  instant  case,  Clause  28  of  the  Agreement  

expressly  provides  that  the  Agreement  would  be  

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subject to the laws of India and that during the  

period of arbitration the parties to the Agreement  

would carry on in accordance with the terms and  

conditions  contained  therein.   Accordingly,  on  

account of the application of Part I of the 1996  

Act,  the  International  Arbitration  Act,  2002  of  

Singapore would have no application to the facts of  

this case, though, the conduct of the proceedings  

of arbitration would be governed by the SIAC Rules.  

13. Ms.  Malhotra  urged  that  the  High  Court  had  

erred in coming to the conclusion that since under  

Clause 27 of the Agreement, the parties had agreed  

that the arbitral proceedings would be conducted in  

accordance with the SIAC Rules and by virtue of  

Rule  32  thereof,  the  jurisdiction  of  the  Indian  

Courts stood ousted.  Ms. Malhotra urged that the  

High Court had failed to appreciate the provisions  

of Clause 28 of the Agreement while arriving at  

such  a  conclusion.   Ms.  Malhotra  reiterated  her  

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earlier submissions that Rule 32 of the SIAC Rules  

is subject to Rule 1.1 thereof which provides that  

if any of the said Rules was in conflict with the  

mandatory provision of the applicable law of the  

arbitration,  from  which  the  parties  could  not  

derogate,  that  provision  shall  prevail.   Ms.  

Malhotra  submitted  that  the  finding  of  the  High  

Court being contrary to the provisions agreed upon  

by the parties, such finding was liable to be set  

aside.  Ms. Malhotra submitted that the very fact  

that the respondents had approached the District  

Court,  Narsinghpur,  in  India  and  had  filed  an  

application  under  Section  9  of  the  1996  Act  

therein,  indicated  that  the  respondent  also  

accepted the applicability of the 1996 Act.  Ms.  

Malhotra pointed out that in the application the  

respondent has indicated as follows :

“That,  the  work  of  Contract,  which  was  executed  between  the  petitioner  and  respondent is well within the jurisdiction  of  this  Hon’ble  Court  at  Narsinghpur.  

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Thus, this Hon’ble Court has jurisdiction  to pass an order on this application under  Section  9  of  the  Arbitration  and  Conciliation Act, 1996.”  

14. Ms.  Malhotra  urged  that  having  regard  to  

Section 42 of the 1996 Act, it is in the District  

Court of Narsinghpur where the application under  

Section 9 of the Arbitration and Conciliation Act,  

has  been  filed  which  has  jurisdiction  over  the  

arbitral proceedings at all stages.  Ms. Malhotra  

pointed  out  that  the  High  Court  had  erroneously  

held  that  Section  42  was  not  applicable  to  an  

appeal  and  was  applicable  only  for  filing  an  

application, without appreciating the wordings of  

Section 42 which provides that Courts shall have  

jurisdiction  over  the  arbitral  proceedings  also.  

Ms. Malhotra urged that with regard to the said  

findings of the High Court, the order impugned was  

liable to be set aside.    

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15. Ms. Malhotra submitted that the stand of the  

respondent  that  in  view  of  clause  27  of  the  

Agreement,  the  law  governing  the  arbitral  

proceedings  would  be  the  SIAC  Rules,  was  not  

tenable, in view of Clause 28 which without any  

ambiguity  provides  that  the  Agreement  would  be  

subject to the laws of India and that during the  

period of arbitration the parties to the Agreement  

would carry on, in accordance with the terms and  

conditions contained therein.  Accordingly, it is  

the Arbitration and Conciliation Act, 1996, which  

would be the proper law or the law governing the  

arbitration.

16. Ms. Malhotra submitted that apparently there  

was a misconception in the minds of the learned  

Judges of the High Court as to the concept of the  

‘proper law’, of the Arbitration Agreement and the  

‘Curial Law’ governing the conduct and procedure of  

the reference.  Ms. Malhotra submitted that while  

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the proper law of the Arbitration Agreement governs  

