BGS SGS SOMA JV versus NHPC LTD.

[2019] 17 S.C.R. 742

[2019] 17 S.C.R.

BGS SGS SOMA JV

NHPC LTD.

(Civil Appeal No. 9307 of 2019)

BDECEMBER 10, 2019

[R. F. NARIMAN, ANIRUDDHA BOSE ANDV. RAMASUBRAMANIAN, JJ.]

Arbitration and Conciliation Act, 1996:

Cs. 37 – Appeals under – Against the orders passed inapplications u/s. 151 r/w O. VII r. 10 CPC and u/s. 2(1)(e)(i) ofthe Arbitration and Conciliation Act, 1996, seeking return ofpetition filed u/s. 34 of 1996 Act – Maintainability of – Held:Section 37(1) makes it clear that appeals shall only lie from theorders set out in sub-clause (a), (b) and (c) thereof and no othersD– The refusal to set aside an arbitral award must be under s. 34i.e. after the grounds set out in s. 34 have been applied to thearbitral award in question and after the courts have turned downsuch grounds – In the present case there was no adjudication u/s.34 – Therefore, the appeals filed in the present case do not fallEwithin s. 37 and hence not maintainable.

ss. 20, 31(4), 42 and 2(1)(e) – Juridical seat of arbitralproceedings – What constitutes ‘judicial seat’ of arbitral proceeding– In the facts of the present case whether the ‘seat’ of thearbitration proceedings would be in ‘New Delhi’ or ‘Faridabad’ –FHeld: The moment seat is designated by agreement between theparties, it is akin to an exclusive jurisdiction clause, which wouldthen vest the Courts at the ‘seat’ with exclusive jurisdiction for thepurpose of regulating arbitral proceedings – In order to determinewhether the ‘seat’ of the arbitral proceedings has, infact, beenindicated in the agreement between the parties, it is to be seen thatGwherever there is express designation of ‘venue’ and there is nodesignation of any alternative place as the ‘seat’, combined withsupranational body of rules governing the arbitration, and noother significant contrary indicia, the stated ‘venue’ would beactually the ‘seat’ of the arbitral proceedings – The arbitrationHclause in the present case states that “Arbitration Proceedings shall

be at New Delhi/Faridabad” indicates that the proceedings shallbe held at either of the two places – Both the places have beendesignated as the ‘seat’ of the arbitration proceedings – In all thecases, since the proceedings were finally held at New Delhi andthe awards were signed in New Delhi, would lead to the conclusionthat both the parties have chosen New Delhi as ‘seat’ of arbitrationu/s. 20(1) – Therefore, both parties have chosen that the Court atNew Delhi alone would have exclusive jurisdiction over the arbitralproceedings.

Judgments/Orders:

Interpretation of judgments – Principles – Held: Judgmentsof courts are not to be construed as statutes – They are not to beread as Euclid’s theorems – Observations made therein must be readin the context in which they appear.

Judgment having conflicting portions – Held: judgmentmust be read as whole, so that conflicting parts may beharmonised to reveal the true ratio of the judgment – If harmonisingis not possible, first it should be seen if ratio decidendi can becalled out without the conflicting portion – If not the binding natureof the precedent on the point on which there is conflict injudgment, comes under cloud.

Allowing the appeals, the Court

HELD: 1.1 Given the fact that there is no independentright of appeal under Section 13(1) of the Commercial CourtsAct, 2015, which merely provides the forum of filing appeals, itis the parameters of Section 37 of the Arbitration Act,1996 alonewhich have to be looked at in order to determine whether thepresent appeals were maintainable. [Para 14] [764-C]

1.2 Section 37(1) Arbitration Act makes it clear thatappeals shall only lie from the orders set out in sub-clauses (a),(b) and (c) and from no others. The pigeonhole that the HighCourt in the impugned judgement has chosen to say that theappeals in the present cases were maintainable is sub-clause (c).According to the High Court, even where Section 34application is ordered to be returned to the appropriate Court,such order would amount to an order “refusing to set aside anarbitral award under Section 34”. [Para 14] [764-C-D]

744SUPREME COURT REPORTS

A1.3 Under the proviso to Section 13(1A) of the CommercialCourts Act, 2015, Order XLIII of the CPC is also mentioned.This provision is conspicuous by its absence in Section 37 ofthe Arbitration Act, 1996, which alone can be looked at for thepurpose of filing appeals against orders setting aside, or refusingto set aside awards under Section 34. Also, what is missed byBthe impugned judgment is the words “under Section 34”. Thus,the refusal to set aside an arbitral award must be under Section34, i.e., after the grounds set out in Section 34 have been appliedto the arbitral award in question, and after the Court has turneddown such grounds. Admittedly, on the facts of the present cases,Cthere was no adjudication under Section 34 of the ArbitrationAct, 1996 - all that was done was that the Special CommercialCourt at Gurugram allowed an application filed under Section 151read with Order VII Rule 10 CPC, determining that the SpecialCommercial Court at Gurugram had no jurisdiction to proceedfurther with the Section 34 application, and therefore, suchDapplication would have to be returned to the competent courtsituate at New Delhi. Thus, the appeals filed in the present casedo not fall within Section 37 of the Arbitration Act,1996 and arenot maintainable. [Paras 15-16 and 22] [764-E-G-H; 765-A-B;770-B]

EKandla Export Corporation & Anr. v. M/s OCICorporation & Anr. (2018) 14 SCC 715 : [2018] 1SCR 915 – relied on.

Hamanprit Singh Sidhu v. Arcadia Shares & StockBrokers Pvt. Ltd 2016 234 DLT 30 (DB) ; South DelhiFMunicipalCorporation v. Tech Mahindra EFA (OS)–(Comm.) 3 of 2019 approved.

Antrix Corporation Ltd. v. Devas Multimedia Pvt. Ltd.2018 SCC Online Del 9338 – held per-incuriam.

GMunicipal Corporation of Delhi & Ors. v.International Security & Intelligence Agency Ltd.(2004) 3 SCC 250 : [2003] 1 SCR 951 ; Arcot TextileMills Ltd. v. Regional Provident Fund Commissionerand Ors. (2013) 16 SCC 1 : [2013] 11 SCR 371 ;South Delhi Municipal Corporation v. Tech MahindraHEFA (OS) (Comm.) 3 of 2019 – referred to.

2.1 In the statutory setting under Arbitration Act of 1940,the “place” in which the award is made, is not referred to at all.Given this fact, the “Court” was defined as any Civil Courthaving jurisdiction to decide questions forming the subjectmatter of the reference to arbitration if the same had been thesubject matter of suit. The UNCITRAL Model Law onInternational Commercial Arbitration (as adopted by the UnitedNations Commission on International Trade Law on 21 June1985) was then adopted by this country. The UNCITRAL ModelLaw introduced the concept of “place” or “seat” of the arbitralproceedings. [Paras 28 and 29] [772-F-G]2.2 The Arbitration Act, 1996 repealed the Arbitration Act,1940. As is stated in its preamble, the Arbitration Act, 1996adopted provisions of the UNCITRAL Model Law, as they hadmade significant contribution to the establishment of unifiedlegal frame work for the fair and efficient settlement of disputesarising in international commercial relations. The ArbitrationAct, 1996 refers to “the place” of arbitration and defines ‘Court’,and indicates which Courts have jurisdiction in relation to arbitralproceedings in several sections in Part I. [Paras 30 and 31] [774-A-B]

2.3 The new provisions contained in Sections 20 and 31(4)of the Arbitration Act, 1996 are replication of Articles 20 and31(3) of the UNCITRAL Model Law, in which pride of place isgiven to the juridical seat of the arbitral proceedings. However,the definition of “court” in Section 2(1)(e) of the Arbitration Act,1996 continues the definition contained in the Arbitration Act,1940, but replaces any and every civil court by only the principalcivil court of original jurisdiction in district, and includes theHigh Court in exercise of its ordinary civil jurisdiction. Section42 of the Arbitration Act, 1996 also substantially follows the drillof Section 31(4) of the Arbitration Act, 1940. [Para 33] [775-H;776-A-B]

2.4 Thus, given the new concept of “juridical seat” of thearbitral proceedings, and the importance given by theArbitration Act, 1996 to this “seat”, the arbitral award is nownot only to state its date, but also the place of arbitration asdetermined in accordance with Section 20. However, thedefinition of “Court” contained in Section 2(1)(c) of the

AArbitration Act, 1940, continued as such in the Arbitration Act,1996, though narrowed to mean only principal civil court and theHigh Court in exercise of their original ordinary civil jurisdiction.Thus, the concept of juridical seat of the arbitral proceedingsand its relationship to the jurisdiction of courts which are thento look into matters relating to the arbitral proceedingsBincluding challenges to arbitral awards was unclear, and had tobe developed in accordance with international practice on caseby case basis by this Court. [Para 34] [776-C-D]

2.5 The judgment in *BALCO case would show that whereCparties have selected the seat of arbitration in their agreement,such selection would then amount to an exclusive jurisdictionclause, as the parties have now indicated that the Courts at the“seat” would alone have jurisdiction to entertain challengesagainst the arbitral award which have been made at the seat.The *BALCO judgment when read as whole, applies the conceptDof “seat” which is in Section 20 of the Arbitration Act, 1996, byharmoniously construing Section 20 with Section 2(1)(e), so asto broaden the definition of “court”, and bring within its kencourts of the “seat” of the arbitration. However, this propositionis contradicted when paragraph 96 of the judgment speaks ofEthe concurrent jurisdiction of Courts within whose jurisdictionthe cause of action arises wholly or in part, and Courts withinthe jurisdiction of which the dispute resolution i.e. arbitration,is located. [Paras 40 and 41] [783-H; 784-A-D]

2.6 Judgments of Courts are not to be construed asFstatutes, neither are they to be read as Euclid’s theorems. Allobservations made must be read in the context in which theyappear. In any case, judgment must be read as whole, so thatconflicting parts may be harmonised to reveal the true ratio ofthe judgment. However, if this is not possible, and it is foundGthat the internal conflicts within the judgment cannot beresolved, then the first endeavour that must be made is to seewhether ratio decidendi can be culled out without the conflictingportion. If not, then, the binding nature of the precedent on thepoint on which there is conflict in judgment, comes under aHcloud. [Paras 43 and 45] [785-C; 787-A-B]2.7 If paragraphs 75, 76, 96, 110, 116, 123 and 194 of thejudgment in *BALCO case are read together, what becomes clearis that Section 2(1)(e) has to be construed keeping in viewSection 20 of the ArbitrationAct, 1996, which gives recognitionto party autonomy - the Arbitration Act, 1996 having acceptedthe territoriality principle in Section 2(2), following theUNCITRAL Model Law. The narrow construction of Section2(1)(e) was expressly rejected in *BALCO case. This being so,what has then to be seen is what is the effect Section 20 onSection 2(1)(e) of the Arbitration Act, 1996. [Para 46] [788-A-B]

2.8 In **Indus Mobile Distribution Private Limited case theprovisions of Section 20 were properly analysed in the light ofthe 246[th]Report of the Law Commission of India titled,‘Amendments to the Arbitration and Conciliation Act, 1996’ (i.e.the “Law Commission Report, 2014”), under which Section20(1) and (2) would refer to the “seat” of the arbitration, andSection 20(3) would refer only to the “venue” of the arbitration.Given the fact that when parties, either by agreement or, indefault of there being an agreement, where the arbitral tribunaldetermines particular place as the seat of the arbitration underSection 31(4) of the Arbitration Act, 1996, it becomes clear thatthe par- ties having chosen the seat, or the arbitral tribunalhaving determined the seat, have also chosen the Courts at theseat for the purpose of interim orders and challenges to theaward. [Para 47] [788-C-E]

2.9 The Law Commission Report, 2014 also recommendedan amendment in the definition of “Court” under Section 2(1)(e)of the Arbitration Act, 1996, so that in the case of internationalcommercial arbitrations held in India, the High Court aloneshould be the “Court” for the purposes of the Arbitration Act,1996, even where such High Court does not exercise ordinaryoriginal jurisdiction. There commendation made by the LawCommission, 1996. [Para 49] [790-F-G]

2.10 The said amendment carried out in the definition of“Court” is also step showing the right direction, namely, thatin international commercial arbitrations held in India, the HighCourt alone is to exercise jurisdiction over such proceedings,even where no part of the cause of action may have arisen within

Athe jurisdiction of such High Court, such High Court not havingordinary original jurisdiction. In such cases, the “place” wherethe award is delivered alone is looked at, and the High Courtgiven jurisdiction to supervise the arbitration proceedings, onthe footing of its jurisdiction to hear appeals from decrees ofcourts subordinate to it, which is only on the basis of territorialBjurisdiction which in turn relates to the “place” where the awardis made. In the light of this im- portant change in the law, Section2(1)(e)(i) of the Arbitration Act, 1996 must also be construed inthe manner indicated by this judgment. [Para 50] [791-H; 792-A-B]

2.11 If, the conflicting portion of the judgment of *BALCOcase in paragraph 96 is kept aside for moment, the very factthat parties have chosen place to be the seat would necessarilycarry with it the decision of both parties that the Courts at theseat would exclusively have jurisdiction over the entire arbitralDprocess. In fact, subsequent Division Benches of this Court haveunderstood the law to be that once the seat of arbitration ischosen, it amounts to an exclusive jurisdiction clause, insofaras the Courts at that seat are concerned. [Paras 51 and 52] [792-F-H]

E2.12 The moment seat is designated by agreementbetween the parties, it is akin toan exclusive jurisdiction clause,which would then vest the Courts at the “seat” with exclusivejurisdiction for purposes of regulating arbitral proceedingsarising out of the agreement between the parties. [Para 55] [796-D]F

2.13 It will thus be seen that wherever there is an expressdesignation of “venue”, and no designation of any alternativeplace as the “seat”, combined with supranational body of rulesgoverning the arbitration, and no other significant contraryindicia, the in-exorable conclusion is that the stated venue isGactually the juridical seat of the arbitral proceeding. [Para 63][802-B]

2.14 Whenever there is the designation of place ofarbitration in an arbitration clause as being the “venue” of thearbitration proceedings,the expression“arbitration proceedingsHwould make it clear that the “venue” is really the “seat” of the

arbitral proceedings, as the aforesaid expression does not includejust one or more individual or particular hearing, but thearbitration proceedings as whole, including the making of anaward at that place. This language has to be contrasted withlanguage such as “tribunals are to meet or have witnesses,experts or the parties” where only hearings are to take placein the “venue”, which may lead to the conclusion, other thingsbeing equal, that the venue so stated is not the “seat” of arbitralproceedings, but only convenient place of meeting. Further,the fact that the arbitral proceedings “shall be held” at aparticular venue would also indicate that the parties intendedto anchor arbitral proceedings to particular place, signifyingthere by, that that place is these at of the arbitral proceedings.This, coupled with there being no other significant contraryindicia that the stated venue is merely “venue” and not the“seat” of the arbitral proceedings, would then conclusively showthat such clause designates “seat” of the arbitral proceedings.In an International context, if supranational body of rulesis to govern the arbitration, this would further be an indiciathat “the venue”, so stated, would be the seat of the arbitralproceedings. In national context, this would be replaced by theArbitration Act, 1996 as applying to the “stated venue”, whichthen becomes the “seat” for the purposes of arbitration. [Para84] [816-G-H; 817-A-D]

2.15 In the present case, as per the arbitration agreement,in case dispute was to arise with foreign contractor, clause67.3(ii) would apply. Under this sub-clause, dispute whichwould amount to an ‘international commercial arbitration’ withinthe meaning of Section 2(1)(f) of the Arbitration Act, 1996, wouldhave to be finally settled in accordance with the Arbitration Act,1996 read with the UNCITRAL Arbitration Rules, and in caseof any conflict, the Arbitration Act, 1996 is to prevail (as an awardmade under Part I is considered domestic award under Section2(7) of the Arbitration Act, 1996 not withstanding the fact thatit is an award made in an international commercial arbitration).Applying the Shashoua principle, it is clear that if the disputewas with foreign contractor under Clause 67.3 of theagreement, the fact that arbitration proceedings shall be heldat New Delhi/Faridabad, India in sub-clause (vi) of Clause 67.3,

Awould amount to the designation of either of these places as the“seat” of arbitration, as supranational body of law is to beapplied, namely, the UNCITRAL Arbitration Rules, inconjunction with the Arbitration Act, 1996. As such arbitrationwould be an international commercial arbitration which would bedecided in India, the Arbitration Act, 1996 is to apply as well.BThere being no other contra indication in such situation, eitherNew Delhi or Faridabad, India is the designated “seat” underthe agreement, and it is there- after for the parties to chooseas to in which of the two places the arbitration is finally to beheld. [Para 98] [825-E-H; 826-A-B]C2.16 Given the fact that if there were dispute betweenNHPC Ltd. and foreign con- tractor, clause 67.3(vi) would haveto be read as clause designating the “seat” of arbitration, thesame must follow even when sub-clause (vi) is to be read withsub-clause (i) of Clause 67.3, where the dispute between NHPCLtd. would be with an Indian Contractor. The arbitration clauseDin the present case states that “Arbitration Proceedingsshallbe held at New Delhi/Faridabad, India…”, thereby signifying thatall the hearings, in- cluding the making of the award, are to takeplace at one of the stated places. Negatively speaking, the clausedoes not state that the venue is so that some, or all, of theEhearings take place at the venue; neither does it use languagesuch as “the Tribunal may meet”, or “may hear witnesses,experts or parties”. The expression “shall be held” alsoindicates that the so called “venue” is really the “seat” of thearbitral proceedings. The dispute is to be settled in accordancewith the Arbitration Act, 1996 which, therefore, applies aFnational body of rules to the arbitration that is to be held eitherat New Delhi orFaridabad, given the fact that the presentarbitration would be Indian and not international. It is clear,therefore, that even in such scenario, New Delhi/Faridabad,India has been designated as the “seat” of the arbitrationproceedings. [Para 99] [826-B-E]G

2.17 However, the fact that in all the three appeals beforethis Court, the proceedings were finally held at New Delhi, andthe awards were signed in New Delhi, and not at Faridabad,would lead to the conclusion that both parties have chosen NewDelhi as the “seat” of arbitration under Section 20(1) of theHArbitration Act, 1996. This being the case, both parties have,

therefore, chosen that the Courts at New Delhi alone would haveexclusive jurisdiction over the arbitral proceedings. Therefore,the fact that part of the cause of action may have arisen atFaridabad would not be relevant once the “seat” has beenchosen, which would then amount to an exclusive jurisdictionclause so far as Courts of the “seat” are concerned. [Para 100][826-F-H]

2.18 Consequently, the impugned judgment is set aside,and the Section 34 petition is ordered to be presented in theCourts in New Delhi, as was held by the Single Judge of theSpecial Commercial Court at Gurugram. [Para 101] [827-A]

*Bharat Aluminium Co. (BALCO) v. Kaiser AluminiumTechnical Service, Inc.,(2012) 9 SCC 552 : [2012] 12SCR 327 Amar Nath Om Prakash v. State of Punjab(1985) 1 SCC 345 ; Union of India v. Amrit LalManchanda (2004) 3 SCC 75 : [2004] 2 SCR 422 ;Brahmani River Pellets Ltd. v. Kamachi Industries Ltd.2019 SCC Online SC 929 ; Enercon (India) Ltd. andOrs. v. Enercon GmbH and Anr. (2014) 5 SCC 1 ;**Indus Mobile Distribution Private Limited v.Datawind Innovations Private Limited & Ors., (2017)7 SCC 678 : [2017] 4 SCR 744 – relied on.

Union of India v. Hardy Exploration and Production(India) Inc. 2018 SCC Online SC 1640 – held notgood law.

Antrix Corporation Ltd. v. Devas Multimedia Pvt. Ltd.(2018) SCC Online Del 9338 – not approved.

Venture Global Engineering v. Satyam ComputerServices Ltd. & Anr. (2008) 4 SCC 190 – stoodoverruled.

Dozco India (P) Ltd. v. Doosan Infracore Co. Ltd.(2011) 16 SCC 179 ; Videocon Indusries Ltd. v. Unionof India (2011) 6 SCC 161 ; Harmony InnovationShipping Ltd. v. Gupta Coal India Ltd. and Anr. (2015)9 SCC 172 ; Roger Shashoua & Ors. v. MukeshSharma & Ors., (2017) 14 SCC 722 ; Sumitomo HeavyIndustries Ltd. v. ONGC Ltd. & Ors. (1998) 1 SCC305 ; Hakam Singh v. M/s. Gammon (India) Ltd.,(1971) 1 SCC 286 : [1971] 3 SCR 314 ; Reliance

[2019] 17 S.C.R.

