# • (2011] 8 S.C.R. 569 VIDEOCON INDUSTRIES LTD v. UNION OF INDIA AND ANR

- **Citation:** [2011] 8 S.C.R. 569
- **Court:** Supreme Court of India
- **Decided:** 2011-05-11
- **Case number:** Civil Appeal No. 4269 of 2011
- **Bench:** R.V. Raveendran, G.S. Singhvi
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/2011-8-s-c-r-569-videocon-industries-ltd-v-union-of-india-and-anr-27852
- **Pages:** 31

## Headnote

A
B
Arbitration and Conciliation Act, 1996 -
s. 9 -
Jurisdiction for entertaining petition uls. 9 -
Seat of
arbitration - Production Sharing Contract (PSC) - Dispute C
between the parties -
Matter referred to arbitral tribunal
under clause 34.3 of PSC -
In terms of clause 34.12 of
the PSC, the seat of arbitration was Kuala Lumpur,
Malaysia -
However, due to outbreak of epidemic SARS,
the arbitral tribunal decided to hold its sittings first at D
Amsterdam and then at London and the parties did not
object to this - Partial award passed - Respondent No. 1
challenged the partial award by filing a petition in the High
Court of Malaysia at Kuala Lumpur -
Thereafter, the
respondents made request to the tribunal to conduct the . E
remaining arbitral proceedings at Kuala Lumpur, but the
request was rejected and it was declared that the remaining
arbitral proceedings will be held in London - At that stage,
the respondents filed application uls.9 of the Act in Delhi
High Court for stay of the arbitral proceedings - Appellant
F
objected to the maintainability of the application and
pleaded that the Courts in India did not have the
jurisdiction to entertain challenge to the arbitra/ award -
Delhi High Court overruled the objection of the appellant
and held that the said High Court had the jurisdiction to
entertain the petition filed uls.9 - On appeal, held: As per G
the terms of agreement, the seat of arbitration was Kuala
Lumpur- If the parties wanted to amend clause 34.12, they
could have done so only by written instrument which W?S
569
H
570
SUPREME COURT REPORTS
[2011) 8 S.C.R.
A required to be signed by all of them - Admittedly, neither
there was any agreement .between the parties to the PSC
to shift the juridical seat of arbitration from Kuala Lumpur
to London nor any written instrument was signed by them
for amending clause 34.12 - Mere change in the physical
B venue of the hearing from Kuala Lumpur to Amsterdam
and London did not amount to change in the juridical seat
of arbitration -
In cases of international commercial
arbitrations held out of India provisions of Part I of the Act
would apply unless the parties by agreement, express or
c implied, exclude all or any of its provisions - In that case
the laws or rules chosen by the parties would prevail - In
the p(esent case,
the parties had agreed that
notwithstanding Clause 33. 1, the arbitration agreement
contained in Clause 34 of PSC shall be governed by laws
0 of England - This necessarily implies that the parties had
agreed to exclude the provisions of Part I of the Act - As
a corollary, the Delhi High Court did not have the
jurisdiction to entertain the petition filed by the respondents
uls.9 of the Act and the mere fact that the appellant had
E earlier filed similar petitions was not sufficient to clothe that
High Court with the jurisdiction to entertain the petition filed
by the respondents -- English Arbitration Act, 1996 - ss.3
and 53.
A Production Sharing Contract (PSC) was executed
F between re~pondent No.1-Government of India on the
one hand and a consortium of four companies
consisting of Oil and Natural Gas Corporation Limited,
Videocon Petroleum Limited, Command Petroleum
(India) Private Limited and Ravva Oil (Singapore)
G Private Limited (hereinafter referred to as "the
Contractor'') in terms of which the latter was granted
an exploration licence and mining lease to explore and
produce the hydro carbon resources owned by
respondent No.1. Subsequently, Cairn Ener:gy U.K. was
H subst!tuted in place of Command Petroleum (India)
•
• VIDEOCON INDUSTRIES LTD. v. UNION OF INDIA 571
AND ANR.
Private Limited and the name of the Videocon
A
Petroleum Limited was changed to Petrocon India
Limited, which merged the appellant -
Videocon
Industries Limited.
In 2000, disputes arose between the respondents
B
and the contractor with respect to correctness of
certain cost recoveries and profit. Sinoe the parties
could not resolve their disputes amicably, the same
were referred to th

## Text

_Characters 0–39,963 of 57,857. This is a partial read: ask again with offset=39963 for what follows._

•
(2011] 8 S.C.R. 569
VIDEOCON INDUSTRIES LTD.
v.
UNION OF INDIA AND ANR.
(Civil Appeal No. 4269 of 2011)
MAY 11, 2011
[R.V. RAVEENDRAN AND G.S. SINGHVI, JJ.]
