# ROGER SHASHOUA & OTHERS v. MUKESH SHARMA & OTHERS

- **Citation:** [2017] 7 S.C.R. 442
- **Court:** Supreme Court of India
- **Decided:** 2017-07-04
- **Case number:** Civil Appeal Nos. 2841-2843 of 2017
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/roger-shashoua-others-v-mukesh-sharma-others-32061
- **Pages:** 41

## Headnote

A
B
[2017] 7 S.C.R. 442
ROGER SHASHOUA & OTHERS
v.
MUKESH SHARMA & OTHERS
(Civil Appeal Nos. 2841-2843 of 2017)
JULY 04, 2017
[DIPAK MISRA AND R. BANUMATHI, JJ.I
Arbitration and Conciliation Act, 1996 - s.34 - Applicability
of Part I or II - Plea of appellant that the Commercial court in
C
London, interpreting the clauses in the agreement has determined
that the courts in London have jurisdiction - The analysis made
therein has been appreciated in BALCO and Ei1erco11 and the
Supreme Court has approved the principle set forth in the said case
- Once the Supreme Court has accepted the principle, the principle
governs as it holds the field and it becomes a binding precedent -
D
Clause 14 of the shareholders agreement (SHA) refers to arbitration
- Clause 14.1 lays down that the arbitration proceedings shall be
in accordance with the Rules of Conciliation and Arbitration of the
ICC - There is distinction between the venue and the seat - But
when a Court finds that there is prescription for venue and something
E
F
G
H
else, it has to be adjudged on the facts of each case to determine
the juridical seat- The agreement in question having been interpreted
in a particular manner by the English courts and the said
interpretation having gained acceptance by the Supreme Court, the
inescapable conclusion is that the courts in India have. no
jurisdiction.
Bharat Aluminium Co. v. Kaiser Aluminium Technical
Services Inc. (BALCO) [2012) 12 SCR 327 : (2012) 9
SCC 552; Enercon (India) Ltd. v. Enercon GmbH [20141
2 SCR 855 : (2014) 5 SCC 1; Reliance Industries
Limited and another v. Union of India [20141 6
SCR 456 : (2014) 7 SCC 603 - relied on.
National Thermal Power Corporation v. Singer
Company (19921 3 SCR 106: (1992) 3 SCC 551;
Bhatia International v. Bulk Trading S.A. and another
[200212 SCR 411: (2002) 4 SCC 105; Venture Global
Engineering v. Satyam Computer Services Ltd. [2008)
442
ROGER SHASHOUA& OTHERS v. MUKESH SHARMA& OTHERS
1 SCR 501 : (2008) 4 SCC 190; lndtel Technical
Services (P) Ltd. v. W.S. Atkins Rail Ltd. [2008) 12
SCR 673 : (2008) 10 SCC 308; Citation lnfowares
Limited v. Equinox Corporation [2009) 6 SCR 737 :
(2009) 7 SCC 220; Videocon Industries Limited v.
Union of India and another [2011) 8 SCR 569: (2011)
6 SCC 161; Dozco India Private Limited v. Doosan
lnfracore Company Limited [2010) 12 SCR 259
: (2011) 6 SCC 179; Sumitomo Heavy Industries Ltd.
v. ONGC Ltd. [1997) 6 Suppl. SCR 186: (1998) 1 sec
305; Yograj Infrastructure Limited v. Ssang Yong
Engineering and Construction Company Limited [20111
14 SCR 301 : (2011) 9 SCC 735; Sundeep Kumar
Bafna v. State of Maharashtra and another [20141 4
SCR 486 : (2014) 16 SCC 623; Fibre Boards Private
Limited, Bangalore v. Commissioner of Income Tax,
Bangalore [2015) 8 SCR 906 : (2015) 10 SCC 333;
Union of India v. Raghubir Singh [19891 3 SCR 316:
(1989) 2 SCC 754; Chandra Prakash v. State of
U.P. [2002) 2 SCR 913 : (2002) 4 SCC 234; State of
Orissa v. M.A. Tulloch and Co. [19641 4 SCR 461 :
AIR 1964 SC 1284; Raya/a Corporation (P) Ltd. v.
Director of Enforcement [1970) 1 SCR 639: (1969) 2
SCC 412; State of U.P. v. Synthetics and Chemicals
Ltd. (1991) 4 SCC 139; Synthetics and Chemicals Ltd.
and others v. State of U.P. and others [19891 1 Suppl.