AIndustries Ltd. v. Union of India (2014) 7 SCC 603 :[2014] 6 SCR 456 – referred to.

Roger Shashoua & Ors. v. Mukesh Sharma [2009]EWHC 957 (Comm) ; Harper and Ors. v. NationalCoal Board (1974) 2 All ER 441 ; Enercon GmbH v.BEnercon (India) Ltd. [2012] EWHC 689 ; ShagangSouth-Asia (Hong Kong) Trading Co. Ltd. v. DaewooLogistics [2015] EWHC 194 ; Process and IndusrialDevelopments Ltd. v. Nigeria [2019] EWHC 2241 ;Naviera Amazonica Peruana S.A. v. CompaniaInternacional De Seguros Del Peru (1988) 1 Lloyd’sCRep 116 (CA) ; Braes of Doune Wind Farm (Scotland)v. Alfred McAlpine Business Services Ltd. [2008]EWHC 436 (TCC) ; v. [2007] EWCA Civ. 182 –referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 9307of 2019.

From the Judgment and Order dated 12.09.2018 of the HighCourt of Punjab and Haryana at Chandigarh in FAO-COM No. 2 of2018.

With

Civil Appeal Nos. 9308, 9309 of 2019.

Ms. Maninder Acharya, ASG, Dr. Abhishek M. Singhvi, Sr. Adv.,Arunabh Chowdhury, Mrs. Pragya Baghel, Vaibhav Tomar, BarnaliChowdhury, Ms. Shruti Choudhry, Amit Bhandari, Abhishek Roy,Ms. Samten Doma, Karma Dorjee, Dechen W. Lachungpa, A.C.Mishra, Ankit Chaturvedi (for M/s ACM Legal), Puneet Taneja,Tarkeshwar Nath, Ms. Laxmi Kumari, Viplav Acharya, Mahavir Rawat,Rameshwar Prasad Goyal, Advs. for the appearing parties.

The Judgment of the Court was delivered by

R. F. NARIMAN, J.

1. Leave granted.

2. Three appeals before us raise questions as to maintainabilityof appeals under Section 37 of the Arbitration and Conciliation Act, 1996(hereinafter referred to as “the Arbitration Act, 1996”), and, given thearbitration clause in these proceedings, whether the “seat” of thearbitration proceedings is New Delhi or Faridabad, consequent uponwhich petition under Section 34 of the Arbitration Act, 1996 may befiled dependent on where the seat of arbitration is located.

3. At the outset, the facts in SLP (Civil) No.25618 of 2018 areset out as follows. On 16.01.2004, the Petitioner was awarded contractfor construction of Diversion Tunnels, Coffer Dams, Concrete GravityDams, Plunge Pools and Cutoff Walls of Subansri Lower HydroelectricProject on river Subansri, with an installed capacity of 2000 MW, statedto be the largest Hydropower project yet in India. The project site islocated in the lower Subansri districts in the States of Assam andArunachal Pradesh. Clause 67.3 of the agreement between the partiesprovides for dispute resolution through arbitration. Clause 67.3 readsas follows:

“Any dispute in respect of which the Employer and theContractor have failed to reach at an amicable settlementpursuant to Sub-Clause 67.1, shall be finally settled by arbitrationas set forth below. The Arbitral Tribunal shall have full power toopen up, review and revise any decision, opinion, instruction,determination, certificate or valuation of the Engineer.

(i) dispute with an Indian Contractor shall be finallysettled in accordance with the Indian Arbitration andConciliation Act, 1996, or any statutory amendmentthereof. The arbitral tribunal shall consist of 3 arbitrators,one each to be appointed by the Employer and theContractor. The third Arbitrator shall be chosen by thetwo Arbitrators so appointed by the Parties and shall actas Presiding arbitrator. In case of failure of the twoarbitrators, appointed by the parties to reach upon aconsensus within period of 30 days from theappointment of the arbitrator appointed subsequently, thePresiding arbitrator shall be appointed by the Presidentof the Institution of Engineers (India). For the purposesof this Sub-Clause, the term “Indian Contractor” meansa contractor who is registered in India and is juridicperson created under Indian law as well as jointventure between such contractor and ForeignContractor.

(ii) In the case of dispute with Foreign Contractor, thedispute shall be finally settled in accordance with theprovisions of the Indian Arbitration and Conciliation Act,F1996 and read with UNCITRAL Arbitration Rules. Thearbitral tribunal shall consist of three Arbitrators, oneeach to be appointed by the Employer and theContractor. The third Arbitrator shall be chosen by thetwo Arbitrators so appointed by the Parties and shall actas Presiding arbitrator. In case of failure of the twoGarbitrators appointed by the parties to reach consensuswithin period of 30 days from their appointment onthe Presiding Arbitrator to be appointed subsequently,the Presiding arbitrator shall be appointed by thePresident of the Institution of Engineers (India). For theHpurposes of this Clause 67, the term “Foreign

Contractor” means contractor who is not registeredin India and is not juridic person created under IndianLaw. In case of any contradiction between IndianArbitration and Conciliation Act, 1996 and UNCITRALArbitration Rules, the provisions in the Indian Arbitrationand Conciliation Act, 1996 shall prevail.

(iii) Arbitration may be commenced prior to or aftercompletion of the Works, provided that the obligationsof the Employers, the Engineer, and the Contractor shallnot be altered by reason of the arbitration beingconducted during the progress of the Works.

xxxxxxxxx

(v) If one of the parties fail to appoint its arbitrator inpursuance of sub-clause (i) and (ii) above, within 30 daysafter receipt of the notice of the appointment of itsarbitrator by the other party, then the President of theInstitution of Engineers (India), both in cases of foreigncontractors as well as Indian Contractors, shall appointthe arbitrator. certified copy of the order of thePresident of Institution of Engineers (India), makingsuch an appointment shall be furnished to each of theparties.

(vi) Arbitration Proceedings shall be held at New Delhi/Faridabad, India and the language of the arbitrationproceedings and that of all documents andcommunications between the parties shall be English.

(vii) The decision of the majority of arbitrators shall be finaland binding upon both parties. The cost and expensesof Arbitration shall be borne in such manner asdetermined by the arbitral tribunal. However, theexpenses incurred by each party in connection with thepreparation, presentation etc. of its proceedings as alsothe fees and expenses paid to the arbitrator appointedby such party on its behalf shall be borne by each partyitself.”

4. On 16.05.2011, Notice of Arbitration was issued by thePetitioner to the Respondent, in regard to payment of compensation for

Alosses suffered due to abnormal delays and additional costs as resultof hindrances caused by the Respondent. three-member ArbitralTribunal was constituted as per clause 67.3 of the agreement underthe Arbitration Act, 1996. Pursuant thereto, the Petitioner filed itsStatement of Claim seeking recovery of an amount of INR 986.60crores plus CHF 1060619. Between August 2011 and August 2016,Bseventy-one sittings of the Arbitral Tribunal took place at New Delhi.The Tribunal then delivered its unanimous award at New Delhi on26.08.2016, by which the claims of the Petitioner aggregating to INR424,81,54,096.29 were allowed, together with simple interest at 14%per annum till the date of actual payment. On 04.10.2016, in view ofCcertain computational and typographical errors in the arbitral award, thefigure of 424,81,54,096.29 was rectified to INR 424,70,52,126.66. On03.01.2017, being aggrieved by the arbitral award and the rectificationthereto, the Respondent filed an application under Section 34 of theArbitration Act, 1996 seeking to set aside these awards before the Courtof the District and Sessions Judge, Faridabad, Haryana. On 28.04.2017,Dthe Petitioner filed an application under Section 151 read with OrderVII Rule 10 of the Code of Civil Procedure, 1908 (hereinafter referredto as the “CPC”) and Section 2(1)(e)(i) of the Arbitration Act, 1996,seeking return of the petition filed under Section 34 for presentationbefore the appropriate Court at New Delhi and/or the District JudgeEat Dhemaji, Assam. In November, 2017, after the constitution of aSpecial Commercial Court at Gurugram, the Section 34 petition filed atFaridabad was transferred to the said Gurugram Commercial Court andnumbered as Arbitration Case No.74 (CIS No. ARB/118/2017).

5. On 21.12.2017, the Special Commercial Court, GurugramFallowed the application of the Petitioner, and returned the Section 34petition for presentation to the proper court having jurisdiction in NewDelhi. On 15.02.2018, the Respondent filed an appeal under Section37 of the Arbitration Act, 1996 read with Section 13(1) of theCommercial Courts Act, 2015 before the High Court of Punjab and

Haryana at Chandigarh. On 12.09.2018, the impugned judgment wasGdelivered by the Punjab and Haryana High Court, in which it was heldthat the appeal filed under Section 37 of the Arbitration Act, 1996 wasmaintainable, and that Delhi being only convenient venue wherearbitral proceedings were held and not the seat of the arbitrationproceedings, Faridabad would have jurisdiction on the basis of the causeHof action having arisen in part in Faridabad. As result, the appeal was

allowed and the judgment of the Special Commercial Court, Gurugramwas set aside.

6. Dr. Abhishek Manu Singhvi, learned Senior Advocateappearing on behalf of the Petitioner in SLP (C) No.25618 of 2018,has assailed the impugned High Court judgment on both counts.According to him, on combined reading of Section 13 of theCommercial Courts Act, 2015 and Section 37 of the Arbitration Act,1996, it becomes clear that Section 13 of the Commercial Courts Act,2015 only provides the forum for challenge, whereas Section 37 of theArbitration Act, 1996 - which is expressly referred to in the proviso toSection 13(1) of the Commercial Courts Act, 2015 - circumscribes theright of appeal. He contended that this when read with Section 5 ofthe Arbitration Act, 1996, makes it clear that only certain judgmentsand orders are appealable, and no appeal lies under any provision outsideSection 37 of the Arbitration Act, 1996. He contended that the HighCourt was manifestly wrong when it said that the present appeal wasappealable under Section 37(1)(c) of the Arbitration Act, 1996 as beingan appeal against an order refusing to set aside an arbitral award underSection 34 of the Arbitration Act, 1996. According to Dr. Singhvi, anorder which allows an application under Section 151 read with OrderVII Rule 10 of the CPC can by no stretch of the imagination amountto an order refusing to set aside an arbitral award under Section 34 ofthe Arbitration Act, 1996. For this proposition, he strongly relied uponon our judgment in Kandla Export Corporation & Anr. v. M/s OCICorporation & Anr. (2018) 14 SCC 715. On the second point, he readout the impugned judgment in detail, and stated that the ultimateconclusion that New Delhi was only “venue” and not the “seat” ofthe arbitration was incorrect, as the parties have chosen to have sittingsat New Delhi, as result of which it is clear that the Arbitral Tribunalconsidered that the award made at New Delhi would be made at “theseat” of the arbitral proceedings between the parties. He further addedthat it was clear that even if both New Delhi and Faridabad hadjurisdiction, New Delhi being the choice of the parties, the principlecontained in Hakam Singh v. M/s. Gammon (India) Ltd., (1971) 1SCC 286, would govern. He referred in copious detail to manyjudgments of this Court, including the Five Judge Bench in BharatAluminium Co. (BALCO) v. Kaiser Aluminium TechnicalService, Inc., (2012) 9 SCC 552, Indus Mobile Distribution PrivateLimited v. Datawind Innovations Private Limited & Ors., (2017)

A7 SCC 678, and various other judgments to buttress his submissions.According to him, the recent judgment delivered in Union of India v.Hardy Exploration and Production (India) Inc. 2018 SCC OnlineSC 1640 queers the pitch, in that it is directly contrary to the Five Judgebench decision in BALCO (supra). It is only as result of the confusioncaused by judgments such as Hardy Exploration and ProductionB(India) Inc. (supra) that the impugned judgment has arrived at thewrong conclusion that New Delhi is not the “seat”, but only the “venue”of the present arbitral proceedings. He, therefore, in the course of hissubmissions argued that this confusion should be removed, and exhortedus to declare that Hardy Exploration and Production (India) Inc.C(supra) was not correctly decided, being contrary to the larger benchin BALCO (supra).7. Dr. Singhvi in the course of his submissions also referredpointedly to paragraph 96 of BALCO (supra), and argued that not onlywas the example given in the said paragraph contrary to the theory ofDconcurrent jurisdiction propounded therein, but was also contrary tosubsequent paragraphs in the said judgment, in which it was clearly heldthat clause in an agreement stating the “seat” of arbitration is akin toan exclusive jurisdiction clause, which would put paid to any theory ofconcurrent jurisdiction. As matter of fact, two subsequent decisionsEhave understood the ratio of BALCO (supra) to be that once the “seat”is indicated in an arbitration agreement, it is akin to an exclusivejurisdiction clause, which would oust the jurisdiction of courts other thancourts at the seat. For this purpose he expressly referred to and reliedupon Reliance Industries Ltd. v. Union of India (2014) 7 SCC 603Fand Indus Mobile Distribution Pvt. Ltd. (supra).

8. Shri Arunabh Chowdhury, appearing in SLP (Civil) No. 25848of 2018, argued that unlike the first SLP argued by Dr. Singhvi, in hiscase, the Notice for Arbitration was sent to the Assam site-office ofthe Respondent, and not routed through the Assam office to be sent toGthe Head Office at Faridabad, thereby making the observations basedon Section 21 of the Arbitration Act,1996 in the impugned judgmentinapplicable on the facts of his case. He supported Dr. Singhvi’sargument that the appeal filed under Section 37 of the Arbitration Act,1996 would not be maintainable, and cited several judgments, whichwill be dealt with little later.H

9. Shri Ankit Chaturvedi, appearing in SLP (Civil) No. 28062 of2018, stressed one important difference in the facts of his case, whichis, that the arbitral award made in his case expressly referred to Section31(4) of the Arbitration Act, 1996, and stated that the place of arbitration,as determined in accordance with Section 20 of the Arbitration Act,1996, was New Delhi. Therefore, this being the “seat” as determinedby the Arbitral Tribunal in this case, challenge under Section 34 ofthe Arbitration Act, 1996 could only be made in the courts at New Delhi.

10. Smt. Maninder Acharya, learned Additional Solicitor General,supported the judgment under appeal. She first argued that the reasoningof the impugned judgment, that an order passed under Section 151 readwith Order VII Rule 10 of the CPC would amount to refusal to setaside an arbitral award, is correct, and relied heavily upon DivisionBench judgment of the Delhi High Court in Antrix Corporation Ltd.v. Devas Multimedia Pvt. Ltd. 2018 SCC Online Del 9338 for thispurpose. On the second point, she argued that the arbitration clausedid not expressly state that either New Delhi or Faridabad was to bethe seat of the Arbitral Tribunal. Therefore, the arbitration clause onlyreferred to convenient venue, and the fact that the sittings were heldat New Delhi, therefore, would not make New Delhi the seat of thearbitration under Section 20(1) of the Arbitration Act, 1996. Accordingto her, since the agreements in the present case were signed inFaridabad, and since notices were sent by the Petitioners to theRespondent’s Faridabad office, part of the cause of action clearly arosein Faridabad, as result of which the courts in Faridabad would beclothed with jurisdiction to decide Section 34 application. She stressedthe fact that in BALCO (supra), even assuming that New Delhi wasthe seat of arbitration, both New Delhi and Faridabad would haveconcurrent jurisdiction - New Delhi being neutral forum in which nopart of the cause of action arose, and Faridabad being chosen forumwhere part of the cause of action has arisen. When read with Section42 of the Arbitration Act, 1996, since the Court at Faridabad was firstapproached by filing an application under Section 34 of the ArbitrationAct,1996, that Court alone would have jurisdiction, as result of whichthe impugned judgment ought to be affirmed.

Maintainability of the appeals under Section 37 of the ArbitrationAct, 1996

A11. Section 37(1) of the Arbitration Act, 1996 reads as follows:

“37. Appealable Orders.-

(1) An appeal shall lie from the following orders (and from noothers) to the Court authorised by law to hear appeals fromoriginal decrees of the Court passing the order, namely:-

(a) refusing to refer the parties to arbitration undersection 8;

(b) granting or refusing to grant any measure undersection 9;

(c) setting aside or refusing to set aside an arbitral awardunder section 34.”

12. Section 13 of the Commercial Courts Act, 2015 reads asfollows:

“13. Appeals from decrees of Commercial Courts andDCommercial Divisions.-

(1) Any person aggrieved by the judgment or order of aCommercial Court below the level of District Judge may appealto the Commercial Appellate Court within period of sixty daysfrom the date of judgment or order.

(1A)Any person aggrieved by the judgment or order of aCommercial Court at the level of District Judge exercising originalcivil jurisdiction or, as the case may be, Commercial DivisionBench of High Court may appeal to the Commercial AppellateDivision of that High Court within period of sixty days fromthe date of the judgment of order:

Provided that an appeal shall lie from such orders passed by theCommercial Division or Commercial Court that are specificallyenumerated in Order XLIII of the Code of Civil Procedure, 1908(5 of 1908) as amended by this Act and Section 37 of theArbitration and Conciliation Act, 1996 (26 of 1996).

(2) Notwithstanding anything contained in any other law for thetime being in force or Letters Patent of High Court, no appealshall lie from any other order or decree of Commercial Divisionor Commercial Court otherwise than in accordance with theprovisions of the Act.”

13. The interplay between Section 37 of the Arbitration Act, 1996and Section 13 of the Commercial Courts Act, 2015, has been laid downin some detail in the judgment in Kandla Export Corporation (supra).The precise question that arose in Kandla Export Corporation (supra)was as to whether an appeal, which was not maintainable under Section50 of the Arbitration Act,1996, is nonetheless maintainable under Section13(1) of the Commercial Courts Act, 2015. In this context, after settingout various provisions of the Commercial Courts Act, 2015 and theArbitration Act, 1996, this Court held:

“13. Section 13(1) of the Commercial Courts Act, with whichwe are immediately concerned in these appeals, is in two parts.The main provision is, as has been correctly submitted by ShriGiri, provision which provides for appeals from judgments,orders and decrees of the Commercial Division of the High Court.To this main provision, an exception is carved out by theproviso…”

14. The proviso goes on to state that an appeal shall lie fromsuch orders passed by the Commercial Division of the High Courtthat are specifically enumerated under Order 43 of the Code ofCivil Procedure Code, 1908, and Section 37 of the ArbitrationAct. It will at once be noticed that orders that are not specificallyenumerated under Order 43 CPC would, therefore, not beappealable, and appeals that are mentioned in Section 37 of theArbitration Act alone are appeals that can be made to theCommercial Appellate Division of High Court.

15. Thus, an order which refers parties to arbitration underSection 8, not being appealable under Section 37(1)(a), would notbe appealable under Section 13(1) of the Commercial Courts Act.Similarly, an appeal rejecting plea referred to in sub-sections(2) and (3) of Section 16 of the Arbitration Act would equallynot be appealable under Section 37(2)(a) and, therefore, underSection 13(1) of the Commercial Courts Act.

xxxxxxxxx

20. Given the judgment of this Court in Fuerst DayLawson [Fuerst Day Lawson Ltd. v. Jindal Exports Ltd.,(2011) 8 SCC 333 : (2011) 4 SCC (Civ) 178] , which Parliamentis presumed to know when it enacted the Arbitration Amendment

Act, 2015, and given the fact that no change was made in Section50 of the Arbitration Act when the Commercial Courts Act wasbrought into force, it is clear that Section 50 is provisioncontained in self-contained code on matters pertaining toarbitration, and which is exhaustive in nature. It carries thenegative import mentioned in para 89 of Fuerst DayLawson [Fuerst Day Lawson Ltd. v. Jindal Exports Ltd.,(2011) 8 SCC 333 : (2011) 4 SCC (Civ) 178] that appeals whichare not mentioned therein, are not permissible. This being thecase, it is clear that Section 13(1) of the Commercial Courts Act,being general provision vis-à-vis arbitration relating to appealsarising out of commercial disputes, would obviously not apply tocases covered by Section 50 of the Arbitration Act.