A
B
Arbitration and Conciliation Act, 1996 -
s. 9 -
Jurisdiction for entertaining petition uls. 9 -
Seat of
arbitration - Production Sharing Contract (PSC) - Dispute C
between the parties -
Matter referred to arbitral tribunal
under clause 34.3 of PSC -
In terms of clause 34.12 of
the PSC, the seat of arbitration was Kuala Lumpur,
Malaysia -
However, due to outbreak of epidemic SARS,
the arbitral tribunal decided to hold its sittings first at D
Amsterdam and then at London and the parties did not
object to this - Partial award passed - Respondent No. 1
challenged the partial award by filing a petition in the High
Court of Malaysia at Kuala Lumpur -
Thereafter, the
respondents made request to the tribunal to conduct the . E
remaining arbitral proceedings at Kuala Lumpur, but the
request was rejected and it was declared that the remaining
arbitral proceedings will be held in London - At that stage,
the respondents filed application uls.9 of the Act in Delhi
High Court for stay of the arbitral proceedings - Appellant
F
objected to the maintainability of the application and
pleaded that the Courts in India did not have the
jurisdiction to entertain challenge to the arbitra/ award -
Delhi High Court overruled the objection of the appellant
and held that the said High Court had the jurisdiction to
entertain the petition filed uls.9 - On appeal, held: As per G
the terms of agreement, the seat of arbitration was Kuala
Lumpur- If the parties wanted to amend clause 34.12, they
could have done so only by written instrument which W?S
569
H
570
SUPREME COURT REPORTS
[2011) 8 S.C.R.
A required to be signed by all of them - Admittedly, neither
there was any agreement .between the parties to the PSC
to shift the juridical seat of arbitration from Kuala Lumpur
to London nor any written instrument was signed by them
for amending clause 34.12 - Mere change in the physical
B venue of the hearing from Kuala Lumpur to Amsterdam
and London did not amount to change in the juridical seat
of arbitration -
In cases of international commercial
arbitrations held out of India provisions of Part I of the Act
would apply unless the parties by agreement, express or
c implied, exclude all or any of its provisions - In that case
the laws or rules chosen by the parties would prevail - In
the p(esent case,
the parties had agreed that
notwithstanding Clause 33. 1, the arbitration agreement
contained in Clause 34 of PSC shall be governed by laws
0 of England - This necessarily implies that the parties had
agreed to exclude the provisions of Part I of the Act - As
a corollary, the Delhi High Court did not have the
jurisdiction to entertain the petition filed by the respondents
uls.9 of the Act and the mere fact that the appellant had
E earlier filed similar petitions was not sufficient to clothe that
High Court with the jurisdiction to entertain the petition filed
by the respondents -- English Arbitration Act, 1996 - ss.3
and 53.
A Production Sharing Contract (PSC) was executed
F between re~pondent No.1-Government of India on the
one hand and a consortium of four companies
consisting of Oil and Natural Gas Corporation Limited,
Videocon Petroleum Limited, Command Petroleum
(India) Private Limited and Ravva Oil (Singapore)
G Private Limited (hereinafter referred to as "the
Contractor'') in terms of which the latter was granted
an exploration licence and mining lease to explore and
produce the hydro carbon resources owned by
respondent No.1. Subsequently, Cairn Ener:gy U.K. was
H subst!tuted in place of Command Petroleum (India)
•
• VIDEOCON INDUSTRIES LTD. v. UNION OF INDIA 571
AND ANR.
Private Limited and the name of the Videocon
A
Petroleum Limited was changed to Petrocon India
Limited, which merged the appellant -
Videocon
Industries Limited.
In 2000, disputes arose between the respondents
B
and the contractor with respect to correctness of
certain cost recoveries and profit. Sinoe the parties
could not resolve their disputes amicably, the same
were referred to the arbitral tribunal under clause 34.3
of the said PSC. The arbitral tribunal fixed the date of
hearing at Kuala Lumpur (Malaysia), but due to
C
outbreak of epidemic SARS, the arbitral tribunal shifted
the venue of its sittings to Amsterdam in the first
instance and, thereafter, to London. Thereafter, various
proceedings were held by the arbitral tribunal at
London. Subsequently a partial award was passed.
D
Respondent No.1 challenged the partial award by
filing a petition in the High Court of Malaysia at Kuala
Lumpur. On being noticed, the appellant questioned
the maintainability of the case before the High Court
E
of Malaysia by contending that in view of clause 34.12
of the PSC only the English Courts had the jurisdiction
to entertain any challenge to the award.
After filing the petition before the .High Court of
Malaysia, the respondents made a request to the
F
tribunal to conduct the remaining arbitral proceedings
at Kuala Lumpur, but their request was rejected and it
was declared that the remaining arbitral proceedings
will be held in London. At that stage, the respondents
filed an application under Section 9 of the Arbitration
G
and Conciliation Act, 1996 in Delhi High Court for stay
of the arbitral proceedings. The appellant objected to
the maintainability of the application and pleaded that
the Courts in India did not have the jurisdiction to
entertain challenge to the arbitral award. The Single
H
572
SUPREME COURT REPORTS
[2011] 8 S.C.R.
A Judge of the Delhi High Court overruled the objection
of the appellant and held that the said High Court had
the jurisdiction to entertain the petition filed under
Section 9 of the Act.
8
The
question
which
therefore
arose
for
consideration in the present appeal was whether the
Delhi High Court could entertain the petition filed by
the respondents under Section 9 of the Arbitration and
Conciliation Act, 1996 for grant of a declaration that
C Kuala Lumpur (Malaysia) was contractual and juridical
seat of arbitration and for issue of a direction to the
arbitral tribunal to continue the hearing at Kuala
Lumpur in terms of clause 34 of PSC.