SCR 623 : (1990) 1 SCC 109; Vikas Yadav v. State of
Uttar Pradesh and others [2016) 8 SCR 872 : (2016)
9 SCC 541; Regional Manager v. Pawan Kumar Dubey
[1976[ Suppl. SCR 67 : (1976) 3 SCC 344; Director
of Settlements, A.P. and others v. M.R. Apparao and
another [2002) 2 SCR 661 : (2002) 4 SCC 638;
Commissioner of Income Tax v. Sun Engineering Works
(P) Ltd. [1992) 1 Suppl. SCR 732 : (1992) 4 sec 363;
Ambica Quarry Works v. State of Gujarat and others
[1987) 1 SCR 562 : (1987) 1 SCC 213; State of Assam
v. Barak Upatyaka D. U. Karmachari Sanstha (2009) 5
SCC 694; Kapila Hingorani (l)v. State of Bihar, [2003]
1 Suppl. SCR 175: (2003) 6 SCC 1; Kapila Hingorani
443
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444
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SUPREME COURT REPORTS
[2017] 7 S.C.R.
(II) v. Sta

## Text

_Characters 0–39,936 of 93,850. This is a partial read: ask again with offset=39936 for what follows._

A
B
[2017] 7 S.C.R. 442
ROGER SHASHOUA & OTHERS
v.
MUKESH SHARMA & OTHERS
(Civil Appeal Nos. 2841-2843 of 2017)
JULY 04, 2017
[DIPAK MISRA AND R. BANUMATHI, JJ.I
Arbitration and Conciliation Act, 1996 - s.34 - Applicability
of Part I or II - Plea of appellant that the Commercial court in
C
London, interpreting the clauses in the agreement has determined
that the courts in London have jurisdiction - The analysis made
therein has been appreciated in BALCO and Ei1erco11 and the
Supreme Court has approved the principle set forth in the said case
- Once the Supreme Court has accepted the principle, the principle
governs as it holds the field and it becomes a binding precedent -
D
Clause 14 of the shareholders agreement (SHA) refers to arbitration
- Clause 14.1 lays down that the arbitration proceedings shall be
in accordance with the Rules of Conciliation and Arbitration of the
ICC - There is distinction between the venue and the seat - But
when a Court finds that there is prescription for venue and something
E
F
G
H
else, it has to be adjudged on the facts of each case to determine
the juridical seat- The agreement in question having been interpreted
in a particular manner by the English courts and the said
interpretation having gained acceptance by the Supreme Court, the
inescapable conclusion is that the courts in India have. no
jurisdiction.
Bharat Aluminium Co. v. Kaiser Aluminium Technical
Services Inc. (BALCO) [2012) 12 SCR 327 : (2012) 9
SCC 552; Enercon (India) Ltd. v. Enercon GmbH [20141
2 SCR 855 : (2014) 5 SCC 1; Reliance Industries
Limited and another v. Union of India [20141 6
SCR 456 : (2014) 7 SCC 603 - relied on.
National Thermal Power Corporation v. Singer
Company (19921 3 SCR 106: (1992) 3 SCC 551;
Bhatia International v. Bulk Trading S.A. and another
[200212 SCR 411: (2002) 4 SCC 105; Venture Global
Engineering v. Satyam Computer Services Ltd. [2008)
442
ROGER SHASHOUA& OTHERS v. MUKESH SHARMA& OTHERS
1 SCR 501 : (2008) 4 SCC 190; lndtel Technical
Services (P) Ltd. v. W.S. Atkins Rail Ltd. [2008) 12
SCR 673 : (2008) 10 SCC 308; Citation lnfowares
Limited v. Equinox Corporation [2009) 6 SCR 737 :
(2009) 7 SCC 220; Videocon Industries Limited v.
Union of India and another [2011) 8 SCR 569: (2011)
6 SCC 161; Dozco India Private Limited v. Doosan
lnfracore Company Limited [2010) 12 SCR 259
: (2011) 6 SCC 179; Sumitomo Heavy Industries Ltd.
v. ONGC Ltd. [1997) 6 Suppl. SCR 186: (1998) 1 sec
305; Yograj Infrastructure Limited v. Ssang Yong
Engineering and Construction Company Limited [20111
14 SCR 301 : (2011) 9 SCC 735; Sundeep Kumar
Bafna v. State of Maharashtra and another [20141 4
SCR 486 : (2014) 16 SCC 623; Fibre Boards Private
Limited, Bangalore v. Commissioner of Income Tax,
Bangalore [2015) 8 SCR 906 : (2015) 10 SCC 333;
Union of India v. Raghubir Singh [19891 3 SCR 316:
(1989) 2 SCC 754; Chandra Prakash v. State of
U.P. [2002) 2 SCR 913 : (2002) 4 SCC 234; State of
Orissa v. M.A. Tulloch and Co. [19641 4 SCR 461 :
AIR 1964 SC 1284; Raya/a Corporation (P) Ltd. v.
Director of Enforcement [1970) 1 SCR 639: (1969) 2
SCC 412; State of U.P. v. Synthetics and Chemicals
Ltd. (1991) 4 SCC 139; Synthetics and Chemicals Ltd.
and others v. State of U.P. and others [19891 1 Suppl.