21. However, the question still arises as to why Section 37 ofthe Arbitration Act was expressly included in the proviso toSection 13(1) of the Commercial Courts Act, which is equally aspecial provision of appeal contained in self-contained code,which in any case would be outside Section 13(1) of theCommercial Courts Act. One answer is that this was done exabundanti cautela. Another answer may be that as Section 37itself was amended by the Arbitration Amendment Act, 2015,which came into force on the same day as the CommercialCourts Act, Parliament thought, in its wisdom, that it wasnecessary to emphasise that the amended Section 37 would haveprecedence over the general provision contained in Section 13(1)of the Commercial Courts Act. Incidentally, the amendment of2015 introduced one more category into the category ofappealable orders in the Arbitration Act, namely, categorywhere an order is made under Section 8 refusing to refer partiesto arbitration. Parliament may have found it necessary toemphasise the fact that an order referring parties to arbitrationunder Section 8 is not appealable under Section 37(1)(a) andwould, therefore, not be appealable under Section 13(1) of theCommercial Courts Act. Whatever may be the ultimate reasonfor including Section 37 of the Arbitration Act in the proviso toSection 13(1), the ratio decidendi of the judgment in Fuerst DayLawson [Fuerst Day Lawson Ltd. v. Jindal Exports Ltd.,(2011) 8 SCC 333 : (2011) 4 SCC (Civ) 178] would apply, andthis being so, appeals filed under Section 50 of the ArbitrationAct would have to follow the drill of Section 50 alone.

22. This, in fact, follows from the language of Section 50 itself.In all arbitration cases of enforcement of foreign awards, it isSection 50 alone that provides an appeal. Having provided foran appeal, the forum of appeal is left “to the Court authorisedby law to hear appeals from such orders”. Section 50 properlyread would, therefore, mean that if an appeal lies under the saidprovision, then alone would Section 13(1) of the CommercialCourts Act be attracted as laying down the forum which will hearand decide such an appeal.

xxx

27. The matter can be looked at from slightly different angle.Given the objects of both the statutes, it is clear that arbitrationitself is meant to be speedy resolution of disputes betweenparties. Equally, enforcement of foreign awards should take placeas soon as possible if India is to remain as an equal partner,commercially speaking, in the international community. In pointof fact, the raison d’être for the enactment of the CommercialCourts Act is that commercial disputes involving high amountsof money should be speedily decided. Given the objects of boththe enactments, if we were to provide an additional appeal, whenSection 50 does away with an appeal so as to speedily enforceforeign awards, we would be turning the Arbitration Act and theCommercial Courts Act on their heads. Admittedly, if the amountcontained in foreign award to be enforced in India were lessthan Rs 1 crore, and Single Judge of High Court were toenforce such award, no appeal would lie, in keeping with theobject of speedy enforcement of foreign awards. However, if,in the same fact circumstance, foreign award were to be forRs 1 crore or more, if the appellants are correct, enforcementof such award would be further delayed by providing an appealunder Section 13(1) of the Commercial Courts Act. Any suchinterpretation would lead to absurdity, and would be directlycontrary to the object sought to be achieved by the CommercialCourts Act viz. speedy resolution of disputes of commercialnature involving sum of Rs 1 crore and over. For this reasonalso, we feel that Section 13(1) of the Commercial Courts Actmust be construed in accordance with the object sought to beachieved by the Act. Any construction of Section 13 of theCommercial Courts Act, which would lead to further delay,

Ainstead of an expeditious enforcement of foreign award must,therefore, be eschewed. Even on applying the doctrine ofharmonious construction of both statutes, it is clear that they arebest harmonised by giving effect to the special statute i.e. theArbitration Act, vis-à-vis the more general statute, namely, theCommercial Courts Act, being left to operate in spheres otherBthan arbitration.”14. Given the fact that there is no independent right of appealunder Section 13(1) of the Commercial Courts Act, 2015, which merelyprovides the forum of filing appeals, it is the parameters of Section 37of the Arbitration Act,1996 alone which have to be looked at in orderCto determine whether the present appeals were maintainable. Section37(1) makes it clear that appeals shall only lie from the orders set outin sub-clauses (a), (b) and (c) and from no others. The pigeonhole thatthe High Court in the impugned judgement has chosen to say that theappeals in the present cases were maintainable is sub-clause (c).DAccording to the High Court, even where Section 34 application isordered to be returned to the appropriate Court, such order wouldamount to an order “refusing to set aside an arbitral award under Section34”.

15. Interestingly, under the proviso to Section 13(1A) of theECommercial Courts Act, 2015, Order XLIII of the CPC is alsomentioned. Order XLIII Rule(1)(a) reads as follows:

“1. Appeal from orders.- An appeal shall lie from the followingorders under the provisions of Section 104, namely-

(a)an order under Rule 10 of Order VII returning plaint to beFpresented to the proper Court except where the procedurespecified in rule 10A of Order VII has been followed;”

16. This provision is conspicuous by its absence in Section 37 ofthe Arbitration Act, 1996, which alone can be looked at for the purposeof filing appeals against orders setting aside, or refusing to set asideGawards under Section 34. Also, what is missed by the impugnedjudgment is the words “under Section 34”. Thus, the refusal to set asidean arbitral award must be under Section 34, i.e., after the grounds setout in Section 34 have been applied to the arbitral award in question,and after the Court has turned down such grounds. Admittedly, on theHfacts of these cases, there was no adjudication under Section 34 of

the Arbitration Act, 1996 - all that was done was that the SpecialCommercial Court at Gurugram allowed an application filed underSection 151 read with Order VII Rule 10 CPC, determining that theSpecial Commercial Court at Gurugram had no jurisdiction to proceedfurther with the Section 34 application, and therefore, such applicationwould have to be returned to the competent court situate at New Delhi.

17. Shri Anurabh Chowdhury referred to number of judgmentsin which well-settled proposition was elucidated, i.e. that an appealis creature of statute, and must either be found within the four cornersof the statute, or not be there be at all. In support thereof, he referredto Municipal Corporation of Delhi & Ors. v. InternationalSecurity & Intelligence Agency Ltd. (2004) 3 SCC 250 (atparagraphs 14 and 15), and Arcot Textile Mills Ltd. v. RegionalProvident Fund Commissioner and Ors. (2013) 16 SCC 1 (atparagraph 20). He also referred to recent Delhi High Court judgmentreported as South Delhi Municipal Corporation v. Tech MahindraEFA (OS) (Comm.) 3 of 2019, in which the Delhi High Court held thatan order of Single Judge, which directed the deposit of 50% of theawarded amount, would not be appealable under Section 37 of theArbitration Act, 1996 read with the Commercial Courts Act, 2015. Inthe course of discussion the Delhi High Court said:

“12. In view of the above discussions, we conclude that thepresent appeal is not maintainable. The appellant’s remedy clearlylies elsewhere. An attempt was made to urge that no litigant canbe deprived of remedy if there is grievance: ubi jus ibiremedium; however, that argument is wholly without substancebecause an appeal, it has been repeatedly emphasised, is aspecific creation of statute and cannot be claimed as matterof right. This was explained pithily in Ganga Bai v. Vijay Kumar,(1974) 2 SCC 393, in the following terms:

“There is basic distinction between the right of suit and theright of appeal. There is an inherent right in every person to bringsuit of civil nature and unless the suit is barred by statute onemay, at one’s peril, bring suit of one’s choice. It is no answerto suit howsoever frivolous the claim, that the law confers noright to sue. suit for its maintainability requires no authority oflaw and it is enough that no statute bars the suit. But the positionin regard to appeals is quite the opposite. The right of appeal

inheres in no one and therefore an appeal for its maintainabilitymust have the clear authority of law. That explains why the rightof appeal is described as creature of statute.

13. In view of the above discussion, it is held that the presentappeal is plainly not maintainable by virtue of provisions of theBCommercial Courts Act, 2015; the appeal is therefore dismissed.No costs.”

18. Shri Chowdhury also referred to another Delhi High Courtjudgment reported as Hamanprit Singh Sidhu v. Arcadia Shares &Stock Brokers Pvt. Ltd 2016 234 DLT 30 (DB), in which learnedCSingle Judge of the Delhi High Court allowed an application forcondonation of delay in filing Section 34 petition. The Division Bench,in holding that an appeal against such an order would not be maintainableunder Section 37 of the Arbitration Act, 1996, read with the CommercialCourts Act, 2015 held:

D“10. Coming to Section 37(1), it is evident that an appeal can liefrom Coming to Section 37(1), it is evident that an appeal canlie from only the orders specified in clauses (a), (b) or (c). Inother words, an appeal under Section 37 would only bemaintainable against (a) an order refusing to refer the parties toarbitration under Section 8 of the A&C Act; (b) an order grantingEor refusing to grant any measure under Section 9 of the A&CAct; or (c) an order setting aside or refusing to set aside anarbitral award under Section 34 of the A&C Act. The impugnedorder is clearly not relatable to Sections 8 or 9 of the A&C Act.It was sought to be contended by the learned counsel for theFappellant that the present appeal would fall within Section 37(1)(c) which relates to an order “setting aside” or “refusing to setaside” an arbitral award under Section 34. We are unable toaccept this proposition. By virtue of the impugned order, thearbitral award dated 10.09.2013 has not been set aside. Nor hasthe court, at this stage, refused to set aside the said arbitral awardGunder Section 34 of the A&C Act. In fact, the appellant in whosefavour the award has been made, would only be aggrieved if theaward were to have been set aside in whole or in part. That hasnot happened. What the learned single Judge has done is to havecondoned the delay in re-filing of the petition under Section 34.HThis has not, in any way, impacted the award.”

19. The reasoning in this judgment commends itself to us, as adistinction is made between judgments which either set aside, or refuseto set aside, an arbitral award after the court applies its mind to Section34 of the Arbitration Act, 1996, as against preliminary orders ofcondonation of delay, which do not in any way impact the arbitral awardthat has been assailed.

20. However, Smt. Acharya relied heavily upon the DivisionBench judgment of the Delhi High Court in Antrix Corporation Ltd.(supra). On the facts of that case, on 28.02.2017, learned Single Judgeof the Delhi High Court ruled that Antrix’s petition under Section 9 ofthe Arbitration Act, 1996 before the Bangalore Court was notmaintainable, and that Devas’ petition under Section 9 was maintainable,the bar under Section 42 of the Arbitration Act, 1996 being inapplicable.The order also held that consequently, Antrix’s petition under Section34 of the Arbitration Act, 1996 before the Bangalore City Civil Courtwould not be maintainable, inasmuch as Devas’ petition filed in Delhiunder Section 9 was filed earlier. The learned Single Judge then listedthe matter for hearing on merits and directed Antrix to file an affidavitof an authorised officer, enclosing therewith its audited Balance Sheets,and Profit and Loss Accounts for the past three years. Antrix thenappealed against this order, to which preliminary objection was taken,stating that this appeal would not be maintainable under Section 37 ofthe Arbitration Act, 1996. After setting out Section 13 of the CommercialCourts Act, 2015 and Sections 37 and 42 of the Arbitration Act, 1996,the Division Bench noticed Hamanprit Singh Sidhu (supra) inparagraph 39, without at all adverting to paragraph 10 of the judgment(which is set out hereinabove). Thereafter, the Court held as follows:

“42. While undeniably, the Learned Single Judge in the impugnedorder has not decided the Section 9 petition finally and had listedthe matter for hearing on merits, Antrix states that the impugnedorder is indistinguishable from an order under Section 9. Devashowever, argued that the sequence of events has not beencompleted. Antrix should face an adverse order under Section 9before it can approach this court in appeal. On this issue,significant reliance has been placed on the decision of the MadrasHigh Court in Samson Maritime (supra). In that case, the Courtheld:

“Learned counsel appearing for the respondent made anattempt to contend that the application seeking for furnishing

of details of assets cannot be construed as an interimmeasure or interim relief contemplated under section 9 of thesaid Act. I am not convinced to accept the said contentionfor the reason that those details are sought for by theapplicant only to seek for consequential or follow up reliefin the event of the respondent’s failure to furnish securities.Therefore, as the relief sought for in this application is havinga direct bearing on the relief sought for in the otherapplications seeking for furnishing securities, it cannot besaid that this relief seeking for details of the assets is outsidethe scope of Section 9. Therefore, I find that the applicationfiled seeking for details of the assets is also maintainable.”43. The Court in Samson Maritime (supra) reasoned that anapplication seeking for furnishing of details of assets would alsoamount to an interim measure under Section 9, because thereason that those details are sought are only to seek consequentialor follow up relief in the event of the respondent’s failure tofurnish securities. Therefore, an order mandating party todisclose his assets or file his accounts would also be an interimmeasure within the meaning of Section 9. In this case, throughParagraph 57 of the impugned order, the Learned Single Judgehad directed Antrix to file an affidavit of an authorised officer,enclosing therewith its audited balance sheets and profit and lossaccounts for the past three years. Keeping in mind the view ofthe Court in Samson Maritime (supra), which this Court is inagreement with, this would also in effect be Section 9 orderas those details are sought for the purpose of adjudicatingwhether consequential relief could be given to Devas of securingthe amount due from the arbitral award against Antrix. Moreover,this Court cannot take doctrinaire and unbending approach inthis matter, when it is clear that Antrix has suffered all but oneremaining blow through the impugned order, and therefore, theCourt should not wait till it suffers the final blow (that of the finalSection 9 order) before it can assume jurisdiction over the appeal.The court’s direction to Antrix furnish an affidavit along with theparticulars sought, is to aid its order with respect to possibledistraint, attachment or further such consequential order towardsinterim relief. Such an order would not be made unless the courtdirects this as prelude, or important step towards the inevitable

interim order, which would be just consequential. Therefore, theCourt finds that Antrix’s appeal against the impugned order ismaintainable.

44. This court also finds merit in Antrix’s argument that asregards the single judge’s observations that the Bangalore courtcannot proceed with the matter, the impugned order is really final.It precludes in effect, Antrix from proceeding with its Section34 petition before that court (in turn based on the pending Section9 petition before that court). If Antrix were to accept the ruling,the effect would be to denude the Bangalore court of jurisdiction.It was contended-and correctly, in this court’s opinion thatwhereas court acts within jurisdiction in deciding whether ithas or does not have jurisdiction over cause of matter, thedeclaration by it about the lack of jurisdiction of another court,based on the appreciation of the matter before the latter court isundeniably an adverse order. Allowing that to stand wouldprejudice Antrix for all times.”21. It can be seen that the reasoning in this judgment would haveno application to the facts of the present case. The Division Bench heldthat directing Antrix to file an affidavit, enclosing therewith its auditedBalance Sheets and Profit and Loss Account for the last three years,is itself an interim order passed under Section 9 of the Arbitration Act,1996. The further reasoning of the Court that the direction to Antrix tofurnish an affidavit is to aid future interim order, which would be justconsequential, does not commend itself to us. step towards an interimorder would not amount to granting, or refusing to grant, any measureunder Section 9 of the Arbitration Act, 1996. The case is alsodistinguishable for the reason that, as regards the Bangalore Court,which cannot proceed further with the matter, the impugned ordertherein is really final and would, therefore, also be appealable underSection 37. For all these reasons, this judgment is wholly distinguishableand would not apply to the facts of the present case. We may alsoadvert to the fact that our judgment in Kandla (supra) was deliveredon 07.02.2018, and was missed by the Division Bench in AntrixCorporation Ltd. (supra), as the Division Bench had reservedjudgment on 06.12.2017, even though it ultimately pronounced thejudgment on 30.05.2018. The judgment in South Delhi MunicipalCorporation (supra) was decided after reference was made to

AKandla (supra), resulting in deposit order being held to be notappealable under Section 37 of the Arbitration Act, 1996.

22. It is clear, therefore, that the appeals filed in the present casedo not fall within Section 37 of the Arbitration Act,1996 and are notmaintainable.B

23. We now examine the second part of the challenge made bythe Petitioners to the impugned judgment, which relates to thedetermination of the “seat” of the arbitral proceedings between theparties. The impugned judgment of the Punjab and Haryana High Courtreferred to BALCO (supra) and Indus Mobile Distribution Pvt.CLtd. (supra), and other judgments of this Court, in order to arrive atthe conclusion that the arbitration clause in the present case does notrefer to the “seat” of arbitration, but only refers to the “venue” ofarbitration. Consequently, the impugned judgment holds that since partof the cause of action had arisen in Faridabad, and the FaridabadDCommercial Court was approached first, the Faridabad Court alonewould have jurisdiction over the arbitral proceedings, and the courts atNew Delhi would have no such jurisdiction. The correctness of thesepropositions has been vehemently assailed before us, and it is thereforeimportant to lay down the law on what constitutes the “juridical seat”of arbitral proceedings, and whether, once the seat is delineated by theEarbitration agreement, courts at the place of the seat would alonethereafter have exclusive jurisdiction over the arbitral proceedings.

The juridical seat of the arbitral proceedings

24. The Arbitration Act, 1940 did not refer to the “juridical seat”Fof the arbitral proceedings at all. Under the scheme of the ArbitrationAct, 1940, Section 14 stated as follows:

“14. Award to be signed and filed.-

(1) When the arbitrators or umpire have made their award,they shall sign it and shall give notice in writing to theGparties of the making and signing thereof and of theamount of fees and charges payable in respect of thearbitration and award.

(2) The arbitrators or umpire shall, at the request of anyparty to the arbitration agreement or any person claimingHunder such party or if so directed by the Court and upon

payment of the fees and charges due in respect of thearbitration and award and of the costs and charges offiling the award, cause the award or signed copy ofit, together with any depositions and documents whichmay have been taken and proved before them, to befiled in Court, and the Court shall thereupon give noticeto the parties of the filing of the award.

(3) Where the arbitrators or umpire state special caseunder clause (b) of Section 13, the Court, after givingnotice to the parties and hearing them, shall pronounceits opinion thereon and such opinion shall be added to,and shall form part of, the award.

25. When the award was signed and filed in Court, judgmentin terms of the award had then to be made as follows:

“17. Judgment in terms of award.- Where the Court sees nocause to remit the award or any of the matters referred toarbitration for reconsideration or to set aside the award, the Courtshall, after the time for making an application to set aside theaward has expired, or such application having been made, afterrefusing it, proceed to pronounce judgement according to theaward, and upon the judgment so pronounced decree shallfollow, and no appeal shall lie from such decree except on theground that it is in excess of, or not otherwise in accordance with,the award.”

26. It was in this setting that “Court” was defined by Section2(c) of the Arbitration Act, 1940 as follows:

“2. Definitions.- In this Act, unless there is anything repugnantin the subject or the context,

xxxxxx

xxx

(c)“Court” means Civil Court having jurisdiction to decide thequestions forming the subject-matter of the reference if the samehad been the subject-matter of suit, but does not, except forthe purpose of arbitration proceedings under Section 21, includea Small Cause Court;”

27. Section 31, which dealt with the Court in which an awardmay be filed then stated as follows:

A“31. Jurisdiction.

(1) Subject to the provisions of this Act, an award may befiled in any Court having jurisdiction in the matter towhich the reference relates.

(2) Notwithstanding anything contained in any other law forBthe time being in force and save as otherwise providedin this Act, all questions regarding the validity, effect orexistence of an award or an arbitration agreementbetween the parties to the agreement- or personsclaiming under them shall be decided by the Court inCwhich the award under the agreement has been, or maybe, filed, and by no other Court.

(3) All applications regarding the conduct of arbitrationproceedings or otherwise arising out of such proceedingsshall be made to the Court where the award has been,Dor may be, filed, and to no other Court.

(4) Notwithstanding anything contained elsewhere in thisAct or in any other law for the time being in force,where in any reference any application under this Acthas been made in Court competent to entertain it, thatECourt alone shall have jurisdiction over the arbitrationproceedings-, and all subsequent applications arising, outof that reference, and the arbitration proceedings shallbe made in that Court and in no other Court.”

28. It will be noticed that in this statutory setting, the “place” inFwhich the award is made is not referred to at all. Given this fact, the“Court” was defined as any Civil Court having jurisdiction to decidequestions forming the subject matter of the reference to arbitration ifthe same had been the subject matter of suit.

29. The UNCITRAL Model Law on International CommercialGArbitration (as adopted by the United Nations Commission onInternational Trade Law on 21 June 1985) (hereinafter referred to asthe “UNCITRAL Model Law”) was then adopted by this country. TheUNCITRAL Model Law introduced the concept of “place” or “seat”of the arbitral proceedings as follows:

H“Article 1. Scope of application

xxxxxx

xxx

(2) The provisions of this Law, except articles 8, 9, 35 and 36,apply only if the place of arbitration is in the territory of this State.

xxxxxx

xxx

Article 2. Definitions and rules of interpretation

xxxxxxxxx

(c) “court” means body or organ of the judicial system of aState;

xxxxxxxxx

Article 6. Court or other authority for certain functions ofarbitration assistance and supervision

The functions referred to in articles 11(3), 11(4), 13(3), 14, 16(3)and 34(2) shall be performed by ... [Each State enacting thismodel law specifies the court, courts or, where referred to therein,other authority competent to perform these functions.]

xxxxxxxxx

Article 20. Place of arbitration

(1) The parties are free to agree on the place of arbitration.Failing such agreement, the place of arbitration shall beEdetermined by the arbitral tribunal having regard to thecircumstances of the case, including the convenience ofthe parties.(2) Notwithstanding the provisions of paragraph (1) of thisarticle, the arbitral tribunal may, unless otherwise agreedF

(2) Notwithstanding the provisions of paragraph (1) of thisarticle, the arbitral tribunal may, unless otherwise agreedby the parties, meet at any place it considers appropriatefor consultation among its members, for hearingwitnesses, experts or the parties, or for inspection ofgoods, other property or documents.

xxxxxxxxx

Article 31. Form and contents of award

xxxxxxxxx

(3) The award shall state its date and the place of arbitration asdetermined in accordance with article 20(1). The award shall bedeemed to have been made at that place.”