D
Allowing the appeal, the Court
HELD:1.1. The first issue is as to whether Kuala
Lumpur was the designated seat or juridical seat of
arbitration and the same had been shifted to London.
It is evident that in terms of clause 34.12 of the PSC
E entered into by 5 parties, the seat of arbitration was
Kuala Lumpur, Malaysia. However, due to outbreak of
epidemic SARS, the arbitral tribunal decided to hold its
sittings first at Amsterdam and then at London and the
parties did not object to this. In the proceedings held
at London, the arbitral tribunal recorded the consent of
F the parties for shifting the juridical seat of arbitration
to London. Whether this amounted to shifting of the
physical or juridical seat of arbitration from Kuala
Lumpur to London would depend on a holistic
consideration of the relevant clauses of the PSC. As
G per the terms of agreement, the seat of arbitration was
Kuala Lumpur. If the parties wanted to amend clause
34.12, they could have done so only by written
instrument which was required to be signed by all of
them. Admittedly, neither there was any agreement
H between the parties to the PSC to shift the juridical seat
• VIDEOCON INDUSTRIES LTD. v. UNION OF INDIA
573
AND ANR.
of arbitration from Kuala Lumpur to London nor any A
written instrument was signed by them for amending
clause 34.12. Therefore, the mere fact that the . parties
to the particular arbitration had agreed for shifting of
the seat of arbitration to London cannot be interpreted
as anything except physical change of the venue of B
arbitration from l<uala Lumpur to London. In this
connection, reference can usefully be made to Section
3 of the English Arbitration Act, 1996. A reading of the
above provision shows that under the English law the
seat of arbitration means juridical seat of arbitration, c
which can be designated by the parties to the
arbitration agreement or by any arbitral or other
institution or person empowered by the parties to do
so or by the arbitral tribunal, if so authorised by the
parties. In contrast, there is no provision in the Act D
under ·~!hich the arbitral tribunal could change the
juridical seat of arbitration which, as per the agreement
of the parties, was Kuala Lumpur. Therefore, mere
change in the physical venue of the hearing from Kuala
Lumpur to Amsterdam and London did not amount to
change in the juridical seat of arbitration. This is E
expressly indicated in Section 53 of the English
Arbitration Act, 1996. [Paras 12, 13) [585-F-H; 586-H;
587-A-C]
1.2. The next issue is whether the Delhi High Court
F
could entertain the petition filed by the respondents
under Section 9 of the Act. In Bhatia International v. Bulk
Trading S.A., a three-Judge Bench of this Court held
that the provisions of Part I of the Act would apply to
all arbitrations and to all proceedings relating thereto.
G
Where such arbitration is held in India the provisions
of Part I would compulsorily apply and parties are free
to deviate only to the extent permitted by the derogable
provisions of Part I. In cases of international commercial
arbitrations held out of India provisions of Part I would
H
574
SUPREME COURT REPORTS
[2011) 8 S.C.R.
A apply unless the parties by agreement, express or
implied, exclude all or any of its provisions. In that case
the laws or rules chosen by the parties would prevail.
Any provision, in Part I, which is contrary to or
excluded by that law or rules will not apply. [Para 15]
B [588-C-E; 593-C]
1.3. In the present case, the parties had agreed that
notwithstanding Clause 33.1 of the PSC, the arbitration
agreement contained in Clause 34 shall be governed
G by laws of England. This necessarily implies that the
parties had agreed to exclude the provisions of Part I
of the Act. As a corollary to the above conclusion, the
Delhi High Court did not have the jurisdiction to
entertain the petition filed by the respondents under
Section 9 of the Act and the mere fact that the appellant
D had earlier filed similar petitions was not sufficient to
clothe that High Court with the jurisdiction to entertain
the petition filed by the respondents. In the result, the
impugned order is set aside and the petition filed by
the respondents under Section 9 of the Act is
E dismissed. [Paras 19, 20) [599-0-F]
Bhatia International v. Bulk Trading S.A. (2002) 4 SCC
105: 2002 (2) SCR 411; Dozco India P. Ltd. v. Doosan
lnfracore Co. Ltd. 2010 (9) UJ 4521 (SC) and Venture
F Global Engineering v. Satyam Computer Services Limited
(2008) 4 sec 190: 2008 (1) SCR 501 - relied on.
G
H
Hardy Oil and Gas Limited v. Hindustan Oil Exploration
Company Limited and others (2006) 1 GLR 6.58 -
approved.
Shreejee Traco (I) Pvt. l:..td. v. Paperline International
Inc. (2003) 9 sec 79; National Thermal Power Corporation
v. Singer Company (1992) 3 SCC 551: 1992 (3) SCR 106
- referred to.
• VIDEOCON INDUSTRIES LTD. v. UNION OF INDIA 575
AND ANR.
Mulamchand v. State of Madhya Pradesh (1968) 3 A
SCR 214 and State of Haryana v. Lal Chand (1984) 3
SCR 715 - cited.