SCR 623 : (1990) 1 SCC 109; Vikas Yadav v. State of
Uttar Pradesh and others [2016) 8 SCR 872 : (2016)
9 SCC 541; Regional Manager v. Pawan Kumar Dubey
[1976[ Suppl. SCR 67 : (1976) 3 SCC 344; Director
of Settlements, A.P. and others v. M.R. Apparao and
another [2002) 2 SCR 661 : (2002) 4 SCC 638;
Commissioner of Income Tax v. Sun Engineering Works
(P) Ltd. [1992) 1 Suppl. SCR 732 : (1992) 4 sec 363;
Ambica Quarry Works v. State of Gujarat and others
[1987) 1 SCR 562 : (1987) 1 SCC 213; State of Assam
v. Barak Upatyaka D. U. Karmachari Sanstha (2009) 5
SCC 694; Kapila Hingorani (l)v. State of Bihar, [2003]
1 Suppl. SCR 175: (2003) 6 SCC 1; Kapila Hingorani
443
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c
D
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F
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H
444
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B
c
D
E
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SUPREME COURT REPORTS
[2017] 7 S.C.R.
(II) v. State of Bihar [2005) 1 SCR 456 : (2005) 2 SCC
262; Kanwar Singh Saini v. High Court of Delhi [2011)
15 SCR 972 : (2012) 4 SCC 307; Jagmittar Sain
Bhagat v. Director, Health Services, Haryana [20131 8
SCR 77 : (2013) 10 SCC 136; Zuari Cement Ltd. v.
Regional Director, Employees' State Insurance
Corporation (2015) 6 SCR 474 : (2015) 7 SCC 690;
United Commercial Bank Ltd. v. Workmen 1951 AIR
230: [1951) SCR 380; State of Gujarat v. Rajesh Kumar
Chimanlal Barot (1996) 5 SCC 477; Kesar Singh v.
Sadhu [19961 1 SCR 1011: (1996) 7 sec 711;
Kondiba Dagadu Kadam v. Savitribai Sopan
Gujar [1999) 2 SCR 728 : (1999) 3 SCC 722;
Collector of Central Excise, Kanpur v. Flock (India)
Pvt. Ltd. [2000) 2 Suppl. SCR 156 : (2000) 6 sec 650;
Union of India v. Reliance Industries Limited [2015)
10 SCR 85 : (2015) 10 SCC 213 - referred to
Union of India v. McDonnell Douglas Corpn. (1993) 2
Lloyd's Rep 48; Naviera Amazonica Peruana S.A. v.
Compania International de Seguros de!; Peru (1988)
1 Lloyd's Rep 116 (CA); C v. D 2008 Bus LR 843 :
2007 EWCA Civ 1282 (CA); Braes of Daune Wind
Farm (Scotland) Ltd. v. Alfred McA/pine Business
Services Ltd. 2008 Bus LR D 137 (QBD) : 2008 EWHC
426 (TCC); Lesotho Highlands Development Authority
v. Impregilo SpA (2005) 3 ALL ER 789; Shashoua v.
Sharma 2009 EWHC 957 (Comm) - referred to.
Case Law Reference
[2012) 12 SCR 327
relied on
Para6
[2014) 2 SCR 855
relied on
Para6
[1992) 3 SCR 106
referred to
Para 7
[2002] 2 SCR 411
referred to
Paras
[2008) 1 SCR 501
referred to
Para 11
[2008) 12 SCR 673
referred to
Para 12
[2009) 6 SCR 737
referred to
Para 15
ROGER SHASHOUA& OTHERS v. MUKESH SHARMA& OTHERS
445
[20141 6 SCR 456
relied on
Para 19
A
[20111 8 SCR 569
referred to
Para 21
[20101 12 SCR 259
referred to
Para 24
[1997] 6 Suppl. SCR 186
referred to
Para 24
[20111 14 SCR 301
referred to
Para 24
B
[20141 4 SCR 486
referred to
Para 37
[2015) 8 SCR 906
referred to
Para 37
[1989[ 3 SCR 316
referred to
Para 38
[20021 2 SCR 913
referred to
Para 38
c
[1964) 4 SCR 461
referred to
Para 39
[1970) 1 SCR 639
referred to
Para 39
(1991) 4 sec 139
referred to
Para 40
[19891 1 Suppl. SCR 623
referred to
D
Para 40
[20161 8 SCR 872
referred to
Para 41
[19761 Suppl. SCR 67
referred to
Para 51
[20021 2 SCR 661
referred to
Para 52
E
[1992) 1 Suppl. SCR 732
referred to
Para 53
[19871 1 SCR 562
referred to
Para 54
c2009) 5 sec 694
referred to
Para 57
[2003] 1 Suppl. SCR 175
referred to
Para 58
F
[20051 1 SCR 456
referred to
Para 58
[2011] 15 SCR 972
referred to
Para 61
[2013] 8 SCR 77
referred to
Para 61
[2015] 6 SCR 474
referred to
Para 61
G
[1951] SCR 380
referred to
Para 61
(1996) 5 sec 477
referred to
Para 62
[19961 1 SCR 1017
referred to
Para 62
H
446
A
SUPREME COURT REPORTS
[1999) 2 SCR 728
[2000] 2 Suppl. SCR 156
[2015) 10 SCR 85
referred to
referred to
referred to
[2017) 7 S.C.R.