the law which would be applicable in deciding the  

disputes referred to arbitration, the Curial law is  

the law which governs the procedural aspect of the  

conduct  of  the  arbitration  proceedings.   It  was  

urged that in the instant case while the proper law  

of  the  arbitration  would  be  the  Arbitration  and  

Conciliation Act, 1996, the Curial law would be the  

SIAC  Rules  of  Singapore.  Ms.  Malhotra  submitted  

that the said difference in the two concepts had  

been considered by this Court in  Sumitomo  Heavy  

Industries Ltd. Vs.  ONGC [(1998) 1 SCC 305] and  

NTPC Vs.  Singer [(1992) 3 SCC 551], in which the  

question for decision was what would be the law  

governing the arbitration when the proper law of  

the contract and the Curial law were agreed upon  

between the parties.  In the said cases this Court  

observed that in many circumstances the applicable  

law  would be the same as that of the proper law of  

contract  and  the  Curial  law,  but  it  was  not  

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uncommon to encounter the incumbent Curial law in  

cases where the parties had made an express choice  

of  arbitration  in  a  jurisdiction  which  was  

different  from  the  jurisdiction  with  which  the  

contract had the closest real connection.

17. Ms. Malhotra submitted that in the absence  

of  any  express  choice,  the  proper  law  of  the  

contract would be the proper law of the Arbitration  

Agreement.  Ms.  Malhotra  submitted  that  in  the  

instant case, admittedly the proper law of contract  

is the law of India and since the parties have not  

expressly  made  any  choice  regarding  the  law  

governing the Arbitration Agreement, the proper law  

of  contract,  namely,  the  Arbitration  and  

Conciliation Act, 1996, would be the proper law of  

the Arbitration Agreement. Ms. Malhotra urged that  

ultimately  the  right  to  appeal  which  is  a  

substantive  right  under  the  1996  Act  would  be  

governed  by the said Act and the instant appeal,  

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is therefore, liable to be allowed, and the order  

of  the  High  Court,  impugned  in  the  appeal,  was  

liable to be set aside.

18. Within  the  fact  situation  indicated  on  

behalf of the appellant, Mr. Dharmendra Rautray,  

learned  Advocate,  appearing  for  the  respondent  

Company, submitted that the issues involved in the  

present appeal were (i) whether the Indian Courts  

would  have  jurisdiction  to  entertain  an  appeal  

under  Section  37  of  the  Arbitration  and  

Conciliation Act, 1996, against an interim order  

passed by the Arbitral Tribunal with its seat in  

Singapore;  (ii) Whether the “law of arbitration”  

would be the International Arbitration Act, 2002,  

of Singapore; and (iii) whether the “Curial law”  

would be the laws of Singapore?

19. Mr. Rautray submitted that apparently on the  

alleged failure of the appellant to complete the  

work  awarded  under  the  contract  within  the  

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stipulated period of 30 months from the date of  

commencement  of  the  work,  the  respondent  had  to  

give  an  undertaking  to  the  National  Highways  

Authority  of  India  by  way  of  a  Supplementary  

Agreement dated 11th February, 2009, to achieve a  

monthly rate of progress of work, failing which the  

aforesaid authority would be entitled to exercise  

all its rights under the main agreement and even to  

terminate  the  same  with  immediate  effect.   Mr.  

Routray submitted that on account of the failure of  

the appellant to live up to its commitments, the  

respondent who had suffered heavy financial loss  

and  damages  on  account  of  such  breach,  issued  

notice  of  termination  on  22nd September,  2009,  

pursuant to Clause 23.2 of the Agreement.

20. Thereafter, the parties entered into settlement  

talks,  as  provided  for  in  Clause  26  of  the  

Agreement  and  signed  the  minutes  of  the  meeting  

dated 28th September, 2009.  The settlement talks  

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between  the  parties  having  failed,  the  

respondent/claimant,  invoked  Clause  27  of  the  

Agreement  for  reference  of  the  disputes  to  

arbitration  in  accordance  with  the  Singapore  

International  Arbitration  Centre  Rules  (SIAC  

Rules).  The respondent/claimant filed a Statement  

of  Claim  on  16th August,  2010,  before  the  Sole  

Arbitrator, Mr. Graham Easton, claiming a sum of  

221,36,91,097/- crores from the appellant.  Both  

the parties filed applications before the learned  

Arbitrator seeking interim relief under Rule 24 of  

the  SIAC  Rules  on  5th June,  2010.  In  their  

application for interim relief under Rule 24 of the  

SIAC Rules, the respondent, inter alia, prayed for  

release of all plants, machineries and equipment  

belonging to the respondent; injunction against the  

appellant  from  removing  all  plants,  machineries,  

equipment,  materials,  aggregates,  etc.,  owned  by  

the respondent from the work site and/or camp site;  

a  restraint  order  against  the  appellant  from  

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creating  any  third  party  interest  or  otherwise  

sell,  lease,  charge  the  plants,  machineries,  

equipment, materials, etc., at the work site and/or  

camp site and to permit the respondent to use the  

PMEs and materials, aggregates, etc., for carrying  

out  the  works  in  accordance  with  the  terms  and  

conditions  of  the  main  Agreement  and  the  

Supplementary Agreement dated 13th August, 2006.

