Shivnath Rai Harnarain (India) Ltd Vs.
M/S. Abdul Ghaffar Abdul Rehman (Dead) by LRS  INSC 401 (10 March 2008)
H.K. SEMA ARBITRATION PETITION NO. 4
OF 2007 H.K.SEMA,J.
(1) This is an application filed under
Section 11(6) of the Arbitration and Conciliation Act, 1996 (in short "the Act")
for appointment of an Arbitrator.
(2) I have heard Dr.A.M. Singhvi,
learned senior counsel for the applicant and Mr. Kailash Vasdev, learned senior
counsel for the respondents at length.
(3) The sole question that arises for
consideration in this petition is as to whether an application under Section
11(6) of the Act is maintainable? (4) In view of the order that I propose to
pass, it may not be necessary to recite the entire facts, leading to the filing
of the present application.
(5) Suffice it to say that contract
Nos.2001-SI/25, 2001-SI/26 both dated 12th January 2001 and Contract
No.2001-SII/41 dated 28th February 2001 were amended/modified by way of a common
addendum No.1 on 2.3.2001. By an addendum dated 2nd March, 2001 clause (ii) was
introduced. It reads:
"(ii) Settlement of disputes through
Indian Arbitration Council, Delhi."
(6) The dispute having arisen and as
agreed to by both the parties the matter was referred to one Mr. Samuel J.
Marshall, who was agent for both the
parties in the transactions and who also agreed to mediate between the parties.
With the intervention of Mr. Samuel J. Marshal, the parties arrived at an
agreement to resolve the dispute between the parties. The settlement agreement
was entered into on 18.1.2002. Clause 18 of the settlement reads:
"18. Should any dispute or non
implementation arise this will be adjudicated solely by Mr. Samuel J. Marshall."
(7) It also appears from the letter
dated 12.11.2002 and accepted on 21.11.2002 the parties have agreed to resolve
the dispute under the following conditions:
That the venue for resolution of this
dispute will take place in Singapore, assuming that Mr. Marshall is resident
there, alternatively the UK;
That the Agreement dated 18th January
2002 is governed by India Law; and 3. UNCITRAL rules will apply.
(8) Pursuant to the aforesaid
agreement, an application was filed sometime in January 2004, before the
Arbitrator namely Mr. Samuel J. Marshall. However, the respondents herein did
not participate in the arbitration proceedings. On 20.6.2005, the Arbitrator
proceeded with the arbitration at Singapore and passed the Award in favour of
(9) Aggrieved by the Award dated
20.6.2005, the respondents herein challenged the said Award before the High
Court of Republic of Singapore in Originating Motion No.35/2005/H inter alia on
the ground of violation of principles of natural justice. On 31.7.2006, the High
Court of Singapore, set aside the Award with a liberty to the parties to apply
for fresh arbitration. This is undisputed that the applicant herein did not
apply for fresh arbitration before the Arbitrator at Singapore. However, this
application has been filed before this Court under Section 11(6) of the Act.
(10) Dr. Singhvi, learned senior
counsel for the applicant, would submit that the agreement is governed by Indian
Law and, therefore, the law in India is applicable and thus, this Court can
appoint Arbitrator in exercise of power under Section 11(6) of the Act. Per
contra Mr. Kailash Vasdev, learned senior counsel for the respondents, would
content that this application under Section 11(6) is not maintainable inasmuch
as the parties have referred to the Arbitrator Mr.
Samuel J. Marshall in Singapore. The
Award was passed by Mr. Marshall at Singapore and the Award was set aside by the
High Court of Singapore with liberty to apply for fresh arbitration and,
therefore, the appropriate Court to apply is the Court at Singapore and this
application is misconceived.
(11) The facts are not disputed that
the parties by a mutual agreement referred the dispute to Mr. Samuel J.
Marshall. Mr. Samuel J. Marshall
proceeded with the arbitration and passed the Award on 20.6.2005, which was set
aside by the High Court of Singapore on 31.7.2006.