A30. The Arbitration Act, 1996 repealed the Arbitration Act, 1940.As is stated in its preamble, the Arbitration Act, 1996 adopted provisionsof the UNCITRAL Model Law, as they had made significantcontribution to the establishment of unified legal framework for thefair and efficient settlement of disputes arising in internationalcommercial relations.B

31. The Arbitration Act, 1996 refers to “the place” of arbitrationand defines ‘Court’, and indicates which Courts have jurisdiction inrelation to arbitral proceedings in several sections in Part I. Section2(1)(e) and Section 2(2) of the Arbitration Act, 1996 are as follows:

C“2. Definitions.-

(1) In this Part, unless the context otherwise requires,-

xxxxxx

xxx

(e) “Court” means-

D(i) in case of an arbitration other than internationalcommercial arbitration, the principal Civil Court oforiginal jurisdiction in district, and includes the HighCourt in exercise of its ordinary original civil jurisdiction,having jurisdiction to decide the questions forming thesubject-matter of the arbitration if the same had beenEthe subject-matter of suit, but does not include anyCivil Court of grade inferior to such principal CivilCourt, or any Court of Small Causes;

(ii) in the case of international commercial arbitration, theHigh Court in exercise of its ordinary original civilFjurisdiction, having jurisdiction to decide the questionsforming the subject-matter of suit if the same had beenthe subject-matter of suit, and in other cases, HighCourt having jurisdiction to hear appeals from decreesof courts subordinate to that High Court;

Gxxxxxxxxx

(2) This part shall apply where the place of arbitration is in India.

Provided that subject to an agreement to the contrary, theprovisions of sections 9, 27 and clause (a) of sub-section (1) andsub-section (3) of Section 37 shall also apply to international

[R. F. NARIMAN, J.]

commercial arbitration, even if the place of arbitration is outsideIndia, and an arbitral award made or to be made in such placeis enforceable and recognised under the provisions of Part II ofthis Act.

32. Sections 20, 31(4) and 42 of the Arbitration Act, 1996 readas follows:

“20. Place of Arbitration.-

(1) The parties are free to agree on the place of arbitration.

(2) Failing any agreement referred to in sub-section (1), theplace of arbitration shall be determined by the arbitraltribunal having regard to the circumstances of the case,including the convenience of the parties.

(3) Notwithstanding sub-section (1) or sub-section (2), thearbitral tribunal may, unless otherwise agreed by theparties, meet at any place it considers appropriate forconsultation among its members, for hearing witnesses,experts or the parties, or for inspection of documents,goods or other property.”

“31. Form and contents of arbitral award.-

xxxxxx

xxx

(4) The arbitral award shall state its date and the place ofarbitration as determined in accordance with section 20and the award shall be deemed to have been made atthat place.”

“42. Jurisdiction.- Notwithstanding anything containedelsewhere in this Part or any other law for the time being inforce, where with respect to an arbitration agreement anyapplication under this Part has been made in any Court, thatCourt alone shall have jurisdiction over the arbitral proceedingsand all subsequent applications arising out of that agreement andthe arbitral proceedings shall be made in that Court and no otherCourt.”

33. It will thus be seen that the new provisions contained inSections 20 and 31(4) of the Arbitration Act, 1996 are replication ofArticles 20 and 31(3) of the UNCITRAL Model Law, in which pride

Aof place is given to the juridical seat of the arbitral proceedings.However, the definition of “court” in Section 2(1)(e) of the ArbitrationAct, 1996 continues the definition contained in the Arbitration Act, 1940,but replaces any and every civil court by only the principal civil courtof original jurisdiction in district, and includes the High Court inexercise of its ordinary civil jurisdiction. Section 42 of the ArbitrationBAct, 1996 also substantially follows the drill of Section 31(4) of theArbitration Act, 1940.

34. It can thus be seen that given the new concept of “juridicalseat” of the arbitral proceedings, and the importance given by theArbitration Act, 1996 to this “seat”, the arbitral award is now not onlyCto state its date, but also the place of arbitration as determined inaccordance with Section 20. However, the definition of “Court”contained in Section 2(1)(c) of the Arbitration Act, 1940, continued assuch in the Arbitration Act, 1996, though narrowed to mean only principalcivil court and the High Court in exercise of their original ordinary civilDjurisdiction. Thus, the concept of juridical seat of the arbitral proceedingsand its relationship to the jurisdiction of courts which are then to lookinto matters relating to the arbitral proceedings - including challengesto arbitral awards - was unclear, and had to be developed in accordancewith international practice on case by case basis by this Court.

E35. Some of the early decisions of this Court did not properlydistinguish between “seat” and “venue” of an arbitral proceeding. TheFive Judge Bench in BALCO (supra) dealt with this problem as follows:

“75. We are also unable to accept the submission of the learnedcounsel for the appellants that the Arbitration Act, 1996 does notFmake seat of the arbitration as the centre of gravity of thearbitration. On the contrary, it is accepted by most of the expertsthat in most of the national laws, arbitrations are anchored to theseat/place/situs of arbitration.Redfern in Para 3.54 concludes that“the seat of the arbitration is thus intended to be its centreof gravity.” [Blackaby, Partasides, Redfern and HunterG(Eds.), Redfern and Hunter on International Arbitration (5thEdn., Oxford University Press, Oxford/New York 2009).] This,however, does not mean that all the proceedings of the arbitrationhave to take place at the seat of the arbitration. The arbitratorsat times hold meetings at more convenient locations. This isHnecessary as arbitrators often come from different countries. It

may, therefore, on occasions be convenient to hold some of themeetings in location which may be convenient to all. Such asituation was examined by the Court of Appeal in Englandin Naviera Amazonica Peruana S.A. v. CompaniaInternational de Seguros del Peru [(1988) 1 Lloyd’s Rep 116(CA)] wherein at p. 121 it is observed as follows:

“The preceding discussion has been on the basis that there isonly one ‘place’ of arbitration. This will be the place chosenby or on behalf of the parties; and it will be designated in thearbitration agreement or the terms of reference or the minutesof proceedings or in some other way as the place or ‘seat’of the arbitration. This does not mean, however, that theArbitral Tribunal must hold all its meetings or hearings at theplace of arbitration. International commercial arbitration ofteninvolves people of many different nationalities, from manydifferent countries. In these circumstances, it is by no meansunusual for an Arbitral Tribunal to hold meetings—or evenhearings—in place other than the designated place ofarbitration, either for its own convenience or for theconvenience of the parties or their witnesses…. It may bemore convenient for an Arbitral Tribunal sitting in one countryto conduct hearing in another country — for instance, forthe purpose of taking evidence…. In such circumstances eachmove of the Arbitral Tribunal does not of itself mean that theseat of arbitration changes. The seat of arbitration remainsthe place initially agreed by or on behalf of the parties.”

76. It must be pointed out that the law of the seat or place wherethe arbitration is held, is normally the law to govern thatarbitration. The territorial link between the place of arbitrationand the law governing that arbitration is well established in theinternational instruments, namely, the New York Convention of1958 and the UNCITRAL Model Law of 1985. It is true thatthe terms “seat” and “place” are often used interchangeably.In Redfern and Hunter on International Arbitration[Blackaby, Partasides, Redfern and Hunter (Eds.), Redfern andHunter on International Arbitration (5th Edn., OxfordUniversity Press, Oxford/New York 2009).] (Para 3.51), the seattheory is defined thus: “The concept that an arbitration is governedby the law of the place in which it is held, which is the ‘seat’ (or

‘forum’ or locus arbitri) of the arbitration, is well established inboth the theory and practice of international arbitration. In fact,the Geneva Protocol, 1923 states:

“2. The arbitral procedure, including the constitution of theArbitral Tribunal, shall be governed by the will of the partiesand by the law of the country in whose territory the arbitrationtakes place.”

The New York Convention maintains the reference to “the lawof the country where the arbitration took place” [Article V(1)(d)]and, synonymously to “the law of the country where the awardis made” [Articles V(1)(a) and (e)]. The aforesaid observationsclearly show that the New York Convention continues the clearterritorial link between the place of arbitration and the lawgoverning that arbitration. The author further points out that thisterritorial link is again maintained in the Model Law whichprovides in Article 1(2) that:

“1. (2) the provision of this Law, except Articles 8, 9, 35 and36, apply only if the place of arbitration is in the territory ofthe State.”

Just as the Arbitration Act, 1996 maintains the territorial linkbetween the place of arbitration and its law of arbitration, thelaw in Switzerland and England also maintain clear link betweenthe seat of arbitration and the lex arbitri. The Swiss Law states:

“176(I). (1) The provision of this chapter shall apply to anyarbitration if the seat of the Arbitral Tribunal is inSwitzerland and if, at the time when the arbitration agreementwas concluded, at least one of the parties had neither its domicilenor its habitual residence in Switzerland.” [See the Swiss PrivateInternational Law Act, 1987, Ch. 12, Article 176 (I)(1).]

These observations were subsequently followed in Union ofIndia v. McDonnell Douglas Corpn. [(1993) 2 Lloyd’s Rep 48]

xxx

95. Learned Counsel for the Appellants have submitted thatSection 2(1)(e), Section 20 and Section 28 read with Section 45and Section 48(1)(e) make it clear that Part I is not limited onlyto arbitrations which take place in India. These provisions indicate

that Arbitration Act, 1996 is subject matter centric and notexclusively seat centric. Therefore, “seat” is not the “centre ofgravity” so far as the Arbitration Act, 1996 is concerned. Weare of the considered opinion that the aforesaid provisions haveto be interpreted by keeping the principle of territoriality at theforefront. We have earlier observed that Section 2(2) does notmake Part I applicable to arbitrations seated or held outside India.In view of the expression used in Section 2(2), the maximexpressum facit cessare tacitum, would not permit byinterpretation to hold that Part I would also apply to arbitrationsheld outside the territory of India. The expression “this Part shallapply where the place of arbitration is in India” necessarilyexcludes application of Part I to arbitration seated or held outsideIndia. It appears to us that neither of the provisions relied uponby the Learned Counsel for the Appellants would make anysection of Part I applicable to arbitration seated outside India. Itwill be apposite now to consider each of the aforesaid provisionsin turn.

96. Section 2(1)(e) of the Arbitration Act, 1996 reads as under:

“2. Definitions

(1) In this Part, unless the context otherwise requires

(e) “Court” means the principal Civil Court of original jurisdictionin district, and includes the High Court in exercise of itsordinary original civil jurisdiction, having jurisdiction to decide thequestions forming the subject matter of the arbitration if the samehad been the subject matter of suit, but does not include anycivil court of grade inferior to such principal Civil Court, or anyCourt of Small Causes.”

We are of the opinion, the term “subject matter of the arbitration”cannot be confused with “subject matter of the suit”. The term“subject matter” in Section 2(1)(e) is confined to Part I. It has areference and connection with the process of dispute resolution.Its purpose is to identify the courts having supervisory controlover the arbitration proceedings. Hence, it refers to court whichwould essentially be court of the seat of the arbitration process.In our opinion, the provision in Section 2(1)(e) has to be construedkeeping in view the provisions in Section 20 which give

ABC

Arecognition to party autonomy. Accepting the narrow constructionas projected by the Learned Counsel for the Appellants would,in fact, render Section 20 nugatory. In our view, the legislaturehas intentionally given jurisdiction to two courts i.e. the courtwhich would have jurisdiction where the cause of action is locatedand the courts where the arbitration takes place. This wasBnecessary as on many occasions the agreement may provide fora seat of arbitration at place which would be neutral to boththe parties. Therefore, the courts where the arbitration takesplace would be required to exercise supervisory control over thearbitral process. For example, if the arbitration is held in Delhi,Cwhere neither of the parties are from Delhi, (Delhi having beenchosen as neutral place as between party from Mumbai andthe other from Kolkata) and the tribunal sitting in Delhi passesan interim order Under Section 17 of the Arbitration Act, 1996,the appeal against such an interim order under Section 37 mustlie to the Courts of Delhi being the Courts having supervisoryDjurisdiction over the arbitration proceedings and the tribunal. Thiswould be irrespective of the fact that the obligations to beperformed under the contract were to be performed either atMumbai or at Kolkata, and only arbitration is to take place inDelhi. In such circumstances, both the Courts would haveEjurisdiction, i.e., the Court within whose jurisdiction the subjectmatter of the suit is situated and the courts within the jurisdictionof which the dispute resolution, i.e., arbitration is located.

xxxxxx

xxx

98. We now come to Section 20, which is as under:

20. Place of arbitration

(1) The parties are free to agree on the place of arbitration.

(2) Failing any agreement referred to in Sub-section (1), theplace of arbitration shall be determined by the arbitraltribunal having regard to the circumstances of the case,including the convenience of the parties.

(3) Notwithstanding Sub-section (1) or Sub-section (2), thearbitral tribunal may, unless otherwise agreed by theparties, meet at any place it considers appropriate forHconsultation among its members, for hearing witnesses,

experts or the parties, or for inspection of documents,good or other property.”

plain reading of Section 20 leaves no room for doubt that wherethe place of arbitration is in India, the parties are free to agreeto any “place” or “seat” within India, be it Delhi, Mumbai etc.In the absence of the parties’ agreement thereto, Section 20(2)authorizes the tribunal to determine the place/seat of sucharbitration. Section 20(3) enables the tribunal to meet at any placefor conducting hearings at place of convenience in matters suchas consultations among its members for hearing witnesses,experts or the parties.99. The fixation of the most convenient “venue” is taken careof by Section 20(3). Section 20, has to be read in the context ofSection 2(2), which places threshold limitation on theapplicability of Part I, where the place of arbitration is in India.Therefore, Section 20 would also not support the submission ofthe extra-territorial applicability of Part I, as canvassed by theLearned Counsel for the Appellants, so far as purely domesticarbitration is concerned.”

(emphasis supplied)

36. The Court then went on to refer to several English judgmentsand specifically italicised several parts of the judgment in RogerShashoua & Ors. v. Mukesh Sharma [2009] EWHC 957 (Comm)as follows:

“110. Examining the fact situation in the case, the Courtobserved as follows:

The basis for the court’s grant of an anti-suit injunction of thekind sought depended upon the seat of the arbitration. Anagreement as to the seat of an arbitration brought in the lawof that country as the curial law and was analogous to anexclusive jurisdiction clause. Not only was there agreementto the curial law of the seat, but also to the Courts of the seathaving supervisory jurisdiction over the arbitration, so that, byagreeing to the seat, the parties agreed that any challenge toan interim or final award was to be made only in the courtsof the place designated as the seat of the arbitration.

Although, ‘venue’ was not synonymous with ‘seat’, in anarbitration clause which provided for arbitration to be conductedin accordance with the Rules of the ICC in Paris (a supranationalbody of rules), provision that ‘the venue of arbitration shall beLondon, United Kingdom’ did amount to the designation of ajuridical seat...”

In Paragraph 54, it is further observed as follows:

There was little debate about the possibility of the issues relatingto the alleged submission by the claimants to the jurisdiction ofthe High Court of Delhi being heard by that court, because itCwas best fitted to determine such issues under Indian Law. WhilstI found this idea attractive initially, we are persuaded that it wouldbe wrong in principle to allow this and that it would create unduepractical problems in any event. On the basis of what I havealready decided, England is the seat of the arbitration andsince this carries with it something akin to an exclusiveDjurisdiction clause, as matter of principle the foreign courtshould not decide matters which are for this Court to decidein the context of an anti-suit injunction.

In making the aforesaid observations, the Court relied onjudgments of the Court of Appeal in v. (2007) EWCA Civ1282 (CA).”

(emphasis in original)

37. Finally, the conclusion drawn in paragraph 116 was as follows:

“116. The legal position that emerges from conspectus of allFthe decisions, seems to be, that the choice of another country asthe seat of arbitration inevitably imports an acceptance that thelaw of that country relating to the conduct and supervision ofarbitrations will apply to the proceedings

38. Also, in paragraph 123, the Court held as follows:G“

“123. Thus, it is clear that the regulation of conduct of arbitrationand challenge to an award would have to be done by the courtsof the country in which the arbitration is being conducted. Sucha court is then the supervisory court possessed of the power toannul the award. This is in keeping with the scheme of theHinternational instruments, such as the Geneva Convention and the

New York Convention as well as the UNCITRAL Model Law. Italso recognises the territorial principle which gives effect to thesovereign right of country to regulate, through its national courts,an adjudicatory duty being performed in its own country. By wayof comparative example, we may reiterate the observationsmade by the Court of Appeal, England in v. [2008 Bus LR843 : 2007 EWCA Civ 1282 (CA)] wherein it is observed that:

“It follows from this that choice of seat for thearbitration must be choice of forum for remedies seekingto attack the award.”

In the aforesaid case, the Court of Appeal had approved theobservations made in v. [(2007) 1 All ER (Comm) 591 :(2007) 1 Lloyd’s Rep 237] wherein it is observed that:

“… an agreement as to the seat of an arbitration isanalogous to an exclusive jurisdiction clause. Any claimfor remedy … as to the validity of an existing interimor final award is agreed to be made only in the courts ofthe place designated as the seat of arbitration.”

39. The Court then concluded in paragraph 194 as follows:

194. In view of the above discussion, we are of the consideredopinion that the Arbitration Act, 1996 has accepted theterritoriality principle which has been adopted inthe UNCITRAL Model Law. Section 2(2) makes declaration thatPart I of the Arbitration Act, 1996 shall apply to all arbitrationswhich take place within India. We are of the considered opinionthat Part I of the Arbitration Act, 1996 would have no applicationto international commercial arbitration held outside India.Therefore, such awards would only be subject to the jurisdictionof the Indian courts when the same are sought to be enforcedin India in accordance with the provisions contained in Part IIof the Arbitration Act, 1996. In our opinion, the provisionscontained in the Arbitration Act, 1996 make it crystal clear thatthere can be no overlapping or intermingling of the provisionscontained in Part I with the provisions contained in Part II ofthe Arbitration Act, 1996.

40. reading of paragraphs 75, 76, 96, 110, 116, 123 and 194 ofBALCO (supra) would show that where parties have selected the seat

Aof arbitration in their agreement, such selection would then amount toan exclusive jurisdiction clause, as the parties have now indicated thatthe Courts at the “seat” would alone have jurisdiction to entertainchallenges against the arbitral award which have been made at the seat.The example given in paragraph 96 buttresses this proposition, and issupported by the previous and subsequent paragraphs pointed outBhereinabove. The BALCO judgment (supra), when read as whole,applies the concept of “seat” as laid down by the English judgments(and which is in Section 20 of the Arbitration Act, 1996), by harmoniouslyconstruing Section 20 with Section 2(1)(e), so as to broaden the definitionof “court”, and bring within its ken courts of the “seat” of theCarbitration[1].

41. However, this proposition is contradicted when paragraph 96speaks of the concurrent jurisdiction of Courts within whose jurisdictionthe cause of action arises wholly or in part, and Courts within thejurisdiction of which the dispute resolution i.e. arbitration, is located.D

42. Paragraph 96 is in several parts. First and foremost, Section2(1)(e), which is the definition of “Court” under the Arbitration Act,1996 was referred to, and was construed keeping in view the provisionsin Section 20 of the Arbitration Act, 1996, which give recognition toparty autonomy in choosing the seat of the arbitration proceedings.ESecondly, the Court went on to state in two places in the said paragraphthat jurisdiction is given to two sets of Courts, namely, those Courtswhich would have jurisdiction where the cause of action is located; andthose Courts where the arbitration takes place. However, when it cameto providing neutral place as the “seat” of arbitration proceedings,F1 Section 3 of the English Arbitration Act, 1996 defines “seat” as follows:“In this Part “the seat of the arbitration” means the juridical seat of the arbitrationdesignated—

(a) by the parties to the arbitration agreement, or

(b) by any arbitral or other institution or person vested by the parties with powers inthat regard, or

(c) by the arbitral tribunal if so authorised by the parties,Gor determined, in the absence of any such designation, having regard to the parties’agreement and all the relevant circumstances.”