Case Law Reference:
2002 (2) SCR 411
relied on
Para 8, 9,
15, 16, 17,18
(1968) 3 SCR 214
cited
Para 10
(1984) 3 SCR 715
cited
Para 10
2010 (9) UJ 4521 (SC) relied on
Para 14
2008 (1) SCR 501
referred to Para 16
(2003) 9 sec 79
referred to Para 17
1992 (3) SCR 106
referred to Para 17
(2006) 1 GLR 658
approved
Para 17
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
4269 of 2011.
From the Judgment and Order dated 30.04.2008 of the
High Court of Delhi at New Delhi in O.M.P. No. 255 of 2006.
R.F. Nariman, Manu Nair, Mark D'Souza and Prashant
Kalra (for Suresh A. Shroff & Co.) for the Appellant.
K.R. Sasiprabhu and R. Chandrachud for the
· Respondents.
The Judgment of the Court was delivered by
G.S. SINGHVI, J. 1. Leave granted.
2. Whether the Delhi High Court could entertain the
petition filed by the respondents under Section 9 of the
Arbitration and r.onciliation Act, 199Ei (for short, "the Act")
B
c
D
E
F
G
for grant of a declaration that Kuala Lumpur (Malaysia) is
H
576
SUPREME COURT REPORTS
[2011) 8 S.C.R.
A contractual and juridical seat of arbitration and for issue of
a direction to the arbitral tribunal to continue the hearing at
Kuala Lumpur in terms of clause 34 of Production Sharing
Contract (PSC) is the question which arises for consideration
in this appeal.
B
3. Respondent No.1 -
Government of India owns
petroleum resources within the area of India's territorial
waters and exclusive economic zones. Respondent No.2 is
an arm of the Ministry of Petroleum and Natural Gas. On
C 28.10.1994, a PSC was executed between respondent No.1
on the one hand and a consortium of four companies
consisting of Oil and Natural Gas Corporation Limited,
Videocon Petroleum Limited, Command Petroleum (India)
Private Limited and Rawa Oil (Singapore) Private Limited
(hereinafter referred to as "the Contractor") in terms of which
D the latter was granted an exploration licence and mining
lease to explore ~nd produce the hydro carbon resoyrces
owned by respondent No.1. Subsequently, Cairn Energy U.K.
was substituted in place of Command Petroleum (India)
Private Limited and the name of the Videocon Petroleum
E Limited was changed to Petrocon India Limited, which
merged the appellant - Videocon Industries Limited. For the
sake of convenience, the relevant clauses of Articles 33, 34
and 35 of the PSC are extracted below:
F
·G
H
"33.1 Indian Law to Govern
Subject to the provisions of Article 34.12, this Contract
shall be governed and interpreted in accordance with
the laws of India.
33.2 Laws of India Not to be Contravened
Subject to Article 17 .1 nothing in this Contract shall
entitle the Contractor to exercise the rights, privileges
and powers conferred upon it by this Contract in a
manner which will contravene the laws of India.
•
•
VIDEOCON INDUSTRIES LTD. v. UNION OF INDIA
577
AND ANR. [G.S. SINGHVI, J.]
34.3 Unresolved Disputes
A
Subject .to the provisions of this Contract, the Parties
agree that any matter, unresolved dispute, difference or
claim which cannot be agreed or settled amicably within
twenty one (21) days may be submitted to a sole expert
8
(where Article 34.2 applies) or otherwise to an arbitral
tribunal for final decision as hereinafter provided.
34.12. Venue and Law of Arbitration Agreement
The venue of sole expert, conciliation or arbitration c
proceedings pursuant to this Article, unless the Parties
otherwise agree, shall be Kuala Lumpur, Malaysia, and
shall be conducted in the English language. Insofar as
practicable, the Parties shall continue to implement the
terms of this Contract notwithstanding the initiation of 0
arbitral proceedings and any pending claim or dispute.
Notwithstanding the provisions of Article 33.1, tile
arbitration agreement contained in this Article 34 shall
be governed by the laws of England.
35.2 Amendment
E
This Contract shall not be amended, modified, varied or
supplemented in any respect except by an instrument in
writing signed by all the Parties, which shall state the
date upon which the amendment or modification shall
F
·become effective."
4. In 2000, disputes arose between the respondents and
the contractor with respect to correctness of certain cost
recoveries and profit. Since the parties could not resolve their G
disputes amicably, the same were referred to the arbitral
tribunal under clause 34.3 of the PSC. The arbitral tribunal
fixed 28.3.2003 as the date of hearing at Kuala Lumpur
(Malaysia), but due to outbreak of epidemic SARS, the
arbitral tribunal shifted the venue of its sittings to Amsterdam
in the first instance and, thereafter, to London. In its meeting
H
578
SUPREME COURT REPORTS
(2011) 8 S.C.R.
A held on 29.6.2003 at Amsterdam, the arbitral tribunal issued
various directions in Arbitration Case No.1 of 2003. On the
next day, the arbitral tribunal issued similar directions in
Arbitration Case Nos.2 and 3 of 2003. On 19.8.2003, the
arbitral tribunal issued revised time schedule for filing of the
B statement of claim, reply and counter claim, reply to counter
claim, documents, affidavit of admission and denial of
documents in Arbitration Case No.3 of 2003 and fixed the
case for further proceedings to be held at London on
12.12.2003. By another order dated 30.10.2003, the arbitral
•
c tribunal directed that the hearing of the application filed by -·
the claimants for taking on record the supplementary claim
will take place at London on 15.11.2003, on which date, the
following order was passed in Arbitration Case No.3 of
2003:
D
E
F
G
"By consent of parties, seat of the Arbitration is shifted
to London.