Para 62
Para 62
Para 70
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 2841B
2843of2017.
From the Judgment and Order dated 07.06.2016 of the High Court
of Delhi at New Delhi in OMP'sNo. 914 of2011, OMP4 of2008 andin
W. P. (C) No. 10954 of2015.
Rakesh Dwivedi, Rana Mukherjee, P. Chidambarain, Sr. Advs.,
C
Gagan Gupta, Gaurav M. Librehan, Neeraj Gupta, Ms. Anukanksha
S. K., Ms. Sonskriti Pathak, Ms. Mukti Chowdhary, Krishnendu Datta,
Deepak K. Vijay, Ms. Sanjana Saddy, Ms. Neeru Sharma, Abhinav,
Shantanu Parashar, Ms. Sneha Kali ta, Krishan Kumar,Abhinav Hansaria,
Praveen Chaturvedi, Ms. Minati Rani, Advs. for the appearing parties.
D
The Judgment of the Court was delivered by
E
F
DIPAK MISRA, J. 1. Though innumerable facts have been
graphically stated in the petitions seeking leave to appeal as well as in
the written note of submissions, yet regard being had to the centrality of
the controversy, we shall refer to the facts which are absolutely necessary
for adjudication of the /is in question. It may be stated that the High
Court has narrated the facts in detail on various aspects, for it was
deciding-a writ petition and a petition preferred under Section 34 of the
Arbitration and Conciliation Act, 1996 (for brevity, 'the Act') together
and it was required to advert to the "seat of arbitration and venue of
arbitration" to determine the maintainability of the petition in the Courts
of India. That apart, the High Court was obliged to dwell upon the
territorial jurisdiction of a petition under Section 34 oftheAct at Gautam
Budh Nagar, Uttar Pradesh or High Court of Delhi, in case the Courts in
India have the jurisdiction to deal with the objections as postulated under
Part I of the Act. Be it noted, a petition under Section 34 of the Act was
G
filed before the learned District Judge, Gautam Budh Nagar, Uttar
Pradesh who vide order dated 06.07.2011 had not entertained the
application on the ground oflack of territorial jurisdiction and returned it
to be filed before the appropriate Court and the appeal arising therefrom,
that is, FAO (D) 1304 of201 l, filed before the High Court of Allahabad
was dismissed on the ground of maintainability. Thereafter, Writ Petition
H
ROGER SHASHOUA& OTHERS v. MUKESH SHARMA& OTHERS
447
[DIPAKMISRA,J.]
No. 20945 of2014 was filed challenging the order dated 06.07.2011 of A
the District Judge, Gautam Budh Nagar. In the meantime, a petition
under Section 34 of the Act came to be filed before the High Court of
Delhi.
2. When the matter stood thus, ITE India Pvt. Limited approached
this Court by filing Special Leave Petition (Civil) Nos. 22318-22321 of B
2010. On 15.09.2015, the Court passed the following order:
"ln course of hearing, we have been apprised that on behalf of
ITE India Private L.iniited, an application under Section 34 of the
Arbitration and Conciliation Act, 1996 (for short, 'the Act') is pending
before the learned Single Judge of the High Court of Delhi.
c
At this juncture, learned counsel for respondent no.2 submitted
that he had filed an application under Section 34 of the Act before the
learned District Judge, Gautam Budh Nagar, U.P. who had rejected the
application to be filed before the proper court. Against the order passed
by the District Judge, an FAO, i.e. FAFO (D) No.1304/2011 was filed D
before the High Court of Allahabad, Bench at Allahabad and same has
been dismissed on the ground of maintainability. Be it stated, thereafter
the 2nd respondent has challenged the order passed by the District Judge,
Gautam Budh Nagar, UP in Writ Petition (C) No. 20945 of2014 titled as
International Trade Expo Centre Ltd. vs. Mukesh Sharma & Ors.
ln our considered opinion, the writ petition and the petition filed
under Section 34 of the Act in Delhi High Court should be heard together
by one court and accordingly, we transfer the writ petition from Allahabad
and accordingly it is ordered that the writ petition be transferred to the
High Court of Delhi and be heard by the same learned Judge who is
hearing the petition under Section 34 of the Act.