(12) Section 2(1)(e) of the Act
defines Court. It reads:
"(e) "Court" means the principal Civil
Court of original jurisdiction in a district, and includes the High Court in
exercise of its ordinary original civil jurisdiction, having jurisdiction to
decide the questions forming the subject-matter of the arbitration if the same
had been the subject-matter of a suit, but does not include any civil court of a
grade inferior to such principal Civil Court, or any Court of Small Causes"
Further, Section 42 of the Act
provides jurisdiction of the Court. It reads:
anything contained elsewhere in this Part or in any other law for the time being
in force, where with respect to an arbitration agreement any application under
this Part has been made in a Court, that Court alone shall have jurisdiction
over the arbitral proceedings and all subsequent applications arising out of
that agreement and the arbitral proceedings shall be made in that Court and in
no other Court."
(13) Section 42 read thus, provides
that notwithstanding anything contained elsewhere in this part or in any other
law for the time being in force, where with respect to an arbitrator agreement
any application under this part has been made in a court, that court alone shall
have jurisdiction over the arbitral proceedings and all subsequent applications
arising out of that agreement and the arbitral proceedings shall be made in that
court and in no other court.
(14) In the present case, as already
adumbrated, the parties agreed to refer to the Arbitrator, Mr. Samuel J.
Marshall for resolution of the dispute
at Singapore. The Award of the Arbitrator was passed at Singapore. The Award of
the Arbitrator was set aside by the High Court of Singapore and, therefore, in
my view, the Court at Singapore, which alone shall have jurisdiction over the
arbitral proceedings and all applications arising out of that agreement shall be
made in that Court and no other Court.
(15) In support of his contention, Dr.
Singhvi referred to the judgment of this Court, rendered in National
Agricultural Ltd., (2007) 5 SCC 692. In that case Clause 17 of the agreement
deals with arbitration and it provides that the dispute be settled amicably by
negotiation and mutual agreement and if no settlement can be reached the matter
in dispute shall then be referred to and finally resolved by an arbitration in
Hong Kong in accordance with the provisions of the Arbitration and Conciliation
(16) The question raised in that case
was that whether Section 11 of the Act is inapplicable in regard to the
arbitrations, which are to take place outside India? The argument in that case
was that as the venue of arbitration was outside India, Section 11 would not
apply and, therefore, neither the Chief Justice of India nor his designate will
have the jurisdiction to appoint an arbitrator.
(17) The aforesaid contention has been
repelled in paragraph 9 of the judgment as under:- "9. The rules of
interpretation require the clause to be read in the ordinary and natural sense,
except where that would lead to an absurdity. No part of a term or clause should
be considered as a meaningless surplusage, when it is in consonance with the
other parts of the clause and expresses the specific intention of parties. When
read normally, the arbitration clause makes it clear that the matter in dispute
shall be referred to and finally resolved by arbitration in accordance with the
provisions of the Arbitration and Conciliation Act, 1996 (or any statutory
modification, enactment or amendment thereof) and the venue of arbitration shall
be Hong Kong. This interpretation does not render any part of the arbitration
clause meaningless or redundant. Merely because the parties have agreed that the
venue of arbitration shall be Hong Kong, it does not follow that laws in force
in Hong Kong will apply. The arbitration clause states that the Arbitration and
Conciliation Act, 1996 (an Indian statute) will apply.
Therefore, the said Act will govern
the appointment of arbitrator, the reference of disputes and the entire process
and procedure of arbitration from the stage of appointment of arbitrator till
the award is made and executed/given effect to.
(18) In my view, the facts of that
case are not squarely applicable in the present case. The facts of the case at
hand, as already adumbrated, the parties to the agreement agreed to refer the
dispute to the Arbitrator Mr.Samuel J.Marshall. The Award was passed by the said
Arbitrator at Singapore. The Award was also set aside by the High Court of
Singapore with liberty to apply for fresh arbitration.
(19) Having mutually agreed to have
the dispute referred to an arbitrator at Singapore, the applicant is not
permitted to turn around and say that this Court be appointed an arbitrator.
(20) In the facts and circumstances of
the case, as recited above, filing of an application under Section 11(6) of the
Act, before this Court, is misconceived. The application is, accordingly
dismissed. No costs.