It will be noticed that this Section closely approximates with Section 20 of the IndianArbitration Act, 1996. The meaning of “Court” is laid down in Section 105 of theEnglish Arbitration Act, 1996 whereby the Lord Chancellor may, by order, makeprovision allocating and specifying proceedings under the Act which may go to theHHigh Court or to county courts.

the example given by the Five Judge Bench made it clear that appealsunder Section 37 of the Arbitration Act, 1996 against interim orderspassed under Section 17 of the Arbitration Act, 1996 would lie only tothe Courts of the seat - which is Delhi in that example - which are theCourts having supervisory control, or jurisdiction, over the arbitrationproceedings. The example then goes on to state that this would beirrespective of the fact that the obligations to be performed under thecontract, that is the cause of action, may arise in part either at Mumbaior Kolkata. The fact that the arbitration is to take place in Delhi is ofimportance. However, the next sentence in the said paragraph reiteratesthe concurrent jurisdiction of both Courts.

43. This Court has held that judgments of Courts are not to beconstrued as statutes, neither are they to be read as Euclid’s theorems.All observations made must be read in the context in which they appear.This was felicitously put in Amar Nath Om Prakash v. State ofPunjab (1985) 1 SCC 345, where this Court stated:

“10. There is one other significant sentence in SreenivasaGeneral Traders v. State of A.P [(1983) 4 SCC 353 : AIR 1983SC 1246] with which we must express our agreement, It wassaid: (SCC p. 377, para 27)

“With utmost respect, these observations of the learned Judgeare not to be read as Euclid’s theorems, nor as provisions of astatute. These observations must be read in the context in whichthey appear.”

We consider it proper to say, as we have already said in othercases, that judgments of courts are not to be construed asstatutes. To interpret words, phrases and provisions of statute,it may become necessary for Judges to embark into lengthydiscussions but the discussion is meant to explain and not todefine. Judges interpret statutes, they do not interpret judgments.They interpret words of statutes; their words are not to beinterpreted as statutes.

In London Graving Dock Co. Ltd. v. Horton [1951 AC 737,761 : (1951)-2 All ER 1, 14 (HL)] Lord MacDermott observed:

“The matter cannot, of course, be settled merely by treatingthe ipsissima verba of Willes, J., as though they were part ofan Act of Parliament and applying the rules of interpretation

[2019] 17 S.C.R.

Aappropriate thereto. This is not to detract from the great weightto be given to the language actually used by that mostdistinguished Judge....

In Home Office v. Dorset Yacht Co. Ltd. [(1970) 2 All ER 294: (1970) 2 WLR 1140 : 1970 AC 1004 (HL)] Lord Reid said:

B“Lord Atkin’s speech [Donoghue v. Stevension, 1932 All ER Rep1, 11 : 1932 AC 562, 580 : 101 LJPC 119 : 147 LT 281 (HL)] ...is not to be treated as if it was statutory definition. It willrequire qualification in new circumstances.”

Megarry, J. in (1971) 1 WLR 1062 observed:

C“One must not, of course, construe even reserved judgmentof even Russell, L.J. as if it were an Act of Parliament.”

And, in Herrington v. British Railways Board [(1972) 2 WLR537: (1972) 1 All Er 749 : 1972 AC 877 (HL)] Lord Morris said:“There is always peril in treating the words of speech or aDjudgment as though they were words in legislative enactment,and it is to be remembered that judicial utterances are made inthe setting of the facts of particular case.”

(emphasis supplied)

44. More recently, this Court in Union of India v. Amrit LalEManchanda (2004) 3 SCC 75 held as follows:

“15. Cases involving challenges to orders of detention before andafter execution of the order stand on different footings. Courtsshould not place reliance on decisions without discussing as tohow the factual situation fits in with the fact situation of theFdecision on which reliance is placed. Observations of courts areneither to be read as Euclid’s theorems nor as provisions of thestatute and that too taken out of their context. These observationsmust be read in the context in which they appear to have beenstated. Judgments of courts are not to be construed as statutes.To interpret words, phrases and provisions of statute, it mayGbecome necessary for judges to embark into lengthy discussionsbut the discussion is meant to explain and not to define. Judgesinterpret statutes, they do not interpret judgments. They interpretwords of statutes; their words are not to be interpreted asstatutes.”

(emphasis supplied)

45. In any case, judgment must be read as whole, so thatconflicting parts may be harmonised to reveal the true ratio of thejudgment. However, if this is not possible, and it is found that the internalconflicts within the judgment cannot be resolved, then the first endeavourthat must be made is to see whether ratio decidendi can be culledout without the conflicting portion. If not, then, as held by Lord Denningin Harper and Ors. v. National Coal Board (1974) 2 All ER 441,the binding nature of the precedent on the point on which there is aconflict in judgment, comes under cloud.[2]

2 In Harper (supra), the decision in Central Asbestos Co. Ltd. vs. Dodd (1972) 2 AllER 1135, House of Lords judgment, had to be applied. It was found that two learnedLaw Lords decided the question of law in favour of Dodd, whereas two learned LawLords decided the question of law against Dodd, stating that his claim was barred. AsLord Denning stated, the fifth Law Lord, Lord Pearson, was the odd man out, in thathe agreed with the two learned Law Lords that the law did not support Dodd’s case,but agreed with the minority judges that Dodd’s claim was not barred. This being thecase, Lord Denning spoke of the precedential value of Dodd’s case as follows:“How then do we stand on the law? We have listened to most helpful discussion byMr. McCullough on the doctrine of precedent. One thing is clear. We can only accepta line of reasoning which supports the actual decision of the House of Lords. By nopossibility can we accept any reasoning which would show the decision itself to bewrong. The second proposition is that if we can discover the reasoning on which themajority based their decision, then we should accept that as binding upon us. Thethird proposition is that, if we can discover the reasoning on which the minority basetheir decision, we should reject it. It must be wrong because it led them to the wrongresult. The fourth proposition is that, if we cannot discover the reasoning on whichthe majority based their decision, we are not bound by it. We are free to adopt anyreasoning which appears to us to be correct, so long as it supports the actual decisionof the House.In support of those propositions, I would refer to the speech of Lord Dunedin in GreatWestern Railway Co. v. Owners of S.S. Mostyn [1928] A.C. 57, 73–74, and of LordMacDermott in Walsh v. Curry [1955] N.I. 112, 124–125, and of Viscount Simondsin Midland Silicones Ltd. v. Scruttons Ltd. [1962] A.C. 446, 468–469. Applying thepropositions to Smith v. Central Asbestos Co. Ltd. [Dodd’s case] [1973] A.C. 518,the position stands thus: (1) the actual decision of the House in favour of Dodd mustbe accepted as correct, We cannot accept any line of reasoning which would show itto be wrong. We cannot therefore accept the reasoning of minority of two — LordSimon of Glaisdale and Lord Salmon — on the law. It must be wrong because it ledthem to the wrong result. (2) We ought to accept the reasoning of the three in themajority if we can discover it. But it is not discoverable. The three were divided. LordReid and Lord Morris of Borth-y-Gest took one view of the law. Lord Pearson tookanother. We cannot say that Lord Reid and Lard Morris of Borth-y-Gest were correct:because we know that their reasoning on the law was in conflict with the reasoningof the other three. We cannot say that Lord Pearson was correct: because we knowthat the reasoning which he accepted on the law led the other two (Lord Simon of

A46. If paragraphs 75, 76, 96, 110, 116, 123 and 194 of BALCO(supra) are to be read together, what becomes clear is that Section2(1)(e) has to be construed keeping in view Section 20 of the ArbitrationAct, 1996, which gives recognition to party autonomy - the ArbitrationAct, 1996 having accepted the territoriality principle in Section 2(2),following the UNCITRAL Model Law. The narrow construction ofBSection 2(1)(e) was expressly rejected by the Five Judge bench inBALCO (supra). This being so, what has then to be seen is what isthe effect Section 20 would have on Section 2(1)(e) of the ArbitrationAct, 1996.

47. It was not until this Court’s judgment in Indus MobileCDistribution Private Limited (supra) that the provisions of Section20 were properly analysed in the light of the 246[th] Report of the LawCommission of India titled, ‘Amendments to the Arbitration andConciliation Act, 1996’ (August, 2014) (hereinafter referred to as the“Law Commission Report, 2014”), under which Section 20(1) and (2)Dwould refer to the “seat” of the arbitration, and Section 20(3) wouldrefer only to the “venue” of the arbitration. Given the fact that whenparties, either by agreement or, in default of there being an agreement,where the arbitral tribunal determines particular place as the seat ofthe arbitration under Section 31(4) of the Arbitration Act, 1996, itEbecomes clear that the parties having chosen the seat, or the arbitraltribunal having determined the seat, have also chosen the Courts at theseat for the purpose of interim orders and challenges to the award.

48. This Court in Indus Mobile Distribution Private Limited(supra), after referring to Sections 2(1)(e) and 20 of the Arbitration Act,F1996, and various judgments distinguishing between the “seat” of anarbitral proceeding and “venue” of such proceeding, referred to the LawCommission Report, 2014 and the recommendations made therein asfollows:

“17. In amendments to be made to the Act, the Law CommissionGrecommended the following:

“Amendment of Section 20

Glaisdale and Lord Salmon) to wrong conclusion. So we cannot say that any of thethree in the majority was correct. (3) The result is that there is no discernible ratioamong the majority of the House of Lords. In these circumstances I think we are atHliberty to adopt the reasoning which appears to us to be correct.”

In Section 20, delete the word “Place” and add the words “Seatand Venue” before the words “of arbitration”.

(i) In Sub-section (1), after the words “agree on the” deletethe word “place” and add words “seat and venue”

(ii) In Sub-section (3), after the words “meet at any” deletethe word “place” and add word “venue”.

[NOTE: The departure from the existing phrase “place” ofarbitration is proposed to make the wording of the Act consistentwith the international usage of the concept of “seat” ofarbitration, to denote the legal home of the arbitration. Theamendment further legislatively distinguishes between the “[legal]seat” from “[mere] venue” of arbitration.]

Amendment of Section 31

17. In Section 31

(i) In Sub-section (4), after the words “its date and the” deletethe word “place” and add the word “seat”.”

18. The amended Act, does not, however, contain the aforesaidamendments, presumably because the BALCO judgment in nouncertain terms has referred to “place” as “juridical seat” forthe purpose of Section 2(2) of the Act. It further made it clearthat Section 20(1) and 20 (2) where the word “place” is used,refers to “juridical seat”, whereas in Section 20 (3), the word“place” is equivalent to “venue”. This being the settled law, itwas found unnecessary to expressly incorporate what theConstitution Bench of the Supreme Court has already done byway of construction of the Act.

19. conspectus of all the aforesaid provisions shows that themoment the seat is designated, it is akin to an exclusive jurisdictionclause. On the facts of the present case, it is clear that the seatof arbitration is Mumbai and Clause 19 further makes it clearthat jurisdiction exclusively vests in the Mumbai courts. Underthe Law of Arbitration, unlike the Code of Civil Procedure whichapplies to suits filed in courts, reference to “seat” is conceptby which neutral venue can be chosen by the parties to anarbitration clause. The neutral venue may not in the classicalsense have jurisdiction - that is, no part of the cause of action

Amay have arisen at the neutral venue and neither would any ofthe provisions of Section 16 to 21 of the Code of Civil Procedurebe attracted. In arbitration law however, as has been held above,the moment “seat” is determined, the fact that the seat is atMumbai would vest Mumbai courts with exclusive jurisdiction forpurposes of regulating arbitral proceedings arising out of theBagreement between the parties.

20. It is well settled that where more than one court hasjurisdiction, it is open for parties to exclude all other courts. Foran exhaustive analysis of the case law, see Swastik Gases PrivateLimited v. Indian Oil Corporation Limited (2013) 9 SCC 32. ThisCwas followed in recent judgment in B.E. Simoese Von StaraburgNiedenthal and Anr. v. Chhattisgarh Investment Limited: (2015)12 SCC 225. Having regard to the above, it is clear that Mumbaicourts alone have jurisdiction to the exclusion of all other courtsin the country, as the juridical seat of arbitration is at Mumbai.DThis being the case, the impugned judgment is set aside. Theinjunction confirmed by the impugned judgment will continue fora period of four weeks from the date of pronouncement of thisjudgment, so that the Respondents may take necessary stepsUnder Section 9 in the Mumbai Court. Appeals are disposed ofaccordingly.”E

This judgment has recently been followed in Brahmani RiverPellets Ltd. v. Kamachi Industries Ltd. 2019 SCC Online SC 929at paragraph 15.

49. In fact, the Law Commission Report, 2014 also recommendedFan amendment in the definition of “Court” under Section 2(1)(e) of theArbitration Act, 1996, so that in the case of international commercialarbitrations held in India, the High Court alone should be the “Court”for the purposes of the Arbitration Act, 1996, even where such HighCourt does not exercise ordinary original jurisdiction. Therecommendation made by the Law Commission, which was followed,Gleading to an amendment of the Arbitration Act, 1996, is as follows:“26. It is recommended that in case of international commercialarbitrations, where there is significant foreign element to thetransaction and at least one of the parties is foreign, the relevant“Court” which is competent to entertain proceedings arising outHof the arbitration agreement, should be the High Court, even

where such High Court does not exercise ordinary civiljurisdiction. It is expected that this would ensure that internationalcommercial arbitrations, involving foreign parties, will be heardexpeditiously and by commercial oriented judges at the HighCourt level…”

Amendment of Section 2

1. In Section 2 of the Arbitration and Conciliation Act, 1996(hereinafter referred to as the principal Act),-

xxxxxx

(ii)In sub-section (1), clause (e), after the words “Court means-” add sub-section (i) beginning with the words “in the case of anarbitration other than international commercial arbitration,” before thewords “the principal Civil Court of original jurisdiction”

In sub-section (1), clause (e) replace sub-clause (ii) by following:

“(ii) in the case of an international commercial arbitration, theHigh Court exercising jurisdiction over the principal Civil Courtof original jurisdiction in district, and includes the High Courtin exercise of its ordinary original civil jurisdiction, havingjurisdiction to decide the questions forming the subject-matter ofthe arbitration if the same had been the subject-matter of suit,but does not include any Court of grade inferior to such HighCourt, or in cases involving grant of interim measures in respectof arbitrations outside India, the High Court exercising jurisdictionover the court having jurisdiction to grant such measures as perthe laws of India, and includes the High Court in exercise of itsordinary original civil jurisdiction.”

[NOTE: This is to solve the problem of conflict of jurisdictionthat would arise in cases where interim measures are sought inIndia in cases of arbitrations seated outside India. This alsoensures that in International Commercial Arbitrations, jurisdictionis exercised by the High Court, even if such High Court doesnot exercise ordinary original civil jurisdiction.]”

50. The aforesaid amendment carried out in the definition of“Court” is also step showing the right direction, namely, that ininternational commercial arbitrations held in India, the High Court aloneis to exercise jurisdiction over such proceedings, even where no part

DEF

Aof the cause of action may have arisen within the jurisdiction of suchHigh Court, such High Court not having ordinary original jurisdiction.In such cases, the “place” where the award is delivered alone is lookedat, and the High Court given jurisdiction to supervise the arbitrationproceedings, on the footing of its jurisdiction to hear appeals fromdecrees of courts subordinate to it, which is only on the basis ofBterritorial jurisdiction which in turn relates to the “place” where theaward is made. In the light of this important change in the law, Section2(1)(e)(i) of the Arbitration Act, 1996 must also be construed in themanner indicated by this judgment.51. Take the consequence of the opposite conclusion, in the lightCof the facts of given example, as follows. New Delhi is specificallydesignated to be the seat of the arbitration in the arbitration clausebetween the parties. Part of the cause of action, however, arises inseveral places, including where the contract is partially to be performed,let us say, in remote part of Uttarakhand. If concurrent jurisdictionDwere to be the order of the day, despite the seat having been locatedand specifically chosen by the parties, party autonomy would suffer,which BALCO (supra) specifically states cannot be the case. Thus,if an application is made to District Court in remote corner of theUttarakhand hills, which then becomes the Court for the purposes ofSection 42 of the Arbitration Act, 1996 where even Section 34Eapplications have then to be made, the result would be contrary to thestated intention of the parties - as even though the parties havecontemplated that neutral place be chosen as the seat so that theCourts of that place alone would have jurisdiction, yet, any one of fiveother Courts in which part of the cause of action arises, includingCourts in remote corners of the country, would also be clothed withFjurisdiction. This obviously cannot be the case. If, therefore, theconflicting portion of the judgment of BALCO (supra) in paragraph96 is kept aside for moment, the very fact that parties have chosena place to be the seat would necessarily carry with it the decision ofboth parties that the Courts at the seat would exclusively havejurisdiction over the entire arbitral process.G

52. In fact, subsequent Division Benches of this Court haveunderstood the law to be that once the seat of arbitration is chosen, itamounts to an exclusive jurisdiction clause, insofar as the Courts at thatseat are concerned. In Enercon (India) Ltd. and Ors. v. EnerconGmbH and Anr. (2014) 5 SCC 1, this Court approved the dictum inHRoger Shashoua (supra) as follows:

“126. Examining the fact situation in the case, the Courtin Shashoua case [Shashoua v. Sharma, (2009) 2 Lloyd’s LawRep 376] observed as follows:

“The basis for the court’s grant of an anti-suit injunction of thekind sought depended upon the seat of the arbitration. Anagreement as to the seat of an arbitration brought in the lawof that country as the curial law and was analogous to anexclusive jurisdiction clause. Not only was there agreementto the curial law of the seat, but also to the courts ofthe seat having supervisory jurisdiction over the arbitration, sothat, by agreeing to the seat, the parties agreed that anychallenge to an interim or final award was to be made onlyin the courts of the place designated as the seat of thearbitration.

Although, ‘venue’ was not synonymous with ‘seat’, in anarbitration clause which provided for arbitration to be conductedin accordance with the Rules of the ICC in Paris (a supranationalbody of rules), provision that ‘the venue of arbitration shall beLondon, United Kingdom’ did amount to the designation of ajuridical seat….”

In para 54, it is further observed as follows:

“There was little debate about the possibility of the issuesrelating to the alleged submission by the claimants to thejurisdiction of the High Court of Delhi being heard by thatCourt, because it was best fitted to determine such issuesunder the Indian law. Whilst I found this idea attractive initially,we are persuaded that it would be wrong in principle to allowthis and that it would create undue practical problems inany event. On the basis of what I have already decided,England is the seat of the arbitration and since thiscarries with it something akin to an exclusive jurisdictionclause, as matter of principle the foreign court shouldnot decide matters which are for this Court to decide inthe context of an anti-suit injunction.”

53. The Court then concluded:

“138. Once the seat of arbitration has been fixed in India, it wouldbe in the nature of exclusive jurisdiction to exercise thesupervisory powers over the arbitration...”