Parties will deposit Rs.25,000 each as administrative
cost with the Presiding Arbitrator."
5. Thereafter, the following proceedings were held by the
arbitral tribul'lal at London:
(i)
6.2.2004 -
Interim Award pronounced in Case
No.1 of 2003 pronounced.
(ii)
7.2.2004 - proceedings held in Arbitration Case
No.2 of 2003.
(iii)
17.3.2004 - Case No.2 of 2003 fixed for 1319.5.2004 for final arguments.
·(iv)
17.3.2004 -
Case No.3 of 2003 fixed for
recording of evidence from 3.6.2004 to 9.6.2004.
(v)
17.3.2004 -
Case No.3 of 2003 fixed for
H
arguments from 20-26.7.2004.
• VIDEOCON INDUSTRIES LTD. v. UNION OF INDIA
579
AND ANR. [G.S. SINGHVI, J.]
(vi)
27.3.2004 - final arguments rescheduled. to 1620.5.2004 in Case No.2 of 2003.
(vii) 25.11.2004 - Arbitral Tribunal declared that it will
pass award in Case No.2 of 2003 and further
partial award in Case No.1 of 2003.
(viii) 3.2.2005 -
Case No.2 of 2003 fixed for 2526.2.2005 for hearing on the application for
clarification filed on behalf of the Government of
India.
(ix)
12.3.2005 -
The Tribunal declared that it will
finalise the award in Case No.3 of 2003 and
cross-objections in Case No.1 of 2003.
(x)
31.3.2005 - Partial award passed in Case No.3
of 2003.
6. Respondent No.1 challenged partial award dated
31.3.2005 by filing a petition in the High Court of Malaysia
at Kuala Lumpur. On being noticed, the appellant questioned
A
B
c
D
the maintainability of the case before the High Court of E
Malaysia by contending that in view of clause 34.12 of the
PSC only the English Courts have the jurisdiction to entertain
any challenge to the award.
7. After filing the petition before the High Court of
F
Malaysia, the respondents made a request to the tribunal to
conduct the remaining arbitral proceedings at Kuala Lumpur,
but their request was rejected vide order dated 20.4.2006
and it was declared that the remaining arbitral pr'oceedings
will be held in London.
8. At that stage, the respondents filed OMP No.255 of
2006 under Section 9 of the Act in Delhi High Court for stay
of the arbitral proceedings. They filed another OMP No.329
of 2006 questioning award dated 31.3.2005 on the issue of
G
H
580
SUPREME COURT REPORTS
(2011) 8 S.C.R.
A exchange rate. The appellant objected to the maintainability
of OMP No.255 of 2006 and pleaded that the Courts in India
do not have the jurisdiction to entertain challenge to the
arbitral award. The learned Single Judge of the Delhi High
Court overruled the objection of the appellant and held that
B the said High Court has the jurisdiction to entertain the petition
filed under Section 9 of the Act. The learned Single Judge
extensively referred to the judgment of this Court in Bhatia
International v. Bulk Tradinri S.A. (2002) 4 SCC 105 and
observed:
c
D
E
F
G
H
"The ratio of Bhatia International, in my understanding,
is that the provisions of Part-I of the Indian Arbitration
Act would apply to international commercial arbitrations
held outside India, unless the parties by agreement
express or implied, exclude all or any of its provisions.
It is noteworthy that the respondent, while challenging the
jurisdiction of this Court to entertain the present petition,
has not disputed the applicability of Part I of the Indian
Arbitration Act to international commercial arbitrations
held outside India. It is not the case of the respondent
that section 9 of the Indian Arbitrations Act does not
apply to international commercial arbitrations held
outside India. What, in fact, learned senior counsel for
the respondent has sought to contend before this Court
is that the parties herein, by ~dopting the English Law
as the proper law governing the arbitration agreement,
have expressly excluded the applicability of the Indian
Arbitration Act, and consequently, this Court has no
jurisdtction to entertain the present petition. This
contention of the respondent has been resisted by
learned senior counsel for the petitioner on the ground
that English law governs the substantive aspects of the
arbitration agreement, whilst the procedural aspect
thereof is governed by the curial law, that is, the
procedural law of the country where the seat of
•
• VIDEOCON INDUSTRIES LTD. v. UNION OF INDIA
581
AND ANR. [G.S. SINGHVI, J.)
arbitration is. It is thus contended by learned senior A
counsel for the petitioner that the juridical seat of
arbitration being in Kuala Lumpur, it is the Malaysian
laws that would govern the conduct of the arbitral
proceedings. Learned senior counsel for the respondent
has countervailed the said averment of the petitioner by
B
submitting that London, and not, Kuala Lumpur is the
'designated seat' of arbitration in view of the order
dated 15.11.2003 passed by the Arbitral Tribunal
whereby the Arbitral Tribunal recorded the consent of the
parties and shifted the seat of arbitration to London. In c
view of the petitioner having already conceded to
London as the juridical seat of arbitration, it is thus
contended by learned counsel for the respondent that
the petitioner cannot know insist on Kuala Lumpur being
the seat of arbitration.