21. The Sole Arbitrator appointed by the SIAC by  

its  order  dated  29th June,  2010,  directed  the  

appellant to,  inter alia, release for use by the  

respondent all plants and equipment.  The appellant  

was also restrained from creating any third party  

interest, or otherwise to deal with the properties  

at the work site and/or camp site and permit the  

respondent  to  use  the  aggregates  of  a  total  

quantity of 27,580 cubic metres for carrying out  

the works.  The Sole Arbitrator, while dealing with  

the applications filed by both the parties under  

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Rule 24 of the SIAC Rules, also recorded that the  

interim orders were being made with the object of  

allowing the construction work on the project to  

continue while the dispute between the parties were  

resolved in these arbitration proceedings and in  

order to ensure that the progress of the project  

was not hampered, while the parties waited for the  

outcome of the arbitration proceedings.

22. Mr. Routray submitted that the appeal filed  

by  the  appellant  before  the  District  Court,  

Narasinghpur, under Section 37 of the Arbitration  

and  Conciliation  Act,  1996,  against  the  

abovementioned  order  of  the  learned  Arbitrator  

dated 29th June, 2010, was dismissed on 23rd July,  

2010, on the ground of maintainability and lack of  

jurisdiction.  The Civil Revision filed against the  

said order was dismissed by the Madhya Pradesh High  

Court by its order dated 31st August, 2010.  While  

dismissing  the  Revision,  the  High  Court,  inter  

24

alia,  observed  that  under  Clause  27.1  of  the  

Agreement, the parties had agreed to resolve their  

dispute under the provisions of SIAC Rules which  

expressly or, in any case, impliedly also adopted  

Rule  32  of  the  said  Rules  which  categorically  

indicates  that  the  law  of  arbitration  under  the  

said Rules would be the International Arbitration  

Act,  2002,  of  Singapore.   The  Special  Leave  

Petition, out of which the present appeal arises,  

has been filed by the appellant against the said  

order dated 31st August, 2010.

23. Mr.  Routray  further  submitted  that  the  

parties had,  inter alia, agreed that the seat of  

arbitration  would  be  Singapore  and  that  the  

arbitration  proceedings  would  be  continued  in  

accordance with the SIAC Rules, as per Clause 27.1  

of the Agreement.  It was also agreed that the  

proper  law  of  the  agreement/contract  dated  13th  

August,  2006,  between  the  appellant  and  the  

25

respondent would be the Indian law and the proper  

law of the arbitration would be the Singapore law.

24. Mr.  Routray  submitted  that  an  application  

under Section 9 of the 1996 Act was filed before  

the District Court on 30th December, 2009, prior to  

the  date  of  invocation  of  the  arbitration  

proceedings and before the Curial law, i.e., the  

Singapore  law,  became  operative.   On  the  said  

application, the District Judge by his order dated  

10th March, 2010, directed the applicant to submit  

its case before the Arbitrator at Singapore.  Mr.  

Routray pointed out that in the present case, the  

parties had expressly chosen the applicable laws to  

each  legal  disposition  while  entering  into  the  

Agreement  dated  13th August,  2006.   Mr.  Routray  

submitted  that  the  parties  had  expressly  agreed  

that the proper law of the contract would be the  

Indian Law, the proper law of the arbitration would  

be  the  Singapore  International  Arbitration  Act,  

26

2002 and the Curial law would be Singapore law,  

since  the  seat  of  arbitration  was  in  Singapore.  

Mr.  Routray  submitted  that  as  observed  by  this  

Court in  Sumitomo Heavy Industries Ltd. Vs.  ONGC  

Ltd. & Ors. [(1998) 1 SCC 305], the Curial law,  

besides  determining  the  procedural  powers  and  

duties  of  the  Arbitrators,  would  also  determine  

what  judicial  remedies  are  available  to  the  

parties, who wished to apply for security for costs  

or for discovery or who wished to challenge the  

Award once it had been rendered and before it was  

enforced.  