ABC

54. In Reliance Industries Ltd. (supra), this Court held:

“45. In our opinion, it is too late in the day to contend that theseat of arbitration is not analogous to an exclusive jurisdictionclause. This view of ours will find support from numerousjudgments of this Court. Once the parties had consciously agreedthat the juridical seat of the arbitration would be London andthat the arbitration agreement will be governed by the laws ofEngland, it was no longer open to them to contend that theprovisions of Part I of the Arbitration Act would also be applicableto the arbitration agreement. This Court in Videocon IndustriesLtd. [(2011) 6 SCC 161 : (2011) 3 SCC (Civ) 257] has clearlyheld as follows: (SCC p. 178, para 33)

“33. In the present case also, the parties had agreed thatnotwithstanding Article 33.1, the arbitration agreement containedin Article 34 shall be governed by laws of England. Thisnecessarily implies that the parties had agreed to exclude theprovisions of Part I of the Act. As corollary to the aboveconclusion, we hold that the Delhi High Court did not have thejurisdiction to entertain the petition filed by the respondents underSection 9 of the Act and the mere fact that the appellant hadearlier filed similar petitions was not sufficient to clothe that HighCourt with the jurisdiction to entertain the petition filed by therespondents.”

xxxxxx

xxx

55. The effect of choice of seat of arbitration was consideredby the Court of Appeal in v. [2008 Bus LR 843 : (2008) 1Lloyd’s Law 239 : 2007 EWCA Civ 1282] . This judgment hasbeen specifically approved by this Courtin Balco [BALCO v. Kaiser Aluminium Technical Services Inc.,(2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810] and reiteratedin Enercon [Enercon (India) Ltd. v. Enercon GmbH, (2014) 5SCC 1 : (2014) 3 SCC (Civ) 59 : (2014) 1 ALR 257] .In v. [2008 Bus LR 843 : (2008) 1 Lloyd’s Law 239 : 2007EWCA Civ 1282] , the Court of Appeal has observed: (Bus LRp. 851, para 16)

“Primary conclusion

16. I shall deal with Mr Hirst’s arguments in due course but, inmy judgment, they fail to grapple with the central point at issuewhich is whether or not, by choosing London as the seat of thearbitration, the parties must be taken to have agreed thatproceedings on the award should be only those permitted byEnglish law. In my view they must be taken to have so agreedfor the reasons given by the Judge. The whole purpose of thebalance achieved by the Bermuda form (English arbitration butapplying New York law to issues arising under the policy) is thatjudicial remedies in respect of the award should be thosepermitted by English law and only those so permitted. Mr Hirstcould not say (and did not say) that English judicial remedies forlack of jurisdiction on procedural irregularities under Sections 67and 68 of the 1996 Act were not permitted; he was reduced tosaying that New York judicial remedies were also permitted.That, however, would be recipe for litigation and (what isworse) confusion which cannot have been intended by the parties.No doubt New York law has its own judicial remedies for wantof jurisdiction and serious irregularity but it could scarcely besupposed that party aggrieved by one part of an award couldproceed in one jurisdiction and party aggrieved by another partof an award could proceed in another jurisdiction. Similarly, inthe case of single complaint about an award, it could not besupposed that the aggrieved party could complain in onejurisdiction and the satisfied party be entitled to ask the otherjurisdiction to declare its satisfaction with the award. There wouldbe serious risk of parties rushing to get the first judgment orof conflicting decisions which the parties cannot havecontemplated.”56. The aforesaid observations in v. [2008 Bus LR 843 :(2008) 1 Lloyd’s Law 239 : 2007 EWCA Civ 1282] weresubsequently followed by the High Court of Justice, Queen’sBench Division, Commercial Court (England) in Sulamerica CiaNacional de Seguros SA v. Enesa Engelharia SA —Enesa [(2013) 1 WLR 102 : 2012 EWCA Civ 638 : 2012 WL14764] . In laying down the same proposition, the High Courtnoticed that the issue in that case depended upon the weight tobe given to the provision in Condition 12 of the insurance policythat “the seat of the arbitration shall be London, England”. It was

Aobserved that this necessarily carried with it the English Court’ssupervisory jurisdiction over the arbitration process. It wasobserved that:

“this follows from the express terms of the Arbitration Act,1996 and, in particular, the provisions of Section 2 whichBprovide that Part I of the Arbitration Act, 1996 applies wherethe seat of the arbitration is in England and Wales or NorthernIreland. This immediately establishes strong connectionbetween the arbitration agreement itself and the law ofEngland. It is for this reason that recent authorities have laidstress upon the locations of the seat of the arbitration as anCimportant factor in determining the proper law of thearbitration agreement.””

55. In Indus Mobile Distribution Private Limited and Ors.(supra), after clearing the air on the meaning of Section 20 of theArbitration Act, 1996, the Court in paragraph 19 (which has alreadyDbeen set out hereinabove) made it clear that the moment seat isdesignated by agreement between the parties, it is akin to an exclusivejurisdiction clause, which would then vest the Courts at the “seat” withexclusive jurisdiction for purposes of regulating arbitral proceedingsarising out of the agreement between the parties.

56. Despite the aforesaid judgments of this Court, discordantnotes have been struck by some of the High Courts. In AntrixCorporation Ltd. (supra), Division Bench of the Delhi High Court,after setting out paragraph 96 of BALCO (supra), then followed thereasoning of judgements of the Bombay High Court, in stating that theFratio decidendi of the 5 Judge Bench in BALCO (supra) is that Courtswould have concurrent jurisdiction, notwithstanding the designation ofthe seat of arbitration by agreement between the parties. The DelhiHigh Court stated:

“52. Having held that the statement in paragraph 96Gof BALCO (supra) would apply to the present case as well, thiscourt has to examine its legal consequence in light of the lawdeclared in BALCO (supra). It is important to note that in the saidparagraph (extracted above), the Supreme Court has noted thatSection 2(1)(e) of the Arbitration Act confers jurisdiction to twocourts over the arbitral process - the courts having subject matterHjurisdiction and the courts of the seat. This is evident both from

the substantive holding of the paragraph as well as the examplegiven by the Court. The Court notes that “the legislature hasintentionally given jurisdiction to two courts i.e. the courtwhich would have jurisdiction where the cause of action islocated and the courts where the arbitration takes place.”This is further reinforced by the example that the Court gavelater in the same paragraph. In the example where the partiesare from Mumbai and Kolkata and the obligations under thecontract are to be performed at either Mumbai or Kolkata, andthe parties have designated Delhi as the seat of the arbitration,in such situation, both courts would have jurisdiction, i.e. withinwhose jurisdiction the subject matter of the suit is situated (eitherMumbai or Kolkata) and the court within the jurisdiction of whichthe dispute resolution, i.e., arbitration is located (which is Delhi).Moreover, the fact that the court interpreted the term “subjectmatter of the suit” in the paragraph, also gives credence to theinterpretation that the court recognized that Section 2(1)(e) givesjurisdiction to both the cause of action courts, and the court atthe seat of the arbitration. If the Court were of the opinion thatonly the courts at the seat would have jurisdiction under Section2(1)(e) and no other court, then it would be wholly unnecessaryfor the court to interpret the term “subject matter of the suit”,since that court would anyway not have jurisdiction. In sumtherefore, paragraph 96 of BALCO (supra) gives jurisdiction toboth courts at the seat and the courts within whose jurisdictionthe cause of action arises, if the dispute were the subject matterof suit. This is what the Bombay High Court in KonkolaCopper Mines (supra) also interpreted BALCO (supra) asholding:

“The Supreme Court held that the provisions of Section2(1)(e) are purely jurisdictional in nature and can have norelevance to the question whether any part of the cause ofaction has taken place outside India. The observations whichhave been extracted above, clearly establish that the Courtwhere the arbitration takes place would be required toexercise supervisory control over the arbitral process. TheSupreme Court has held that Parliament has givenjurisdiction to two courts - the Court which would havejurisdiction where the cause of action is located and the

Court where the arbitration takes place. This is evident fromthe example which is contained in the above quoted extractfrom the decision.”

57. Having so stated, the Division Bench then went on to give arestricted meaning to Indus Mobile Distribution Private Ltd. (supra)Bin paragraph 56 as follows:

“56. In Datawind (supra), as the facts and the question framedby the Court in the second paragraph of its decision suggest, theCourt was faced with situation where the parties haddesignated both the seat and specified an exclusive forumselection clause. Therefore, its findings have to be interpreted inthat light. In fact, were this Court to find otherwise, andinterpret Datawind (supra) as holding that the designation of seatalone would amount to an exclusive forum selection clause indomestic arbitrations, then this would run contrary to the five-Judge decision in BALCO (supra), which as noticed above, gavejurisdiction under Section 2(1)(e) to two courts - one of whichwas the court of the seat, thereby clearly implying that thedesignation of seat would not amount to an exclusive forumselection clause…”

58. The Court then went on to state:

“58. The court is of the opinion that in this case, only if the partieshad designated the seat as New Delhi and also provided anexclusive forum selection clause in favour of the courts atNew Delhi, could it be said that this court would have exclusivejurisdiction over all applications filed under the Arbitration Act.FIndeed, it is open to parties to an arbitration to designate aparticular forum as the exclusive forum to which all applicationsunder the Act would lie. This would merely be an exercise ofthe right of the parties to choose one among multiple competentforums as the exclusive forum. This is clearly permissibleGexercise of the right of party autonomy as held by the SupremeCourt in Swastik Gases v. Indian Oil Corporation Ltd., (2013)9 SCC 32. Conversely, merely choosing seat, cannot amountto exercising such right of exclusive forum selection.

59. This court is of opinion that, holding otherwise would in effectrender Section 42 of the Arbitration Act ineffective and useless.

Section 42 of the Act presupposes that there is more than onecompetent forum to hear applications under the Arbitration Act,and hence to ensure efficacy of dispute resolution, this provisionenacts that the court, which is first seized of any such applicationunder the Act, would be the only court possessing jurisdiction tohear all subsequent applications. If seat were equivalent to anexclusive forum selection clause in Part-I arbitrations, then everytime parties would designate seat, that would in effect meanthat Section 42 would have no application. Thus, only those fewsituations where parties do not actually designate any seat (andthus no exclusive competence is conferred on one forum) wouldSection 42 have any role. In fact, often, when parties do notagree upon seat in the arbitration agreement, for convenience,the arbitral tribunal designates particular seat of the arbitration,or the agreement vests the discretion in the tribunal to decidethe seat (and not just the “venue”). In all those circumstancesthen as well, the decision of the tribunal to agree upon “seat”would amount to an exclusive jurisdiction clause and Section 42would have no application. This would dilute Section 42 andwould accordingly, be contrary to Parliamentary intent.Undoubtedly, in the present case, the parties have only chosenthe seat as New Delhi and have not specified an exclusive forumselection clause. Therefore, it cannot be said that the courts inDelhi have exclusive competence to entertain applications underthe Arbitration Act in the present dispute. The jurisdiction of thecourts where the cause of action arises, which in this case, isthe Bangalore City Civil Court, cannot be said to have beenexcluded therefore. Accordingly, question (ii) is also answeredin favour of Antrix...”

59. The view of the Delhi High Court in Antrix CorporationLtd. (supra), which followed judgments of the Bombay High Court,does not commend itself to us. First and foremost, it is incorrect to statethat the example given by the Court in paragraph 96 of BALCO (supra)reinforces the concurrent jurisdiction aspect of the said paragraph. Ashas been pointed out by us, the conclusion that the Delhi as well as theMumbai or Kolkata Courts would have jurisdiction in the example givenin the said paragraph is wholly incorrect, given the sentence, “Thiswould be irrespective of the fact that the obligations to beperformed under the contract were to be performed either at

AMumbai or at Kolkata, and only arbitration is to take place inDelhi”. The sentence which follows this is out of sync with this sentence,and the other paragraphs of the judgment. Thus, BALCO (supra) doesnot “unmistakably” hold that two Courts have concurrent jurisdiction,i.e., the seat Court and the Court within whose jurisdiction the causeof action arises. What is missed by these High Court judgments is theBsubsequent paragraphs in BALCO (supra), which clearly andunmistakably state that the choosing of “seat” amounts to the choosingof the exclusive jurisdiction of the Courts at which the “seat” is located.What is also missed are the judgments of this Court in Enercon (India)Ltd. (supra) and Reliance Industries (supra).C60. Equally, the ratio of the judgment in Indus MobileDistribution Private Ltd. (supra), is contained in paragraphs 19 and20. Two separate and distinct reasons are given in Indus MobileDistribution Private Ltd. (supra) for arriving at the conclusion thatthe Courts at Mumbai alone would have jurisdiction. The first reason,Dwhich is independent of the second, is that as the seat of the arbitrationwas designated as Mumbai, it would carry with it the fact that Courtsat Mumbai alone would have jurisdiction over the arbitration process.The second reason given was that in any case, following the HakamSingh (supra) principle, where more than one Court can be said to havejurisdiction, the agreement itself designated the Mumbai Courts as havingEexclusive jurisdiction. It is thus wholly incorrect to state that IndusMobile Distribution Private Ltd. (supra) has limited ratiodecidendi contained in paragraph 20 alone, and that paragraph 19, ifread by itself, would run contrary to the 5 Judge Bench decision inBALCO (supra).F61. Equally incorrect is the finding in Antrix Corporation Ltd.(supra) that Section 42 of the Arbitration Act, 1996 would be renderedineffective and useless. Section 42 is meant to avoid conflicts injurisdiction of Courts by placing the supervisory jurisdiction over allarbitral proceedings in connection with the arbitration in one Courtexclusively. This is why the section begins with non-obstante clause,Gand then goes on to state “…where with respect to an arbitrationagreement any application under this Part has been made in aCourt…” It is obvious that the application made under this part to aCourt must be Court which has jurisdiction to decide such application.The subsequent holdings of this Court, that where seat is designatedHin an agreement, the Courts of the seat alone have jurisdiction, would

require that all applications under Part I be made only in the Courtwhere the seat is located, and that Court alone then has jurisdictionover the arbitral proceedings and all subsequent applications arising outof the arbitral agreement. So read, Section 42 is not rendered ineffectiveor useless. Also, where it is found on the facts of particular casethat either no “seat” is designated by agreement, or the so-called “seat”is only convenient “venue”, then there may be several Courts wherea part of the cause of action arises that may have jurisdiction. Again,an application under Section 9 of the Arbitration Act, 1996 may bepreferred before court in which part of the cause of action arises ina case where parties have not agreed on the “seat” of arbitration, andbefore such “seat” may have been determined, on the facts of aparticular case, by the Arbitral Tribunal under Section 20(2) of theArbitration Act, 1996. In both these situations, the earliest applicationhaving been made to Court in which part of the cause of actionarises would then be the exclusive Court under Section 42, which wouldhave control over the arbitral proceedings. For all these reasons, thelaw stated by the Bombay and Delhi High Courts in this regard isincorrect and is overruled.

Tests for determination of “seat”

62.The judgments of the English Courts have examined theconcept of the “juridical seat” of the arbitral proceedings, and have laiddown several important tests in order to determine whether the “seat”of the arbitral proceedings has, in fact, been indicated in the agreementbetween the parties. The judgment of Cooke, J., in Roger Shashoua(supra), states:

“34. “London Arbitration is well known phenomenon which isoften chosen by foreign nationals with different law, such asthe law of New York, governing the substantive rights of theparties. This is because of the legislative framework andsupervisory powers of the courts here which many parties arekeen to adopt. When therefore there is an express designationof the arbitration venue as London and no designation of anyalternative place as the seat, combined with supranational bodyof rules governing the arbitration and no other significant contraryindicia, the inexorable conclusion is, to my mind, that London isthe juridical seat and English law the curial law. In my judgmentit is clear that either London has been designated by the parties

Ato the arbitration agreement as the seat of the arbitration, or,having regard to the parties’ agreement and all the relevantcircumstances, it is the seat to be determined in accordance withthe final fall back provision of section 3 of the arbitration act.”

63. It will thus be seen that wherever there is an expressBdesignation of “venue”, and no designation of any alternative placeas the “seat”, combined with supranational body of rules governingthe arbitration, and no other significant contrary indicia, the inexorableconclusion is that the stated venue is actually the juridical seat of thearbitral proceeding.

C64. In Enercon GmbH v. Enercon (India) Ltd. [2012] EWHC689, the arbitration clause between the parties read as follows:

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

65. The Court began its discussion on the “seat” of the arbitrationby referring to Roger Shashoua (supra), and then referring to ‘TheEConflict of Laws’, Dicey, Morris & Collins, 14[th] Ed. as follows:

“Moreover, as Cooke J. noted, this conclusion is consistent withthe views expressed in The Conflict of Laws, Dicey, Morris &Collins, 14th Edition at ¶16–035 where the authors state that theseat “is in most cases sufficiently indicated by the country chosenFas the place of the arbitration. For such choice of place not tobe given effect as choice of seat, there will need to be clearevidence that the parties … agreed to choose another seat forthe arbitration and that such choice will be effective to endowthe courts of that country with jurisdiction to supervise and supportthe arbitration” .G

Apart from the last sentence in clause 18.3 (ie “The provisionsof the Indian Arbitration and Conciliation Act 1996 shall apply”),it seems to me that the conclusion that London is the “seat” ofany arbitration thereunder is beyond any possible doubt. Thus themain issue is whether this last sentence is to be regarded asH“significant contrary indicia” (using the language of Cooke J.)

so as to place the “seat” of the arbitration in India. similar issuewas considered by Saville J in Union v of India v McDonnell[1993] 2 Lloyd’s Rep 48 which, of course, pre-dates the English1996 Act . The arbitration agreement in that case provided asfollows: “In the event of dispute arising out of or in connectionwith this agreement…the same shall be referred to an ArbitrationTribunal…The arbitration shall be conducted in accordance withthe procedure provided in the Indian Arbitration Act of 1940 orany enactment or modification thereof. The arbitration shall beconducted in the English language…The seat of the arbitrationproceedings shall be London, United Kingdom.” Saville Jexpressed the view that the arguments on both sides were “finelybalanced” but in effect concluded that the reference to the IndianArbitration Act 1940 did not have the effect of changing the“seat” of the arbitration designated by the parties. Rather, thephrase referring to the 1940 Act was to be reconciled with therest of the clause by reading it as referring to the internal conductof the arbitration as opposed to the external supervision of thearbitration by the Courts.”

(emphasis supplied)

66. The Court then held that although the word “venue” is notsynonymous with “seat”, on the facts of that case, London - thoughdescribed as the “venue” - was really the “seat” of the arbitration. Thiswas for the reason that London was neutral place in which neitherparty worked for gain, and in which no part of the cause of action arose.It was thus understood to be neutral place in which the proceedingscould be “anchored”. Secondly, the Court stressed on the expression“arbitration proceedings” in clause 18.3, which the Court held to be anexpression which included not just one or more individual hearings, butthe arbitral proceedings as whole, culminating in the making of anaward. The Court held:

“Second, the language in clause 18.3 refers to the “arbitrationproceedings”. That is an expression which includes not just oneor more individual or particular hearings but the arbitrationproceedings as whole including the making of an award. Inother words the parties were anchoring the whole arbitrationprocess in London right up to and including the making of anaward. The place designated for the making of an award is

Adesignation of seat. Moreover the language in clause 18.3 doesnot refer to the venue of all hearings “taking place” in London.Clause 18.3 instead provides that the venue of the arbitrationproceedings “shall be” London. This again suggests the partiesintended to anchor the arbitration proceedings to and in Londonrather than simply physically locating the arbitration hearings inBLondon. Indeed in case where evidence might need to be takenor perhaps more likely inspected in India it would make nocommercial sense to construe the provision as mandating allhearings to take place in physical place as opposed to anchoringthe arbitral process to and in designated place. All agreementsCincluding an arbitration agreement should be construed to accordwith business common sense. In my view, there is no businesscommon sense to construe the arbitration agreement (ascontended for by EIL) in manner which would simply deprivethe arbitrators of an important discretion that they possess to hearevidence in convenient geographical location.

Third, Mr Joseph QC submitted that the last sentence of clause18.3 can be reconciled with the choice of London as the seat.First, he submitted that it can be read as referring simply to PartII of the Indian 1996 Act ie the enforcement provisions. Mr EdeyQC’s response was that if that is all the last sentence meant,Ethen it would be superfluous. However, I do not consider thatany such superfluity carries much, if any, weight. Alternatively,Mr Joseph QC submitted that it can be read as referring only tothose provisions of the Indian 1996 Act which were notinconsistent with the English 1996 Act.”

(emphasis supplied)

67. The Court then held that the reference to the IndianArbitration Act, 1996 would not make London the “venue” and Indiathe “seat” of the arbitral process for several reasons, including the factthat in earlier agreements between the same parties, the seat of arbitralGproceedings was India, which was changed by this agreement to London- the explanation for this change being to render an award enforceablein India under the provisions of the Convention on the Recognition andEnforcement of Foreign Arbitral Awards (New York, 1958).

68. In Shagang South-Asia (Hong Kong) Trading Co. Ltd.Hv. Daewoo Logistics [2015] EWHC 194, the Queen’s Bench Division

(Commercial Courts) dealt with ‘Fixture Note’ in which theRespondent agreed to charter vessel to Shangang, China. The FixtureNote provided:

“Clause 23. ARBITRATION TO BE HELD IN HONGKONG.ENGLISH LAW TO BE APPLIED.”

69. After referring to Roger Shashoua (supra) and EnerconGmbH (supra), the Court held:

“In my judgment the approach adopted in Shashoua v Sharmaand in other cases is appropriate in this case also. An agreementthat the arbitration is ‘to be held in Hong Kong’ would ordinarilycarry with it an implied choice of Hong Kong as the seat ofthe arbitration and of the application of Hong Kong law as thecurial law. Clear words or ‘significant contrary indicia’ arenecessary to establish that some other seat or curial law hasbeen agreed.”