The averments made by the respondent, without
prejudice to the veracity thereof, entail an examination
D
on merit and thus cannot be accepted at this preliminary
stage. Whether the Courts at Kuala Lumpur or London
have the jurisdiction to decide upon the seat of E
arbitration squarely hinges on the procedural law
governing the arbitration agreement. However, in a
peculiar situation such as the present one where the
governing procedural law is yet to be determined, I am
of the view that a question regarding the seat of F
arbitration can be best decided by the Court to which
the parties or to which the dispute is most closely
connected. It is important to recall that in the instant case
the parties have expressly stated in Article 33.1 of the
PSC that the laws applicable to the contract would be G
the laws in force in India and that the "Contract shall be
governed and interpreted in accordance with the laws
of India". These words are wide enough to engulf every
question arising under the contract including the disputes
between the parties and the mode of settlement. It was
H
A
B
c
D
E
F
G
H
582
SUPREME COURT REPORTS
[2011] 8 S.C.R.
in India that the PSC was executed. The form of the
PSC is closely related to the system of law in India. It
is also apparent that the PSC is to be performed in
ln_dia with the aid of Indian workmen whose conditions
of service are regulated by Indian laws. Moreover, whilst
the petitioner is an important portfolio of the Government
of India, the respondent is also a company incorporated
under the Indian laws. The contract has in every respect
the closest and most real connection with the Indian
system of law and it is by that law that the parties have
expressly evinced their intention to be bound in all
respects. The arbitration agreement is contained in one
of the clauses of the contract, and not in a separate
agreement. In the absence of any indication to the
contrary, the governing law of the contract or the "proper
law" (in the words of Dicey) of the contract being Indian
law, it is that system of law which must necessarily
govern matters concerning arbitration, although in certain
respects the law of the place of arbitration may have its
relevance in regard to procedural matters.
There is no gainsay that the Courts observe extreme
circumspection whilst affording relief under section 9 of
the Indian Arbitration Act, lest the annals of party
autonomy and sanctity of the arbitral tribunal - the
hallmarks of any arbitration - are jeopardized. It is to
be appreciated that the object underlying the grant of
interim measures under section 9 of the Indian
Arbitration Act is to facilitate and sub serve any ongoing
arbitral proceedings.
It is much apparent that the disparate stands taken by
both parties qua the seat of arbitration has resulted in
a veritable impasse in the arbitral proceedings in the
present case. The petitioner has brought to our notice
that the proceedings initiated by it at the High Court
t<uala Lumpur challenging the Partial award have been
virtually brought to a standstill owing the objections
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AND ANR. [G.S. SINGHVI, J.)
raised by the respondent on grounds of jurisdiction. The
A
petitioner has already expressed its dissidence about
the English Court deciding the question of seat of
arbitration for the reason that for the English Court to
assume jurisdiction, it is the place of arbitration which
is the relevant factor. In such a situation, of the Indian
B
Court does not adjudicate upon the present petition, the
arbitral proceedings between the parties will invariably
end in a stalemate. This, I am afraid, would not only be
inimical to the interests of the parties but also affront to
section 9 of the Indian Arbitration, the underlying object c
whereof is to sub serve and facilitate arbitral
proceedings."
9. Shri R.F. Nariman, learned senior counsel appearing
for the appellant argued that the impugned order is liable to
be set aside because the learned Single Judge
D
misconstrued and misapplied the judgment of this Court in
Bhatia International v. Bulk Trading S.A. (supra) and
erroneously held that the Delhi High Court has jurisdiction to
decide O.M.P. No.255 of 2006. Learned counsel further
argued that the learned Single Judge failed to appreciate that
E
the reliefs prayed for in O.M.P. No.255 of 2006 could not
have been granted on an application filed under Section 9
of the Act because stay of arbitral proceedings is beyond
the scope of that section. Learned senior counsel
emphasized that Section 5 of the Act expressly bars
F
intervention of the Courts except in matters expressly
provided for in the Act and, therefore, even if the petition filed
by the respondents under Section 9 could be treated as
maintainable, the High Court did not have jurisdiction over
the arbitration proceedings because the same are governed
G
by the laws of England. Shri Nariman then argued that after
having expressly consented to the shifting of the seat of
arbitration from Kuala Lumpur to Amsterdam in the first
instance and effectively taken part in the proceedings held
at London till 31.3.2005, respondent No.1 is estopped from
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[2011] 8 S.C.R.
A claiming that the seat of arbitration continues to be a.t Kuala
Lumpur. Learned senior counsel submitted that the learned
Single Judge was not justified in rejecting objection to the
maintainability of the petitions filed by respondent No.1 in the
Delhi High Court merely because the appellant had earlier
B filed O.M.P. No.179 of 2003 before the High Court. He
submitted that the doctrine of waiver and acquiescence
cannot be pressed into service for deciding the issue relating
to jurisdiction of the Delhi High Court to entertain the petition
filed under Section 9 of the Act. Shri Nariman further
c submitted that if respondent No.1 felt aggrieved against
partial award it could have filed petition under Sections 67
and 68 of the English Arbitration Act, 1996.