25. As  to  the  filing  of  Application  under  

Section  9  by  the  appellant  before  the  District  

Court at Narsinghpur, Mr. Routray submitted that  

the  High  Court  had  correctly  held  that  the  

proceedings had been initiated by the parties in  

the Court of District Judge, Narasinghpur, before  

the matter was referred to the Arbitrator and the  

27

same  was  decided  taking  into  consideration  such  

circumstances.  However,  once  the  dispute  was  

referred to the Arbitrator, the parties could not  

be permitted to deviate from the express terms of  

the Agreement under which the SIAC Rules came into  

operation.  

26. Mr.  Routray  submitted  that  the  Section  9  

application had been filed before the Curial law  

became  operative  and  in  view  of  the  agreement  

between  the  parties  the  Indian  Arbitration  and  

Conciliation  Act,  1996,  would  not  apply  to  the  

arbitration  proceedings  and  the  same  would  be  

governed by the Singapore laws.   

27. Mr.  Routray  then  proceeded  to  the  next  

important  question  as  to  whether  choice  of  the  

“seat  of  arbitration”  by  the  parties  confers  

exclusive jurisdiction on the Courts of the seat of  

arbitration to entertain matters arising out of the  

contract.  Learned counsel submitted that choice of  

28

the seat of arbitration empowered the courts within  

the  seat  of  arbitration  to  have  supervisory  

jurisdiction over such arbitration.  Mr. Routray  

has referred to various decisions of English Courts  

which had laid down the proposition that even if  

the arbitration was governed by the law of another  

country, it would not entitle the objector to mount  

a challenge to the Award in a country other than  

the seat of arbitration.  It is not necessary to  

refer to the said judgments for a decision in this  

case.

28. Mr. Routray submitted that the decision of this  

Court in  NTPC Vs.  Singer (supra) relates to the  

applicability of the Indian Arbitration Act, 1940,  

and  the  Foreign  Awards  (Recognition  and  

Enforcement) Act, 1961, to a foreign award sought  

to be set aside in India under the provisions of  

the  1940  Act.   It  was  submitted  that  the  said  

decisions have no relevance to the question raised  

29

in the present case which raises the question as to  

whether the Indian Courts would have jurisdiction  

to entertain an appeal under Section 37 of the 1996  

Act  against  an  interim  order  of  the  Arbitral  

Tribunal,  despite  the  parties  having  expressly  

agreed that the seat of arbitration would be in  

Singapore  and  the  Curial  law  of  the  arbitration  

proceedings would be the laws of Singapore.  Once  

again referring to the decision in the  NTPC case,  

Mr. Routray submitted that in paragraph 46 of the  

judgment, this Court had, inter alia, observed that  

Courts  would  give  effect  to  the  choice  of  a  

procedural  law  other  than  the  proper  law  of  

contract only where the parties had agreed that the  

matters  of  procedure  should  be  governed  by  a  

different  system  of  law.   Mr.  Routray  submitted  

that in the above-mentioned case, this Court was  

dealing with a challenge to a “domestic award” and  

not a “foreign award”.  Section 9(b) of the Foreign  

Awards  (Recognition  and  Enforcement)  Act,  1961,  

30

provides that the said Act would not apply to an  

award, although, made outside India, but which is  

governed by the laws of India.  Accordingly, all  

such awards were treated as domestic awards by the  

1961  Act  and  any  challenge  to  the  said  award,  

could,  therefore,  be  brought  only  under  the  

provisions of the 1940 Act.  Mr. Routray further  

submitted that the law of arbitration in the NTPC  

case (supra) was Indian law as opposed to the facts  

of the present case, where the parties had agreed  

that  the  law  of  arbitration  would  be  the  

International Arbitration Act, 2002, of Singapore.

29. Mr. Routray urged that by virtue of Clause 27  

of the Agreement dated 13th August, 2006, and by  

accepting the SIAC Rules, the parties had agreed  

that  Part  I  of  the  Arbitration  and  Conciliation  

Act,  1996,  would  not  apply  to  the  arbitration  

proceedings taking place in Singapore.  According  

to Mr. Routray, the said decision was reiterated in  

31

the  Terms  of  Reference  that  the  arbitration  

proceedings  would  be  governed  by  the  laws  of  

Singapore.  Mr. Routray further urged that even in  

the decision relied upon by the appellant in the  

case of  Bhatia International, this Court had held  

that  parties  by  agreement,  express  or  implied,  

could exclude all or any of the provisions of Part  

I  of  the  1996  Act.   Consequently,  in  Bhatia  

International this Court had held that exclusion of  

Part I of the 1996 Act could be by virtue of the  

Rules  chosen  by  the  parties  to  govern  the  

arbitration proceedings.   