70. In Process and Indusrial Developments Ltd. v. Nigeria[2019] EWHC 2241 the Court was concerned with dispute that aroseout of gas supply and processing agreement. The arbitration clausein that case read as follows:

“The Parties agree that if any difference or dispute arisesbetween them concerning the interpretation or performance ofthis Agreement and if they fail to settle such difference or disputeamicably, then Party may serve on the other noticeof arbitration under the rules of the Nigerian Arbitration andConciliation Act (Cap A18 LFN 2004) which, except asotherwise provided herein, shall apply to any dispute between suchParties under this Agreement. Within thirty (30) days of the noticeof arbitration being issued by the initiating Party, the Parties shalleach appoint an arbitrator and the arbitrators thus appointed bythe Parties shall within fifteen (15) days from the date thelast arbitrator was appointed, appoint third arbitrator to completethe tribunal. …

The arbitration award shall be final and binding upon the Parties.The award shall be delivered within two months after theappointment of the third arbitrator or within such extended periodas may be agreed by the Parties. The costs of the arbitration shallbe borne equally by the Parties. Each Party shall, however, bear

its own lawyers’ fees. The venue of the arbitration shall beLondon, England or otherwise as agreed by the Parties.The arbitration proceedings and record shall be in the Englishlanguage.”

71. The Court then held that the gas supply agreement providedBfor the seat of the arbitration to be in London, inter alia, for thefollowing reasons:

“It is significant that clause 20 refers to the venue ”ofthe arbitration” as being London. The arbitration would continueup to and including the final award. Clause 20 does not refer toLondon as being the venue for some or all of the hearings. It doesnot use the language used in s. 16(2) ACA of where the tribunalmay “meet” or may “hear witnesses, experts or the parties”. Iconsider that the provision represented an anchoring of theentire arbitration to London rather than providing that the hearingsshould take place there.

Clause 20 provides that the venue of the arbitration ”shall be”London “or otherwise as agreed between the parties”. If thereference to venue was simply to where the hearings should takeplace, this would be an inconvenient provision and one which theparties are unlikely to have intended. It would mean that hearingsEhad to take place in London, however inconvenient that mightbe for particular hearing, unless the parties agreed otherwise.The question of where hearings should be conveniently held is,however, one which the arbitrators ordinarily have the power todecide, as indeed is envisaged in s. 16(2) ACA. That is likely toFbe much more convenient arrangement. Clearly if the partieswere in agreement as to where particular hearing were to takeplace, that would be likely to be very influential onthe arbitral tribunal. But if for whatever reason they were not inagreement, and it is not unknown for parties to arbitration tobecome at loggerheads about very many matters, then it isGconvenient for the arbitrators to be able to decide. If thatarrangement was to be displaced it would, in my judgment, haveto be spelled out clearly. Accordingly, the reference to the “venue”as being London or otherwise as agreed between the parties, isbetter read as providing that the seat of the arbitration is to beHEngland, unless the parties agree to change it. This would still

allow the arbitrators to decide where particular hearings shouldtake place, while providing for an anchor to England forsupervisory purposes, unless changed.”

(emphasis supplied)

72. Coming to the judgments of our Courts, this Court in DozcoIndia (P) Ltd. v. Doosan Infracore Co. Ltd. (2011) 16 SCC 179,was concerned with the following arbitration clause contained in theagreement between the parties:

“Article 22. Governing Laws — 22.1: This agreement shall begoverned by and construed in accordance with the laws of TheRepublic of Korea.

Article 23. Arbitration — 23.1: All disputes arising in connectionwith this agreement shall be finally settled by arbitration in Seoul,Korea (or such other place as the parties may agree in writing),pursuant to the rules of agreement then in force ofthe International Chamber of Commerce.”

73. The Court then held:

“18. In my opinion, there is essential difference between theclauses referred to in Citation Infowares Ltd. v. EquinoxCorpn. [(2009) 7 SCC 220] as also in Indtel Technical Services(P) Ltd. v. W.S. Atkins Rail Ltd. [(2008) 10 SCC 308] on onehand and Article 23.1 in the present case, on the other. ShriGurukrishna Kumar rightly pointed out that the advantage of thebracketed portion cannot be taken, particularly, in view of thedecision in Naviera Amazonica Peruana S.A. v. CompaniaInternational de Seguros del Peru [(1988) 1 Lloyd’s Rep 116(CA)] wherein it was held:“All contracts which provide for arbitration and contain foreignelement may involve three potentially relevant systems of law:(1) the law governing the substantive contract; (2) the lawgoverning the agreement to arbitrate and the performance of thatagreement; (3) the law governing the conduct of the arbitration.In the majority of the 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).”

That is exactly the case here. The language of Article 23.1 clearlysuggests that all the three laws are the laws of The Republic ofKorea with the seat of arbitration in Seoul, Korea and thearbitration to be conducted in accordance with the Rules of theInternational Chamber of Commerce.

19. In respect of the bracketed portion in Article 23.1, however,it is to be seen that it was observed in Naviera case [(1988) 1Lloyd’s Rep 116 (CA)] :

“… It seems clear that the submissions advanced belowconfused the legal ‘seat’, etc. of an arbitration with thegeographically convenient place or places for holding hearings.This distinction is nowadays common feature of internationalarbitrations and is helpfully explained in Redfern andHunter [Ed.: Redfern and Hunter on International Arbitration.]in the following passage under the heading ‘The Place ofArbitration’:

‘The preceding discussion has been on the basis that there is onlyone “place” of arbitration. This will be the place chosen by oron behalf of the parties; and it will be designated in the arbitrationagreement or the terms of reference or the minutes ofproceedings or in some other way as the place or “seat” of theEarbitration. This does not mean, however, that the ArbitralTribunal must hold all its meetings or hearings at the place ofarbitration. International commercial arbitration often involvespeople of many different nationalities, from many differentcountries. In these circumstances, it is by no means unusual foran Arbitral Tribunal to hold meetings — or even hearings — inFa place other than the designated place of arbitration, either forits own convenience or for the convenience of the parties or theirwitnesses….

It may be more convenient for an Arbitral Tribunal sitting in onecountry to conduct hearing in another country — for instance,Gfor the purpose of taking evidence…. In such circumstances,each move of the Arbitral Tribunal does not of itself mean thatthe seat of the arbitration changes. The seat of the arbitrationremains the place initially agreed by or on behalf of the parties.’

These aspects need to be borne in mind when one comes to theHJudge’s construction of this policy.”

BGS SGS SOMA JV v. NHPC LTD.

[R. F. NARIMAN, J.]

It would be clear from this that the bracketed portion in thearticle was not for deciding upon the seat of the arbitration, butfor the convenience of the parties in case they find to hold thearbitration proceedings somewhere else than Seoul, Korea. Thepart which has been quoted above from Naviera AmazonicaPeruana S.A. v. Compania International de Seguros delPeru [(1988) 1 Lloyd’s Rep 116 (CA)] supports this inference.

20. In that view, my inferences are that:

(i) The clear language of Articles 22 and 23 of thedistributorship agreement between the parties in this casespells out clear agreement between the partiesCexcluding Part I of the Act.(ii) The law laid down in Bhatia International v. BulkTrading S.A. [(2002) 4 SCC 105] and Indtel TechnicalServices (P) Ltd. v. W.S. Atkins Rail Ltd. [(2008) 10SCC 308] , as also in Citation InfowaresDLtd. v. Equinox Corpn. [(2009) 7 SCC 220] is notapplicable to the present case.

(iii) Since the interpretation of Article 23.1 suggests that thelaw governing the arbitration will be Korean Law andthe seat of arbitration will be Seoul in Korea, there willbe no question of applicability of Section 11(6) of theAct and the appointment of arbitrator in terms of thatprovision.”

74. In Videocon Industries Ltd. v. Union of India (2011) 6SCC 161, this Court was concerned with an arbitration agreementbetween the parties as follows:

“34.12. Venue and law of arbitration agreement.—The venue ofsole expert, conciliation or arbitration proceedings pursuant to thisarticle, unless the parties otherwise agree, shall be Kuala Lumpur,Malaysia, and shall be conducted in the English language. Insofaras practicable, the parties shall continue to implement the termsof this contract notwithstanding the initiation of arbitralproceedings and any pending claim or dispute. Notwithstandingthe provisions of Article 33.1, the arbitration agreement containedin this Article 34 shall be governed by the laws of England.”

A75. Referring to Sections 3 and 53 of the English Arbitration Act,1996, the Court held:

“20. We shall first consider the question whether Kuala Lumpurwas the designated seat or juridical seat of arbitration and thesame had been shifted to London. In terms of Article 34.12 ofBthe PSC entered into by 5 parties, the seat of arbitration wasKuala Lumpur, Malaysia. However, due to outbreak of epidemicSARS, the Arbitral Tribunal decided to hold its sittings first atAmsterdam and then at London and the parties did not object tothis. In the proceedings held on 14-10-2003 and 15-10-2003 atLondon, the Arbitral Tribunal recorded the consent of the partiesCfor shifting the juridical seat of arbitration to London. Whetherthis amounted to shifting of the physical or juridical seat ofarbitration from Kuala Lumpur to London? The decision of thiswould depend on holistic consideration of the relevant clausesof the PSC.

21. Though, it may appear repetitive, we deem it necessary tomention that as per the terms of agreement, the seat ofarbitration was Kuala Lumpur. If the parties wanted to amendArticle 34.12, they could have done so only by writteninstrument which was required to be signed by all of them.EAdmittedly, neither was there any agreement between the partiesto the PSC to shift the juridical seat of arbitration from KualaLumpur to London nor was any written instrument signed bythem for amending Article 34.12. Therefore, the mere fact thatthe parties to the particular arbitration had agreed for shifting ofthe seat of arbitration to London cannot be interpreted as anythingFexcept physical change of the venue of arbitration from KualaLumpur to London.”

76. In Enercon (India) Ltd. (supra), this Court was concernedwith an arbitration clause which stated that the venue shall be in London.The Court held, on the facts of that case, that since the substantiveGlaw of the contract, the curial law of the proceedings, and the lawgoverning the arbitration agreement were all India, the seat would beIndia - London only being the venue for holding meetings. The Courtthen held, following the Naviera Amazonica Peruana S.A. v.Compania Internacional De Seguros Del Peru (1988) 1 Lloyd’sHRep 116 (CA) case, that the lex fori of the arbitral proceedings, namely,

the place in which arbitration is to be held, must be considered to bethe seat of the arbitral proceedings, other things being equal, as follows:

“100. On the facts of the case, it was observed in NavieraAmazonica case [Naviera Amazonica PeruanaS.A. v. Compania Internacional De Seguros Del Peru, (1988)1 Lloyd’s Rep 116 (CA)] that since there was no contest on Law1 and Law 2, the entire issue turned on Law 3, “the law governingthe conduct of the arbitration”. This is usually referred to asthe curial or procedural law, or the lex fori. Thereafter, theCourt approvingly quoted the following observation from Dicey& Morris on the Conflict of Laws (11th Edn.): “English lawdoes not recognise the concept of delocalised arbitration or ofarbitral procedures floating in the transnational firmament,unconnected with any municipal system of law.” It is further heldthat “accordingly every arbitration must have ‘seat’ or ‘locusarbitri’ or ‘forum’ which subjects its procedural rules to themunicipal law which is there in force”. The Court thereafter cullsout the following principle:

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

The aforesaid classic statement of the conflict of law rules asquoted 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. [1970 AC 583 : (1970) 2 WLR 728 : (1970) 1 All ER 796 :(1970) 1 Lloyd’s Rep 269 (HL)] and Mustill, J. in Black ClawsonInternational Ltd. v. Papierwerke Waldhof-AschaffenburgA.G. [(1981) 2 Lloyd’s Rep 446 at p. 453] , little latercharacterised the same proposition as “the law of the placewhere the reference is conducted, the lex fori”. The position oflaw in India is the same.

77. The Court then examined Braes of Doune Wind Farm(Scotland) v. Alfred McAlpine Business Services Ltd. [2008]EWHC 436 (TCC) in some detail, and concluded in paragraph 118 asfollows:

DEF

812SUPREME COURT REPORTS

A“118. In Braes of Doune [Braes of Doune Wind Farm(Scotland) Ltd. v. Alfred McAlpine Business Services Ltd.,[2008] Bus LR 137 (QBD) : 2008 EWHC 426 (TCC)] ,detailed examination was undertaken by the Court to discern theintention of the parties as to whether the place mentioned refersto venue or the seat of the arbitration. The factual situation in theBpresent case is not as difficult or complex as the parties hereinhave only designated London as venue. Therefore, if one hasto apply the reasoning and logic of Akenhead, J., the conclusionwould be irresistible that the parties have designated India asthe seat. This is even more so as the parties have not agreedCthat the courts in London will have exclusive jurisdiction toresolve any dispute arising out of or in connection with thecontract, which was specifically provided in Clause 1.4.1 of theEPC contract examined by Akenhead, J. in Braes ofDoune [Braes of Doune Wind Farm (Scotland) Ltd. v. AlfredMcAlpine Business Services Ltd., [2008] Bus LR 137 (QBD)D: 2008 EWHC 426 (TCC)] . In the present case, except forLondon being chosen as convenient place/venue for holding themeetings of the arbitration, there is no other factor connectingthe arbitration proceedings to London.”

78. The Court then made reference to v. [2007] EWCAECiv. 182, where the Court, following v. (supra), held:

“122. Longmore, J. of the Court of Appeal observed: (C v. Dcase [[2008] Bus LR 843 : 2007 EWCA Civ 1282] , Bus LR p.851, paras 16-17)

F“16. I shall deal with Mr Hirst’s arguments in due course but, inmy judgment, they fail to grapple with the central point at issuewhich is whether or not, by choosing London as the seat of thearbitration, the parties must be taken to have agreed thatproceedings on the award should be only those permitted byEnglish law. In my view they must be taken to have so agreedGfor the reasons given by the Judge. The whole purpose of thebalance achieved by the Bermuda Form (English arbitration butapplying New York law to issues arising under the policy) is thatjudicial remedies in respect of the award should be thosepermitted by English law and only those so permitted. Mr HirstHcould not say (and did not say) that English judicial remedies for

lack of jurisdiction on procedural irregularities under Sections 67and 68 of the Indian Arbitration Act, 1996 were not permitted;he was reduced to saying that New York judicial remedieswere also [Ed.: The word “also” has been emphasised inoriginal.] permitted. That, however, would be recipe for litigationand (what is worse) confusion which cannot have been intendedby the parties. No doubt New York law has its own judicialremedies for want of jurisdiction and serious irregularity but itcould scarcely be supposed that party aggrieved by one partof an award could proceed in one jurisdiction and partyaggrieved by another part of an award could proceed in anotherjurisdiction. Similarly, in the case of single complaint about anaward, it could not be supposed that the aggrieved party couldcomplain in one jurisdiction and the satisfied party be entitled toask the other jurisdiction to declare its satisfaction with the award.There would be serious risk of parties rushing to get the firstjudgment or of conflicting decisions which the parties cannot havecontemplated.

17. It follows from this that choice of seat for the arbitrationmust be choice of forum for remedies seeking to attack theaward.”

On the facts of the case, the Court held that the seat of thearbitration was in England and accordingly entertained thechallenge to the award.”

79. Reference was made to Roger Shashoua (supra) inparagraphs 124 to 128, and then to various other judgments, includingBALCO (supra), as follows:

“134. It is accepted by most of the experts in the law relatingto international arbitration that in almost all the national laws,arbitrations are anchored to the seat/place/situs ofarbitration. Redfern and Hunter on InternationalArbitration (5th Edn., Oxford University Press, Oxford/NewYork 2009), in Para 3.54 concludes that “the seat of thearbitration is thus intended to be its centre of gravity”.In BALCO [Bharat Aluminium Co. v. Kaiser AluminiumTechnical Services Inc., (2012) 9 SCC 552 : (2012) 4 SCC (Civ)810] , it is further noticed that this does not mean that allproceedings of the arbitration are to be held at the seat of

arbitration. The arbitrators are at liberty to hold meetings at aplace which is of convenience to all concerned. This maybecome necessary as arbitrators often come from differentcountries. Therefore, it may be convenient to hold all or someof the meetings of the arbitration in location other than wherethe seat of arbitration is located. In BALCO, the relevant passagefrom Redfern and Hunter has been quoted which is as under:(SCC p. 598, para 75)

“75. … ‘The preceding discussion has been on the basis thatthere is only one “place” of arbitration. This will be the placechosen by or on behalf of the parties; and it will be designatedin the arbitration agreement or the terms of reference or theminutes of proceedings or in some other way as the place or“seat” of the arbitration. This does not mean, however, that theArbitral Tribunal must hold all its meetings or hearings at the placeof arbitration. International commercial arbitration often involvespeople of many different nationalities, from many differentcountries. In these circumstances, it is by no means unusual foran Arbitral Tribunal to hold meetings—or even hearings—in aplace other than the designated place of arbitration, either for itsown convenience or for the convenience of the parties or theirwitnesses…. It may be more convenient for an Arbitral Tribunal

sitting in one country to conduct hearing in another country —for instance, for the purpose of taking evidence…. In suchcircumstances each move of the Arbitral Tribunal does not ofitself mean that the seat of arbitration changes. The seat ofarbitration remains the place initially agreed by or on behalf of

the parties.’ (Naviera case [Naviera Amazonica PeruanaS.A. v. Compania Internacional De Seguros Del Peru, (1988)1 Lloyd’s Rep 116 (CA)] , Lloyd’s Rep p. 121)”

These observations have also been noticed in Union ofIndia v. McDonnell Douglas Corpn. [(1993) 2 Lloyd’s Rep48]”

80. The Court finally concluded:

“135. In the present case, even though the venue of arbitrationproceedings has been fixed in London, it cannot be presumed thatthe parties have intended the seat to be also in London. In aninternational commercial arbitration, venue can often be different

from the seat of arbitration. In such circumstances, the hearingof the arbitration will be conducted at the venue fixed by theparties, but this would not bring about change in the seatof the arbitration. This is precisely the ratio in Braes ofDoune [Braes of Doune Wind Farm (Scotland) Ltd. v. AlfredMcAlpine Business Services Ltd., [2008] Bus LR 137 (QBD): 2008 EWHC 426 (TCC)] . Therefore, in the present case, theseat would remain in India.”

81. In Harmony Innovation Shipping Ltd. v. Gupta CoalIndia Ltd. and Anr. (2015) 9 SCC 172, the Court dealt with anarbitration clause between the parties which read as follows:

“5. If any dispute or difference should arise under this charter,general average/arbitration in London to apply, one to beappointed by each of the parties hereto, the third by the two sochosen, and their decision or that of any two of them, shall befinal and binding, and this agreement may, for enforcing the same,be made rule of court. Said three parties to be commercial menwho are the members of the London Arbitrators Association. Thiscontract is to be governed and construed according to the Englishlaw. For disputes where total amount claimed by either party doesnot exceed US $50,000 the arbitration should be conducted inaccordance with small claims procedure of the London MaritimeArbitration Association.”

82. After referring, in extenso, to large number of Englishdecisions and the decisions of this Court, the Court concluded:

“48. In the present case, the agreement stipulates that thecontract is to be governed and construed according to the Englishlaw. This occurs in the arbitration clause. Mr Viswanathan,learned Senior Counsel, would submit that this part has to beinterpreted as part of “curial law” and not as “proper law”or “substantive law”. It is his submission that it cannot beequated with the seat of arbitration. As we perceive, it forms asa part of the arbitration clause. There is ample indication throughvarious phrases like “arbitration in London to apply”, arbitratorsare to be the members of the “London Arbitration Association”and the contract “to be governed and construed according to theEnglish law”. It is worth noting that there is no other stipulationrelating to the applicability of any law to the agreement. There

Ais no other clause anywhere in the contract. That apart, it is alsopostulated that if the dispute is for an amount less than US$50,000 then, the arbitration should be conducted in accordancewith small claims procedure of the London Maritime ArbitrationAssociation. When the aforesaid stipulations are read andappreciated in the contextual perspective, “the presumedBintention” of the parties is clear as crystal that the juridical seatof arbitration would be London.”

83. Most recently, in Brahmani River Pellets (supra), this Courtin domestic arbitration considered clause 18 - which was the arbitrationagreement between the parties - and which stated that arbitration shallCbe under Indian Arbitration and Conciliation Act, 1996, and the venueof arbitration shall be Bhubaneswar. After citing several judgments ofthis Court and then referring to Indus Mobile Distribution (supra),the Court held:

“18. Where the contract specifies the jurisdiction of the court atDa particular place, only such court will have the jurisdiction todeal with the matter and parties intended to exclude all othercourts. In the present case, the parties have agreed that the“venue” of arbitration shall be at Bhubaneswar. Considering theagreement of the parties having Bhubaneswar as the venue ofEarbitration, the intention of the parties is to exclude all othercourts. As held in Swastik, non-use of words like “exclusivejurisdiction”, “only”, “exclusive”, “alone” is not decisive and doesnot make any material difference.