10. Shri Gopal Subramaniam, learned Solicitor General
submitted that as per the arbitration agreement which is
D binding on all the parties to the contract, a conscious
decision was taken by them that Kuala Lumpur will be the
s.eat of any intended arbitration, Indian law as the law of
contract and English law as the law ')f arbitration and. the
mere fact that the arbitration was held outside Kuala Lumpur
E due to the outbreak of epidemic SARS, the venue of
arbitration cannot be said to have been changed from Kuala
Lumpur to London. Learned Solicitor General emphasised
that once Kuala Lumpur was decided as the venue of
arbitration by written agreement, the same could not have
F been changed except by amending the written agreement as
provided in clause 35.2 of the PSC. He then argued that the
arbitral tribunal was not entitled to determine the seat of
arbitration and the record of proceedings held on 15.11.2003
at London cannot be construed as an agreement between
G the parties for change in the juridical seat of arbitration. He
further argued that the PSC was between the Government
of India· and ONGC Ltd., Videocon Petroleum Ltd.,
Command Petroleum (India) Pvt. Ltd. and Ravva Oil
(Singapore) Pvt. Ltd. and, therefore, the venue of arbitration
H cannot be treated to have been changed merely on the basis
•
VIDEOCON INDUSTRIES LTD. v. UNION OF INDIA
585
AND ANR. [G.S. SINGHVI, J.]
of the so called agreement between the appellant and the
A
respondents. Learned Solicitor General submitted that any
change in the PSC requires the concurrence by all the
parties to the contract and the consent, if any, given by two
of the parties cannot have the effect of changing the same.
He then argued that every written agreement on behalf of
B
respondent No.1 is required to be expressed in the name
of the President and in the absence of any writt~:n
agreement having been reached between the parties to the
PSC to amend the same, the consent given for shifting the
physical seat of arbitration to London did not result in change
C
of juridical seat of the arbitration which continues to be
Kuala Lumpur. In support of this argument, the learned
Solicitor General relied upon the judgments of this Court in
1 Mutamchand v. State of Madhya Pradesh (1968) 3 SCR
214 and State of Haryana v. Lal Chand (1984) 3 SCR 715.
D
In the end, he argued that the provisions of the English
Arbitration Act, 1996 would have applied only if the seat of
arbitration was in England and Wales. He submitted that
London cannot be treated as juridical seat of arbitration
merely because the parties had decided that the arbitration
agreement contained in Article 34 will be governed by the
E
laws of England.
11. We have considered the respective submissions
and perused the record.
12. We shall first consider the question whether Kuala
Lumpur was the designated seat or juridical seat of
arbitration and the same had been shifted to London. In
terms of clause 34.12 of the PSC entered into by 5 parties,
F
the seat of arbitration was Kuala Lumpur, Malaysia. However,
G
due to outbreak of epidemic SARS, the arbitral tribunal
decided to hold its sittings first at Amsterdam and then at
London and the parties did not object to this. In the
proceedings held on 14th and 15th October, 2003 at
London, the arbitral tribunal recorded the consent of the
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[2011] 8 S.C.R.
A
parties for shifting the juridical seat of arbitration to London.
Whether this amounted to shifting of the physical or juridical
seat of arbitration from Kuala Lumpur to London? The
decision of this would depend on a holistic consideration of
the relevant clauses of the PSC. Though, it may appear
B
repetitive, we deem it necessary to mention that as per the
terms of agreement, the seat of arbitration was Kuala
Lumpur. If the parties wanted to amend clause 34.12, they
could have done so only by written instrument which was
required to be signed by all of them. Admittedly, neither there
c was any agreement between the parties to the PSC to shift
the juridical seat of arbitration from Kuala Lumpur to London
nor any written instrument was signed by them for amending
clause 34.12. Therefore, the mere fact that the parties to the
particular arbitration had agreed for shifting of the seat of
0
arbitration to London cannot be interpreted as anything
except physical change of the venue of arbitration from Kuala
Lumpur to London. In this connection, reference can usefully
be made to Section 3 of the English Arbitration Act, 1996,
which reads as follows:
E
"3.The seat of the arbitration.
F
In this Part "the seat of the arbitration" means the
juridical seat of the arbitration designated-
(a) by the parties to the arbitration agreement, or
(b) by any arbitral or other institution or person vested
by the parties with powers in that regard, or
(c) by the arbitral tribunal if so authorised by the parties,
G
or determined, in the absence of any such designation,
having regard to the parties' agreement and all the
relevant circumstances."
13. A reading of the above reproduced provision shows
that under the English law the seat of arbitration means
H
• VIDEOCON INDUSTRIES LTD. v. UNION OF INDIA
587
AND ANR. [G.S. SINGHVI, J.]
juridical seat of arbitration, which can be designated by the
A
parties to the arbitration agreement or by any arbitral or other
institution or person empowered by the parties to do so or
by the arbitral tribunal, if so authorised by the parties. In
contrast, there is no provision in the Act under which the
arbitral tribunal could change the juridical seat of arbitration
8
which, as per the agreement of the parties, was Kuala
Lumpur. Therefore, mere change in the physical venue of the
hearing from Kuala Lumpur to Amsterdam and London did
not amount to change in the juridical seat of arbitration. This
is expressly indicated in Section 53 of the English Arbitration
C
Act, 1996, which reads as under:
"53. Place where award treated as made.