The Registrar (Judicial) is directed to send a copy of this order to
the Registrar (Judicial) of the High Court of Allahabad for transmitting
the record to the High Court of Delhi. A copy of the order be sent to the
Registrar General of the High Court of Delhi. The learned Chief Justice
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of the High Court of Delhi is requested to nominate a Judge who will
G
hear the writ petition as well as the application preferred under Section
34 of the Act. The nominated judge, we request, should to dispose both
the matters by the end of November 2015. Let the matter be listed for
further hearing on 08.12.2015."
H
448
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SUPREME COURT REPORTS
(2017] 7 S.C.R.
3. It is worthy to mention that extension of time was sought for by
the parties and was granted. Before the High Court the appellant took
the stand that the application under Section 34 was not maintainable
since Part I of the Act is not applicable regard being had to the arbitration
clause in the agreement from which it is discernible that the courts in
London have jurisdiction. Learned single Judge by the impugned order
came to hold that application filed under Section 34 of the Act is
maintainable and the Delhi High Court has the territorial jurisdiction to
deal with the same and accordingly directed the objection to be filed
under Section 34 before the Court.
4. We may immediately state here that Special Leave Petition
(Civil) Nos. 22318-22321 of2010 had been de-tagged vide order dated
15.02.2017 passed by the Court.
5. Regard being had to what we have stated hereinbefore, as
required at present, we shall only dwell upon the applicability of Part I or
Part II of the Act to the controversy in question. If Part I is applicable,
D then we will be obliged to advert to the issue ofterritorialjurisdiction of
Delhi or that of Gautam Budh Nagar, Uttar Pradesh. If Part II would be
applicable, then the said issue will not warrant any deliberation.
E
6. Criticising the impugned order, Mr. Rakesh Dwivedi, learned
senior counsel for the appellants contends that the High Court has fallen
into an error in its appreciation of the arbitration clause and what has
been postulated therein and come to hold that the Courts in India have
jurisdiction. It is also canvassed by him that in the decision delivered
between the parties, the commercial court in London, interpreting the
clauses in the agreement, has determined that the courts in London have
F jurisdiction and the principle laid therein (Shashoua v. Sharma1) has
been accepted in Bharat Aluminium Co. v. Kaiser Aluminium
Technical Services Inc. 2 (BALCO) and further in Enercon (India)
Ltd. v. Enercon GmbIP and, therefore, the inescapable conclusion has
to be that the Courts in India do not have jurisdiction and consequently
Part I of the Act would not be applicable. Be it noted, the second
G proposition, as is seen from the impugned order, was not advanced before
the High Court. Be that as it may, as it involves a pure question of law,
we shall advert to the same.
1 2009 EWHC 957 (Comm)
'c2012) 9 sec 552
H
'(2014) 5 sec 1
ROGER SHASHOUA& OTHERS v. MUKESH SHARMA& OTHERS
449
[DIPAKMISRA,J.]
7. Mr. Chidambaram, learned senior counsel for the respondent,
A
in his turn, would submit that the arbitration clause specifically provides
that London will be the venue for arbitration and venue can never be the
seat of arbitration that vests jurisdiction in courts situate at London. It is
his further submission that mere stipulation in the arbitration clause that
the proceedings shall be in accordance with Rules of Conciliation and
B
Arbitration of the International Chambers of Commerce, Paris is not to
be interpreted that the parties had intended not to be governed by Part I
of the Act. It is assiduously propounded by him that the Constitution
Bench in BAL CO has not approved the judgment in Shashoua and the
view expressed by the two-Judge Bench in Enercon (India) Ltd. (supra)
to that effect is per incuriam. That apart, the principle laid down in
C
National Thermal Power Corporation v. Singer·Company4 which ..
deals with various aspects relating to covenants of the contract is
applicable. It is argued by him that Shashoua arose from an anti-suit
inj_l,lllction and views expressed therein are tentative and, therefore, cannot
earn the status of a precedent. Lastly, it is urged by him that as the ·D
appellants had approached the Courts in India, they have waived their
right to contest the issue of jurisdiction.
8. To appreciate the controversy, it is necessary to take note of
the fact that the agreement has been executed before delivery of the
judgment, that is, 12.9.2012, by the Constitution Bench inBALCO and,
therefore, the principle stated in Bhatia International v. Bulk Trading
E
S.A. and another5 is applicable and for the said purpose what has been
stated in Bhatia International (supra) has to be appositely appreciated
and understood. In Bhatia International (supra), an application was
preferred under Section 9 of the Act before the learned IllrdAdditional
District Judge, Indore, Madhya Pradesh and the appellant therein had
f
raised the plea of maintainability of suc,h an application on the ground
that Part I of the Act would not apply where the place of arbitration is
not in India. The Court referred to various provisions of the Act and
came to hold thus:
"32. To conclude, we hold that the provisions of Part I would
G
apply to all arbitrations and to all proceedings relating thereto.