30. As far as applicability of Section 42 of the  

1996 Act is concerned, the Jabalpur Bench of the  

Madhya Pradesh High Court had held that by express  

agreement parties had ousted the jurisdiction of  

the  Indian  Courts,  while  the  arbitration  

proceedings  were  subsisting.  Accordingly,  the  

jurisdiction  of  the  Indian  Courts  stood  ousted  

32

during  the  subsistence  of  the  arbitration  

proceedings and, accordingly, it is only the laws  

of arbitration as governed by the SIAC Rules which  

would govern the arbitration proceedings along with  

the procedural law, which is the law of Singapore.  

31. In order to appreciate the controversy that has  

arisen  regarding  the  applicability  of  the  

provisions  of  Part  I  of  the  Arbitration  and  

Conciliation Act, 1996, to the proceedings being  

conducted  by  the  Arbitrator  in  Singapore  in  

accordance  with  the  SIAC  Rules,  it  would  be  

necessary  to  look  at  the  arbitration  clause  

contained in the agreement entered into between the  

parties on 13th August, 2006.  Clause 27 of the  

Agreement  provides  for  arbitration  and  reads  as  

follows :

“27.  Arbitration.

27.1  All  disputes,  differences  arising  out of or in connection with the Agreement  shall  be  referred  to  arbitration.   The  

33

arbitration proceedings shall be conducted  in English in Singapore in accordance with  the  Singapore  International  Arbitration  Centre  (SIAC)  Rules  as  in  force  at  the  time of signing of this Agreement.  The  arbitration shall be final and binding.

27.2  The arbitration shall take place in  Singapore  and  be  conducted  in  English  language.  

27.3   None of the Party shall be entitled  to  suspend  the  performance  of  the  Agreement  merely  by  reason  of  a  dispute  and/or a dispute referred to arbitration.”

32. Clause  28  of  the  Agreement  describes  the  

governing law and provides as follows :

“This  agreement  shall  be  subject  to  the  laws  of  India.   During  the  period  of  arbitration,  the  performance  of  this  agreement  shall  be  carried  on  without  interruption  and  in  accordance  with  its  terms and provisions.”

33. As  will  be  seen  from  Clause  27.1,  the  

arbitration  proceedings  are  to  be  conducted  in  

Singapore in accordance with the SIAC Rules as in  

force  at  the  time  of  signing  of  the  agreement.  

There  is,  therefore,  no  ambiguity  that  the  

34

procedural  law  with  regard  to  the  arbitration  

proceedings, is the SIAC Rules.   

34. Clause 27.2 makes it clear that the seat of  

arbitration would be Singapore.  

 35. What we are, therefore, left with to consider  

is the question as to what would be the law on the  

basis whereof the arbitral proceedings were to be  

decided.  In our view, Clause 28 of the Agreement  

provides  the  answer.   As  indicated  hereinabove,  

Clause 28 indicates that the governing law of the  

agreement  would  be  the  law  of  India,  i.e.,  the  

Arbitration  and  Conciliation  Act,  1996.   The  

learned  counsel  for  the  parties  have  quite  

correctly  spelt  out  the  distinction  between  the  

“proper law” of the contract and the “curial law”  

to  determine  the  law  which  is  to  govern  the  

arbitration itself.  While the proper law is the  

law  which  governs  the  agreement  itself,  in  the  

absence of any other stipulation in the arbitration  

35

clause as to which law would apply in respect of  

the arbitral proceedings, it is now well-settled  

that it is the law governing the contract which  

would also be the law applicable to the Arbitral  

Tribunal itself.  Clause 27.1 makes it quite clear  

that the Curial law which regulates the procedure  

to be adopted in conducting the arbitration would  

be  the  SIAC  Rules.   There  is,  therefore,  no  

ambiguity that the SIAC Rules would be the Curial  

law  of  the  arbitration  proceedings.   It  also  

happens  that  the  parties  had  agreed  to  make  

Singapore  the  seat  of  arbitration.  Clause  27.1  

indicates that the arbitration proceedings are to  

be  conducted  in  accordance  with  the  SIAC  Rules.  