19. When the parties have agreed to the have the “venue” ofFarbitration at Bhubaneshwar, the Madras High Court erred inassuming the jurisdiction under Section 11(6) of the Act. Sinceonly the Orissa High Court will have the jurisdiction to entertainthe petition filed under Section 11(6) of the Act, the impugnedorder is liable to be set aside.”

G84. On conspectus of the aforesaid judgments, it may beconcluded that whenever there is the designation of place of arbitrationin an arbitration clause as being the “venue” of the arbitrationproceedings, the expression “arbitration proceedings” would make itclear that the “venue” is really the “seat” of the arbitral proceedings,as the aforesaid expression does not include just one or more individualHor particular hearing, but the arbitration proceedings as whole,

including the making of an award at that place. This language has tobe contrasted with language such as “tribunals are to meet or havewitnesses, experts or the parties” where only hearings are to take placein the “venue”, which may lead to the conclusion, other things beingequal, that the venue so stated is not the “seat” of arbitral proceedings,but only convenient place of meeting. Further, the fact that the arbitralproceedings “shall be held” at particular venue would also indicatethat the parties intended to anchor arbitral proceedings to particularplace, signifying thereby, that that place is the seat of the arbitralproceedings. This, coupled with there being no other significant contraryindicia that the stated venue is merely “venue” and not the “seat” ofthe arbitral proceedings, would then conclusively show that such clausedesignates “seat” of the arbitral proceedings. In an Internationalcontext, if supranational body of rules is to govern the arbitration, thiswould further be an indicia that “the venue”, so stated, would be theseat of the arbitral proceedings. In national context, this would bereplaced by the Arbitration Act, 1996 as applying to the “stated venue”,which then becomes the “seat” for the purposes of arbitration.

Correctness of the judgment in Hardy Exploration andProduction (India) Ltd.

85. Roger Shashoua (supra) was expressly referred to inparagraphs 108 and 109 of BALCO (supra), and followed in paragraph110 as extracted above. BALCO (supra) then summed up the legalposition as follows:

“116. The legal position that emerges from conspectus of allthe decisions, seems to be, that the choice of another country asthe seat of arbitration inevitably imports an acceptance that thelaw of that country relating to the conduct and supervision ofarbitrations will apply to the proceedings.

117. It would, therefore, follow that if the arbitration agreementis found or held to provide for seat / place of arbitration outsideIndia, then the provision that the Arbitration Act, 1996 wouldgovern the arbitration proceedings, would not make Part I of theArbitration Act, 1996 applicable or enable Indian Courts toexercise supervisory jurisdiction over the arbitration or the award.It would only mean that the parties have contractually importedfrom the Arbitration Act, 1996, those provisions which areconcerned with the internal conduct of their arbitration and which

818SUPREME COURT REPORTS

Aare not inconsistent with the mandatory provisions of the EnglishProcedural Law/Curial Law. This necessarily follows from thefact that Part I applies only to arbitrations having their seat / placein India.”

86. In Roger Shashoua & Ors. v. Mukesh Sharma & Ors.,B(2017) 14 SCC 722, Division Bench of this Court, after referring toa number of judgments, referred to the English Shashoua judgment[3] asfollows:

“46. As stated earlier, in Shashoua Cooke, J., in the course ofanalysis, held that “London arbitration” is well knownCphenomenon which is often chosen by foreign nationals with adifferent law, such as the law of New York, governing thesubstantive rights of the parties and it is because of the legislativeframework and supervisory powers of the courts here whichmany parties are keen to adopt. The learned Judge has furtherheld that when there is an express designation of the arbitrationDvenue as London and no designation of any alternative place asthe seat, combined with supranational body of Rules governingthe arbitration and no other significant contrary indicia, theinexorable conclusion is that London is the juridical seat andEnglish law the curial law.”E87. The Division bench then turned down an argument thatBALCO (supra) had not expressly approved the Shashoua principle,as follows:“54. We had earlier extracted extensively from the said judgment,as we find, the Court after adverting to various aspects, hasFcategorically held that the High Court had not followed Shashouaprinciple. The various decisions referred to in Enercon (India)Ltd. (supra), the analysis made and the propositions deducedleads to an indubitable conclusion that Shashoua principle has beenaccepted by Enercon (India) Ltd. (supra). It is also to be notedGthat in BALCO, the Constitution Bench has not merelyreproduced few paragraphs from Shashoua but has also referredto other decisions on which Shashoua has placed reliance upon.As we notice, there is analysis of earlier judgments, though itdoes not specifically state that “propositions laid down in

Shashoua are accepted”. On clear reading, the ratio of thedecision in BALCO, in the ultimate eventuate, reflects that theShashoua principle has been accepted and the two-Judge Benchin Enercon (India) Ltd. (supra), after succinctly analyzing it, hasstated that the said principles have been accepted by theConstitution Bench. Therefore, we are unable to accept thesubmission of Mr. Chidambaram that the finding recorded inEnercon (India) Ltd. (supra) that Shashoua principle has beenaccepted in BALCO should be declared as per incuriam.”

88. The Court then set out the arbitration clause and thegoverning law on the facts of the case as follows:

“69. Though we have opined that Shashoua principle has beenaccepted in BALCO and Enercon (India) Ltd. (supra), yet wethink it apt to refer to the clauses in the agreement and scrutinizewhether there is any scope to hold that the courts in India couldhave entertained the petition. Clause 14 of the shareholdersagreement (SHA) refers to arbitration. The said Clause readsthus:

14. ARBITRATION

14.1 ...Each party shall nominate one arbitrator and in the eventof any difference between the two arbitrators, third arbitrator/umpire shall be appointed. The arbitration proceedings shall bein accordance with the Rules of Conciliation and Arbitration ofthe International Chamber of Commerce Paris.

14.2 Proceedings in such arbitrations shall be conducted in theEnglish language.

14.3 The arbitration award shall be substantiated in writing andshall be final and binding on the parties.

14.4 The venue of the arbitration shall be London, UnitedKingdom.”

70. Clause 17.6 deals with governing law, which reads asfollows:

17.6 GOVERNING LAW

This Agreement shall be governed by and construed inaccordance with the laws of India.”

A89. The court then went on to state:

“72. It is worthy to note that the arbitration agreement is notsilent as to what law and procedure is to be followed. On thecontrary, Clause 14.1 lays down that the arbitration proceedingsshall be in accordance with the Rules of Conciliation andBArbitration of the ICC. In Enercon (India) Ltd. (supra), the two-Judge Bench referring to Shashoua case accepted the view ofCooke, J. that the phrase “venue of arbitration shall be in London,UK” was accompanied by the provision in the arbitration Clauseor arbitration to be conducted in accordance with the Rules ofICC in Paris. The two-Judge Bench accepted the Rules of ICC,CParis which is supernational body of Rules as has been notedby Cooke, J. and that is how it has accepted that the parties havenot simply provided for the location of hearings to be in London.To elaborate, the distinction between the venue and the seatremains. But when Court finds there is prescription for venueDand something else, it has to be adjudged on the facts of eachcase to determine the juridical seat. As in the instant case, theagreement in question has been interpreted and it has been heldthat London is not mentioned as the mere location but the courtsin London will have the jurisdiction, another interpretativeperception as projected by the learned senior Counsel isEunacceptable.

xxxxxx

xxx

76. In view of the aforesaid analysis, we allow the appeals andset aside the judgment of the High Court of Delhi that has heldFthat courts in India have jurisdiction, and has also determined thatGautam Budh Nagar has no jurisdiction and the petition UnderSection 34 has to be filed before the Delhi High Court. Oncethe courts in India have no jurisdiction, the aforesaid conclusionsare to be nullified and we so do. In the facts and circumstancesof the case, there shall be no order as to costs.”

90. The stage is now set for consideration of the recent judgmentof Three Judge Bench of this Court in Hardy Exploration andProduction (India) Inc. (supra). The precise question that had beenreferred to the Three Judge Bench in Hardy Exploration andProduction (India) Inc. (supra) was as to whether the ratio ofHSumitomo Heavy Industries Ltd. v. ONGC Ltd. & Ors. (1998) 1

SCC 305 - judgment delivered under the Arbitration Act, 1940 - wouldhave any impact on the “juridical seat” doctrine in arbitration law, asdeveloped in England and by our courts. The Three Judge Benchanswered the reference as follows:

“27. In view of the aforesaid development of law, there is noconfusion with regard to what the seat of arbitration and venueof arbitration mean. There is no shadow of doubt that thearbitration Clause has to be read in holistic manner so as todetermine the jurisdiction of the Court. That apart, if there ismention of venue and something else is appended thereto,depending on the nature of the prescription, the Court can cometo conclusion that there is implied exclusion of Part I of theAct. The principle laid down in Sumitomo Heavy Industries Ltd.(supra) has been referred to in Reliance Industries Limited (II)and distinguished. In any case, it has no applicability to acontroversy under the Act. The said controversy has to begoverned by the BALCO principle or by the agreement or bythe principle of implied exclusion as has been held in BhatiaInternational.

28. Thus, we answer the reference accordingly.”

91. Having answered the reference, the Court then went on toconsider the arbitration clause in the facts of that case, which was setout in paragraph 30 as follows:

“30. Article 33 deals with “Sole expert, conciliation andarbitrator”. Article 33.9 and 33.12 read thus:

33.9 Arbitration proceedings shall be conducted in accordancewith the UNICITRAL Model Law on International CommercialArbitration of 1985 except that in the event of any conflictbetween the Rules and the provisions of this Article 33, theprovisions of this Article 33 shall govern.

xxxxxx

xxx

33.12 The venue of conciliation or arbitration proceedingspursuant to this Article unless the parties otherwise agree, shallbe Kuala Lumpur and shall be conducted in English language.Insofar as practicable the parties shall continue to implement theterms of this contract notwithstanding the initiation of arbitrationproceedings and any pending claim or dispute.”

A92. The Court then went on to see for itself Articles 20 and 31of the UNCITRAL Model Law and then went on to state that underthe UNCITRAL Model Law, either the juridical seat of the arbitralproceedings is indicated in the agreement between the parties, or if itis not, must be determined by the Arbitral Tribunal. Holding that theBarbitration clause, on the facts of that case, referred to the “venue” asKuala Lumpur, the Court went on to hold that there was nodetermination of any “juridical seat” by agreement, and would thereforehave to be determined by the Arbitral Tribunal. As there was no suchdetermination by the Arbitral Tribunal, the Court then concluded:C““40. The said test clearly means that the expression ofdetermination signifies an expressive opinion. In the instant case,there has been no adjudication and expression of an opinion. Thus,the word ‘place’ cannot be used as seat. To elaborate, venuecan become seat if something else is added to it as aDconcomitant. But place unlike seat, at least as is seen in thecontract, can become seat if one of the conditions precedentis satisfied. It does not ipso facto assume the status of seat. Thusunderstood, Kuala Lumpur is not the seat or place of arbitrationand the interchangeable use will not apply in stricto sensu.E

41. In view of the aforesaid analysis, the irresistible conclusionis that the Courts in India have jurisdiction and, therefore, theorder passed by the Delhi High Court is set aside. Resultantly,the appeal stands allowed and the High Court is requested toFdeal with the application preferred Under Section 34 of the Actas expeditiously as possible. There shall be no order as to costs.”

93. The Three Judge Bench in Hardy Exploration andProduction (India) Inc (supra) failed to apply the Shashoua principleto the arbitration clause in question. Had the Shashoua principle beenGapplied, the answer would have been that Kuala Lumpur, which wasstated to be the “venue” of arbitration proceedings, being governed bythe UNCITRAL Model Law, would be governed by supranationalset of rules, and there being no other contrary indicator, it would beclear that Kuala Lumpur would therefore be the juridical “seat” of theHarbitration.

94. As we have seen hereinabove, the judgement of Cooke, J.in Roger Shashoua and Ors. v. Mukesh Sharma[4], was expresslyapproved by the 5-Judge Bench in BALCO (supra), as was stated bythe Supreme Court of India in Roger Shashoua and Ors. v. MukeshSharma and Ors.[5] By failing to apply the Shashoua principle to thearbitration clause in question, the Three Judge Bench in HardyExploration and Production (India) Inc (supra) has not followed thelaw as to determination of “juridical seat”, laid down by Five JudgeBench of this Court in BALCO (supra). The result in HardyExploration and Production (India) Inc (supra) is that foreignaward that would be delivered in Kuala Lumpur, would now be liableto be challenged in the Courts at Kuala Lumpur, and also be challengedin the courts in India, under Section 34 of Part I of the Arbitration Act,1996. This is exactly the situation that this Court encountered when itdecided the case of Venture Global Engineering v. SatyamComputer Services Ltd. & Anr., (2008) 4 SCC 190. The Five JudgeBench in BALCO (supra) expressly overruled Venture GlobalEngineering (supra) as follows:

“143…With these observations, the matter was remanded backto the trial court to dispose of the suit on merits. The submissionsmade by K.K. Venugopal, as noticed in para 42, epitomise thekind of chaos which would be created by two court systems, intwo different countries, exercising concurrent jurisdiction over thesame dispute. There would be clear risk of conflicting decisions.This would add to the problems relating to enforcement of suchdecisions. Such situation would undermine the policy underlyingthe New York Convention or the UNCITRAL Model Law.

Therefore, we are of the opinion that appropriate manner tointerpret the aforesaid provision is that “alternative two” willbecome available only if “alternative one” is not available.

xxxxxxxxx

“154. At this stage, we may notice that in spite of the aforesaidinternational understanding of the second limb of Article V(1)(e),this Court has proceeded on number of occasions to annul anaward on the basis that parties had chosen Indian law to govern

4 [2009] EWHC 957 (Comm)

5 (2017) 14 SCC 722

Athe substance of their dispute. The aforesaid view has beenexpressed in Bhatia International [(2002) 4 SCC 105]and Venture Global Engg. [(2008) 4 SCC 190] In our opinion,accepting such an interpretation would be to ignore the spiritunderlying the New York Convention which embodies aconsensus evolved to encourage consensual resolution ofBcomplicated, intricate and in many cases very sensitiveinternational commercial disputes. Therefore, the interpretationwhich hinders such process ought not to be accepted. This alsoseems to be the view of the national courts in differentjurisdictions across the world. For the reasons stated above, weCare also unable to agree with the conclusions recorded by thisCourt in Venture Global Engg. [(2008) 4 SCC 190] that theforeign award could be annulled on the exclusive grounds thatthe Indian law governed the substance of the dispute. Such anopinion is not borne out by the huge body of judicial precedentsin different jurisdictions of the world.”

95. The Five Judge Bench then went on to state:

“195. With utmost respect, we are unable to agree with theconclusions recorded in the judgments of this Court in BhatiaInternational (supra) and Venture Global Engineering (supra). InEour opinion, the provision contained in Section 2(2) of theArbitration Act, 1996 is not in conflict with any of the provisionseither in Part I or in Part II of the Arbitration Act, 1996. In aforeign seated international commercial arbitration, no applicationfor interim relief would be maintainable under Section 9 or anyother provision, as applicability of Part I of the Arbitration Act,F1996 is limited to all arbitrations which take place in India.Similarly, no suit for interim injunction simplicitor would bemaintainable in India, on the basis of an international commercialarbitration with seat outside India.”

96. The decision in Hardy Exploration and Production (India)GInc. (supra) is therefore contrary to the Five Judge Bench in BALCO(supra), in that it failed to apply the Shashoua principle to the arbitrationclause in question. The Hardy Exploration and Production (India)Inc. (supra) decision would lead to the result that foreign award wouldnot only be subject to challenge in the country in which it was made,Hbut also subject to challenge under Section 34 of Part I of the Arbitration

Act, 1996, which would lead to the chaos spoken of in paragraph 143of BALCO (supra), with the concomitant risk of conflicting decisions,as held in Venture Global Engineering (supra) [overruled inBALCO (supra)], which would add to problems relating toenforcement, and undermine the policy underlying the New YorkConvention and the UNCITRAL Model Law. We, therefore, declarethat the judgment in Hardy Exploration and Production (India) Inc.(supra), being contrary to the Five Judge Bench in BALCO (supra),cannot be considered to be good law.

97. Coming to the impugned judgment in the present appeals, itis clear that the reasoning followed stems from the subject-matter testthat flows from the definition of ‘court’ in Section 2(1)(e)(i) of the Act.According to the impugned judgment, since the agreement was executedat Faridabad, part of the cause of action would arise at Faridabad,clothing Faridabad courts with jurisdiction for the purposes of filing aSection 34 petition. The second part of the reasoning is that Faridabadis the place where the request for reference to arbitration was received,as result of which part of the cause of action arose in Faridabad,which ousts the jurisdiction of Courts of New Delhi, in which no partof the cause of action arose.98. We have extracted the arbitration agreement in the presentcase (as contained in Clause 67.3 of the agreement between the parties)in paragraph 3 of this judgment. As per the arbitration agreement, incase dispute was to arise with foreign contractor, clause 67.3(ii)would apply. Under this sub-clause, dispute which would amount toan ‘international commercial arbitration’ within the meaning of Section2(1)(f) of the Arbitration Act, 1996, would have to be finally settled inaccordance with the Arbitration Act, 1996 read with the UNCITRALArbitration Rules, and in case of any conflict, the Arbitration Act, 1996is to prevail (as an award made under Part I is considered domesticaward under Section 2(7) of the Arbitration Act, 1996 notwithstandingthe fact that it is an award made in an international commercialarbitration). Applying the Shashoua principle delineated above, it is clearthat if the dispute was with foreign contractor under Clause 67.3 ofthe agreement, the fact that arbitration proceedings shall be held at NewDelhi/Faridabad, India in sub-clause (vi) of Clause 67.3, would amountto the designation of either of these places as the “seat” of arbitration,as supranational body of law is to be applied, namely, the UNCITRALArbitration Rules, in conjunction with the Arbitration Act, 1996. As such

Aarbitration would be an international commercial arbitration which wouldbe decided in India, the Arbitration Act, 1996 is to apply as well. Therebeing no other contra indication in such situation, either New Delhior Faridabad, India is the designated “seat” under the agreement, andit is thereafter for the parties to choose as to in which of the two placesthe arbitration is finally to be held.B

99. Given the fact that if there were dispute between NHPCLtd. and foreign contractor, clause 67.3(vi) would have to be read asa clause designating the “seat” of arbitration, the same must follow evenwhen sub-clause (vi) is to be read with sub-clause (i) of Clause 67.3,Cwhere the dispute between NHPC Ltd. would be with an IndianContractor. The arbitration clause in the present case states that“Arbitration Proceedingsshall be held at New Delhi/Faridabad, India…”,thereby signifying that all the hearings, including the making of theaward, are to take place at one of the stated places. Negatively speaking,the clause does not state that the venue is so that some, or all, of theDhearings take place at the venue; neither does it use language such as“the Tribunal may meet”, or “may hear witnesses, experts or parties”.The expression “shall be held” also indicates that the so-called “venue”is really the “seat” of the arbitral proceedings. The dispute is to besettled in accordance with the Arbitration Act, 1996 which, therefore,Eapplies national body of rules to the arbitration that is to be held eitherat New Delhi or Faridabad, given the fact that the present arbitrationwould be Indian and not international. It is clear, therefore, that evenin such scenario, New Delhi/Faridabad, India has been designatedas the “seat” of the arbitration proceedings.F

100. However, the fact that in all the three appeals before usthe proceedings were finally held at New Delhi, and the awards weresigned in New Delhi, and not at Faridabad, would lead to the conclusionthat both parties have chosen New Delhi as the “seat” of arbitrationunder Section 20(1) of the Arbitration Act, 1996. This being the case,Gboth parties have, therefore, chosen that the Courts at New Delhi alonewould have exclusive jurisdiction over the arbitral proceedings.Therefore, the fact that part of the cause of action may have arisenat Faridabad would not be relevant once the “seat” has been chosen,which would then amount to an exclusive jurisdiction clause so far asHCourts of the “seat” are concerned.

[R. F. NARIMAN, J.]

101. Consequently, the impugned judgment is set aside, and theSection 34 petition is ordered to be presented in the Courts in NewDelhi, as was held by the learned Single Judge of the Special CommercialCourt at Gurugram.