Where such arbitration is held in India the provisions of Part I
would compulsorily apply and parties are free to deviate only to
• (1992) 3 sec 551
'(2002) 4 sec 105
H
450
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SUPREME COURT REPORTS
[2017] 7 S.C.R.
the extent pennitted by the derogable provisions of Part I. In cases
of international commercial arbitrations held out of India provisions
of Part I would 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."
9. After recording the conclusion, the three-Judge Bench noted
the stand of the learned counsel appearing for the appellant therein which
finds place in paragraph 33 of the judgment. It is extracted hereunder:-
"33. Faced with this situation Mr Sen submits that, in this case the
parties had agreed that the arbitration be as per the Rules oflCC.
He submits that thus by necessary implication Section 9 would
not apply. In our view, in such cases the question would be whether
Section 9 gets excluded by the ICC Rules of Arbitration. Article
23 of the ICC Rules reads as follows:
"Conservatory and interim measures
l. Unless the parties have otherwise agreed, as soon as the file
has been transmitted to it, the Arbitral Tribunal may, at the request
of a party, order any interim or conservatory measure it deems
appropriate. The Arbitral Tribunal may make the granting of any
such measure subject to appropriate security being furnished by
the requesting party. Any such measure shall take the fonn of an
order, giving reasons, or of an award, as the Arbitral Tribunal
considers appropriate.
2. Before the file is transmitted to the Arbitral Tribunal, and in
appropriate circumstances even thereafter, the parties may apply
to any competent judicial authority for interim or conservatory
measures.1'.he application of a party to a judicial authority for
such measures or for the implementation of any such measures
ordered by an Arbitral Tribunal shall not be deemed to be an
infringement or a waiver of the arbitration agreement and shall
not affect the relevant powers reserved to the Arbitral Tribunal.
Any such application and any measures taken by the judicial
authority must be notified without delay to the Secretariat. The
Secretariat shall infonn the Arbitral Tribunal thereof."
ROGER SHASHOUA& OTHERS v. MUKESH SHARMA& OTHERS
451
[DIPAK MISRA, J.]
10. After so stating, the Court analysed Article 23 of the A
International Chamber of Commerce Rules and noted that the said Rules
permit parties to apply to a competent judicial authority for interim and
conservatory measures and, therefore, in such cases an application could
be made under Section 9 of the Act.
Eventual conclusion that was
recorded by the three-Judge Bench is as under:
B
"35 ..... in our view a proper and conjoint reading of all the
provisions indicates that Part I is to apply also to international
commercial arbitrations which take place out of India, unless the
parties by agreement, express or implied, exclude it or any of its
provisions. Such an interpretation does not lead to any conflict
between any of the provisions of the saidAct. On this interpretation C
there are no lacunae in the said Act. This interpretation also does
not leave a party remediless .... "
11. In Venture Global Engineering v. Satyam Computer
Services Ltd. 6 the Court followed the principle stated in Bhatia
International (supra). Elucidating the principle of Bltatia International D
(supra), the Court stated:
"33. The very fact that the judgment holds that it would be open
to the parties to exclude the application of the provisions of Part I
by express or implied agreement, would mean that otherwise the
whole of Part I would apply. In any event, to apply Section 34 to
foreign international awards would not be inconsistent with Section
48 of the Act, or any other provision of Part II as a situation may
arise, where, even in respect of properties situate in India and
where an award would be invalid if opposed to the public policy
of India, merely because the judgment-debtor resides abroad, the
award can be enforced against properties in India through personal
compliance with the judgment-debtor and by holding out the threat
of contempt as is being sought to be done in the present case. In
such an event, the judgment-debtor cannot be deprived of his right
under Section 34 to invoke the public policy of India, to set aside
E
F
the award. As observed earlier, the public policy of India includes
G
-
(a) the fundamental policy of India; or (b) the interests of
India; or (c) justice or morality; or (d) in addition, if it is patently
illegal. This extended definition of public policy can be bypassed
by taking the award to a foreign country for enforcement."
• (200S) 4 sec 190
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12. In the said case, the Court scanned the shareholders agreement
and came to hold that Part I of the Act was applicable and hence, though
the award was a foreign award, its legal propriety could be called in
question in India. The said authority, as is reflectible, lays down that it
would be open to the parties to exclude the application of the provision
B of Part I by express or implied agreement and unless there is an express
or implied exclusion, the whole of Part I would apply. The Court, in the
said case, adverted to the agreement in question and eventually expressed
the view that the clauses in the agreement neither expressly nor impliedly
excluded the applicability of Part I of the Act.