The immediate question which, therefore, arises is  

whether in such a case the provisions of Section  

2(2), which indicates that Part I of the above Act  

would apply, where the place of arbitration is in  

India, would be a bar to the invocation of the  

provisions of Sections 34 and 37 of the Act, as far  

36

as  the  present  arbitral  proceedings,  which  are  

being conducted in Singapore, are concerned.  

36. In Bhatia International (supra), wherein while  

considering the applicability of Part I of the 1996  

Act  to  arbitral  proceedings  where  the  seat  of  

arbitration was in India, this Court was of the  

view that Part I of the Act did not automatically  

exclude all foreign arbitral proceedings or awards,  

unless the parties specifically agreed to exclude  

the same.   

37. As has been pointed out by the learned Single  

Judge in the order impugned, the decision in the  

aforesaid case would not have any application to  

the facts of this case, inasmuch as, the parties  

have  categorically  agreed  that  the  arbitration  

proceedings, if any, would be governed by the SIAC  

Rules as the Curial law, which included Rule 32,  

which categorically provides as follows :

37

“Where  the  seat  of  arbitration  is  Singapore,  the  law  of  the  arbitration  under  these  Rules  shall  be  the  International Arbitration Act (Cap. 143A,  2002  Ed,  Statutes  of  the  Republic  of  Singapore)  or  its  modification  or  re- enactment thereof.”

38. Having agreed to the above, it was no longer  

available  to  the  appellant  to  contend  that  the  

“proper law” of the agreement would apply to the  

arbitration proceedings.  The decision in  Bhatia  

International Vs.  Bulk Trading S.A. [(2002) 4 SCC  

105], which was applied subsequently in the case of  

Venture Global Engg. Vs.  Satyam Computer Services  

Ltd. [(2008) 4 SCC 190] and Citation Infowares Ltd.  

Vs.  Equinox Corporation [(2009) 7 SCC 220], would  

have  no  application  once  the  parties  agreed  by  

virtue of Clause 27.1 of the Agreement that the  

arbitration  proceedings  would  be  conducted  in  

Singapore, i.e., the seat of arbitration would be  

in  Singapore,  in  accordance  with  the  Singapore  

International Arbitration Centre Rules as in force  

38

at  the  time  of  signing  of  the  Agreement.   As  

noticed  hereinabove,  Rule  32  of  the  SIAC  Rules  

provides that the law of arbitration would be the  

International Arbitration Act, 2002, where the seat  

of arbitration is in Singapore.  Although, it was  

pointed out on behalf of the appellant that in Rule  

1.1 it had been stated that if any of the SIAC  

Rules was in conflict with the mandatory provision  

of  the  applicable  law  of  the  arbitration,  from  

which  the  parties  could  not  derogate,  the  said  

mandatory provision would prevail, such is not the  

case  as  far  as  the  present  proceedings  are  

concerned.  In the instant case, Section 2(2) of  

the 1996 Act, in fact, indicates that Part I would  

apply only in cases where the seat of arbitration  

is in India.  This Court in  Bhatia International  

(supra), while considering the said provision, held  

that in certain situations the provision of Part I  

of the aforesaid Act would apply even when the seat  

of arbitration was not in India.  In the instant  

39

case, once the parties had specifically agreed that  

the arbitration proceedings would be conducted in  

accordance with the SIAC Rules, which includes Rule  

32, the decision in  Bhatia International and the  

subsequent decisions on the same lines, would no  

longer apply in the instant case where the parties  

had willingly agreed to be governed by the SIAC  

Rules.

39. With regard to the effect of Section 42 of the  

Arbitration and Conciliation Act, 1996, the same,  

in  our  view  was  applicable  at  the  pre-arbitral  

stage,  when  the  Arbitrator  had  not  also  been  

appointed.  Once the Arbitrator was appointed and  

the arbitral proceedings were commenced, the SIAC  

Rules  became  applicable   shutting  out  the  

applicability of Section 42 and  for that matter  

Part I of the 1996 Act, including the right of  

appeal under Section 37 thereof.

40

40. We are not, therefore,  inclined  to interfere  

with the judgment under appeal and the appeal is  

accordingly dismissed and all interim orders are  

vacated.

41. There will be no order as to costs.     

…………………………………………J. (ALTAMAS KABIR)

…………………………………………J. (CYRIAC JOSEPH)

New Delhi Dated:01.09.2011  

41