Unless otherwise agreed by the parties, where the seat
of the arbitration is in England and Wales or Northern D
Ireland, any award in the proceedings shall be treated
as made there, regardless of where it was signed,
despatched or delivered to any of the parties."
14. In Dozco India P. Ltd. v. Doosan lnfracore Co. Ltd.
2010 (9) UJ 4521 (SC), the· learned designated Judge while
E
exercising power under Section 11 (6) of the Act, referred to
the following passage from Redfern v. Hunter:
"The preceding discussion has been on the basis that
there is only one "place" of arbitration. This will be the
F
place chosen by or on behalf of the parties; and it will
be designated in the arbitration agreement or the terms
of reference or the minutes of proceedings or in some
other way as the place or "seat" of the arbitration. This
does not mean, however, that the arbitral tribunal must G
hold all its meetings or hearings at the place of
arbitration. International commercial arbitration often
involves people of many different nationalities, from many
different countries. In these circumstances, it is by no
means unusual for an arbitral tribunal to hold meetings
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[2011] 8 S.C.R.
- or even hearings - in a place other than the designated
place of arbitration, either for its own convenience- or for
the convenience of the parties or their witnesses ....
It may be more convenient for an arbitral tribunal sitting
in one country to conduct a hearing in another country -
for instance, for the purpose of taking evidence..... In
such circumstances, each move of the arbitral tribunal
· does not of itself mean that the seat of the arbitration
changes. The seat of the arbitration remains the place
initially agreed by or on behalf of the parties."
15. The next issue, which merits consideration is
whether the Delhi High Court could entertain the petition filed
by the respondents under Section 9 of the Act. In Bhatia
International v. Bulk Trading S.A. (supra), the !hree-Judge
D Bench considered the important question whether Part I of
the Act is applicable to the international arbitration taking
place outside India. After noticing the scheme of the Act and
argument of the appellant that Part I of the Act would apply
only to the cases in which the venue of arbitration is in India,
E the Court observed:
F
G
H
"A reading of the provisions shows that the said Act
applies to arbitrations which· are held in India between
Indian nationals and to international commercial
arbitrations whether held in India or out of India. Section
2(1 )(f) defines an international commercial arbitration.
The definition makes no distinction between international
commercial arbitrations held in India or outside India. An
international commercial arbitration may be held in a
country which is a signatory to either the New York
Convention or the Geneva Convention (hereinafter called
"the convention country"). An international commercial
arbitration may be held in a non-convention country. The
said Act nowhere provides that its provisions are not to
apply to international commercial arbitrations which take
place in a non-convention country. Admittedly, Part II only
•
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VIDEOCON INDUSTRIES LTD. v. UNION OF INDIA
589
AND ANR. [G.S. SINGHVI, J.]
applies to arbitrations which take place in a convention
A
country. Mr. Sen fairly admitted that Part II would not
apply to an international commercial arbitration which
takes place in a non-convention country. He also fairly
admitted that there would be countries which are not
signatories either to the New York Convention or to the
B
Geneva Convention. It is not possible to accept the
submission that the said Act makes no provision for
international commercial arbitrations which take place in
a non-convention country.
Now le~ us look at sub-sections (2), (3), (4) and (5) of C
Section 2. Sub-section (2) of Section 2 provides that
Part I would apply where the place of arbitration is in
India. To be immediately noted, that it is not providing
that Part I shall not apply where the place of arbitration
is not in India. It is also not providing that Part I will
D
"only" apply where the place of arbitration is in India
(emphasis supplied). Thus the legislature has not
provided. that Part I is not to apply to arbitrations which
take place outside India. The use of the language is
significant and important. The legislature is emphasising
E
that the provisions of Part I would apply to arbitrations
which take place in India, but not providing that the
provisions of Part I will not apply to arbitrations which
take place out of India. The wording of sub-section (2)
of Section 2 suggests that the intention of the legislature
F
was to make provisions of Part I compulsorily applicable
to an arbitration, including an international commercial
arbitration, which takes place in India. Parties cannot, by
agreement, override or exclude the non-derogable
provisions of Part I in such arbitrations. By omitting to
G
provide that Part I will not apply to international
commercial arbitrations which take place outside India
the effect would be that Part I would also apply to
international commercial arbitrations held out of India.
But by not specifically providing that the provisions of H
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SUPREME COURT REPORTS
(2011] 8 S.C.R.
Part I apply to international commercial arbitrations held
out of India, the intention of the legislature appears to
be to ally (sic allow) parties to provide by agreement
that Part I or any provision therein will. not apply. Thus
in respect of arbitrations which take place outside India
even the non-derogable provisions of Part I can be
excluded. Such an agreement may be express or
implied.
If read in this manner there would be no conflict
between Section 1 and Section 2(2). The words "every
arbitration" in sub-section (4) of Section 2 and the
words "all arbitrations and to all proceedings relating
thereto" in sub-section (5) of Section 2 are wide. Subsections (4) and (5) of Section 2 are not made subject
to sub-section (2) of Section 2.