13. In Indtel Technical Services (P) Ltd. v. W.S. Atkins Rail
C Ltd.7, the designated Judge was called upon to decide the issue of
appointment of an arbitrator. The clause that pertained to settlement of
disputes read as follows:
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"6 . ... '13. Settlement of disputes
13.1. This agreement, its construction, validity and performance
shall be governed by and constructed in accordance with the laws
of England and Wales;
13.2. Subject to Clause 13.3 all disputes or differences arising out
of, or in connection with, this agreement which cannot be settled
amicably by the parties shall be referred to adjudication;
13.3. If any dispute or difference under this agreement touches
or concerns any dispute or difference under either of the subcontract agreements, then the parties agree that such dispute or
difference hereunder will be referred to the adjudicator or the
courts as the case may be appointed to decide the dispute or
difference under the relevant sub-contract agreement and the
parties hereto agree to abide by such decision as if it were a
decision under this agreement."'
14. The Court referred to the authority in Bhatia International
(supra) and Lesotho Highlands Development Authority v. lmpregilo
G SpA 8, and came to hold that it is fairly well settled that when an arbitration
agreement is silent as to the law and procedure to be followed in
implementing the arbitration agreement, the law governing the said
agreement would ordinarily be the same as the law governing the contract
1 c2008J 1 o sec 308
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ROGER SHASHOUA& OTHERS v. MUKESHSHARMA& OTHERS
453
[DIPAK MISRA, J.]
itself. The Court referred to Singer Company (supra) and held that the A
proposition stated therein lent support to the view it had expressed.
Thereafter, it noted that in Bhatia International (supra) this Court had
laid down the proposition that notwithstanding the provisions of Section
2(2) of the Act, indicating that Part I of the Act would apply where the
place of arbitration is in India, even in respect of international commercial
agreements, which are to be governed by the laws of another country,
the parties would be entitled to invoke the provisions of Part I of the Act
and consequently the application made under Section 11 thereof would
be maintainable.
15. In the course of hearing we have also been commended to
the authority in Citation Infowares Limited v. Equinox Corporation9
wherein the Designated Judge opined that unless there is express or
implied exclusion of the provisions of Part I of the Act, the entire Part I
including Section 11 would be applicable even where the international
commercial agreements are governed by the laws of another country.
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16. As we find the principle stated in Bhatia International (supra)
D
was followed in many an authority till it was prospectively overruled in
BALCO. The Constitution Bench in BALCO recorded its conclusion in
this manner:
"195. With utmost respect, we are unable to agree with the
conclusions recorded in the judgments of this Court in Bhatia
International (supra) and Venture Global Engg. (supra). In our
opinion, the provision contained in Section 2(2) of the Arbitration
Act, 1996 is not in conflict with any of the provisions either in Part
E
I or in Part II of the Arbitration Act, 1996. In a foreign-seated
international commercial arbitration, no application for interim relief F
would be maintainable under Section 9 or any other provision, as
applicability of Part I of the Arbitration Act, 1996is limited to all
arbitrations which take place in India. Similarly, no suit for interim
injunction simpliciterwould be maintainable in India, on the basis
of an international commercial arbitration with a seat outside India.
196. We conclude that Part I of the Arbitration Act, 1996 is
applicable only to all the arbitrations which take place' within
the territory oflndia. '.'
17. After expressing so, the Court took note of the fact that the
G
• (2009) 7 sec 220
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A Bhatia International (supra) has been followed by all the High Courts
as well as by this Court on numerous occasions and, in fact, judgment
rendered on 10.01.2008 in J'enture Global Engineering (supra) had
followed the ratio laid down in Bhatia International (supra). The
Constitution Bench, as is manifest, declared the principles stated by it to
B
be applicable prospectively to all the arbitration agreements executed
from the date of the delivery of the judgment.
18. After the said judgment was delivered, the issue arose before
this Court whether the parties to the agreement have expressly or
impliedly excluded Part I of the Act. Reference to the said authorities is
seemly to appreciate the perspective of this Court pertaining to exclusion
C of Part I of the Act.
19. In Reliance Industries Limited and another v. Union of
India 10, the order of the High Court allowing the objections preferred
by the Union oflndia pertaining to arbitrability of the claims made by the
petitioner therein in respect of royalties, cess, service tax and CAG audit
D was rejected and for the said purpose, the Court referred to various
agreements entered into between the parties. The issue that arose before
this Court is whether Part I of the Act was excluded or not. The Coun
reproduced the relevant part of Article 33 and the clause that dealt with
final partial award as to "seat". It took note of the fact that jurisdiction
E of the High Court of Delhi was invoked by the Union oflndia contending,
inter alia, that the terms of the PSCs entered would manifest an
unmistakable intention of the parties to be governed by the laws oflndia
and more particularly the Arbitration and Conciliation Act, 1996; that the
contracts were signed and executed in India; that the subject matter of
the contracts were performed within India; and that the contract stipulated
F
that they will be governed and interpreted in accordance with the laws
of India. Various other clauses were pressed into service to stress upon
the availability of jurisdiction in courts oflndia. The Court analyzing the
postulates in the contract in entirety came to hold:
G
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"23. Upon consideration of the entire matter, the High Court has
held that undoubtedly the governing law of the contract i.e. proper
law of the contract is the law of India. Therefore, the parties
never intended to altogether exclude the laws of India, so far as
contractual rights are concerned. The laws of England are limited
in their applicability in relation to arbitration agreement contained
'"(2014) 7 sec 603
ROGER SHASHOUA& OTHERS v. MUKESH SHARMA& OTHERS
455
[DIPAKMISRA, J.]
in Article 33. This would mean that the English law would be
A
applicable only with regard to the curial law matters i.e. conduct
of the arbitral proceedings. For all other matters, proper law of
the contract would be applicable. Relying on Article 15( 1 ), it has
been held that the fiscal laws of India cannot be derogated from.
Therefore, the exclusion of Indian public policy was not envisaged B
by the parties at the time when they entered into the contract.
The High Court further held that to hold that the agreement
contained in Article 33 would envisage the matters other than
procedure of arbitration proceedings would be to rewrite the
contract. The High Court also held that the question of arbitrability
of the claim or dispute cannot be examined solely on the touchstone
C
of the applicability of the law relating to arbitration of any country
but applying the public policy under the laws of the country to
which the parties have subjected the contract to be governed.
Therefore, according to the High Court, the question of arbitrability
of the dispute is not a pure question of applicable law of arbitration D
or lex arbitri but a larger one governing the public policy."
20. After so stating, the two-Judge Bench referred to Articles
32.1 and 32.2 that dealt with the applicable law and various other aspects
from which it was perceivable that parties had agreed that juridical seat
or legal place of arbitration for the purpose initiated under the claimants'
notice of arbitration would be London. The Court posed the question
E
whether such stipulations excluded the applicability of the Part I of the
Act or not. In its ultimate analysis, it repelled the contention that there
had neither been any express nor implied exclusion of Part I of the Act
and ruled:
"43 .... In our opinion, the expression 'laws oflndia' as used in
Articles 32.1 and 32.2 has a reference only to the contractual
obligations to be performed by the parties under. the substantive
contract i.e. PSC. ln other words, the provisions contained in Article
33 .12 are not governed by the provisions contained in Article 32.1.
F
It must be emphasised that Article 32.1 has been made subject to
G
the provision of Article 33.12. Article 33.12 specifically provides
that the arbitration agreement shall be governed by the laws of
England. The two articles are particular in laying down that the
contractual obligations with regard to the exploration of oil and
gas under the PSC shall be governed and interpreted in accordance
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with the laws of India. In contradistinction, Article 33.12 specifically
provides that the arbitration agreement contained in Article 33 .12
shall be governed by the laws of England. Therefore, in our opinion,
the conclusion is inescapable that applicability of the Arbitration
Act, 1996 has been ruled out by a conscious decision and agreement
of the parties. Applying the ratio of law as laid down in Bhatia
International it would lead to the conclusion that the Delhi High
Court had no jurisdiction to entertain the petition under Section 34
of the Arbitration Act, 1996."
21. Be it noted, the Court opined that it was unacceptable that
seat of arbitration is not analogous to an exclusive jurisdiction clause. It
observed that once the parties had consciously agreed that juridical seat
of the arbitration would be London and that the agreement would be
governed by the laws of England, it is no longer open to propound that
provisions of Part I of the Act would also be applicable to the arbitration
agreement. It referred to the authority in Jlideocon Industries Limited ·
v. U11io11 of India and another11 and held thus:
"47 .... The first issue raised in Videocon Industries Ltd. was as
to whether the seat of arbitration was London or Kuala Lumpur.
The s~cond issue was with regard to the courts that would have
supervisory jurisdiction over the arbitration proceedings. Firstly,
the plea of Videocon Industries Ltd. was that the seat could not
have been changed from Kuala Lumpur to London only on
agreement of the parties without there being a corresponding
amendment in the PSC. This plea was accepted. It was held that
seat of arbitration cannot be changed by mere agreement of
parties. In para 21 of the judgment, it was observed as follows:
"2 J. Though, it may appear 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 Article 34.12,
they could have done so only by a written instrument which was
required to be signed by all of them. Admittedly, neither was
there any agreement between the parties to the PSC to shift the
juridical seat of arbitration from Kuala Lumpur to London nor
was any written instrument signed by them for amending Article
34.12. Therefore, the mere fact that the parties to the particular
arbitration had agreed for shifting of the seat of arbitration to
"(201!)6SCC 161
ROGERSHASHOUA& OTHERS v. MUKESH SHARMA& OTHERS
457
[DIPAKMISRA,J.]
London cannot be interpreted as anything except physical change
A
of the venue of arbitration from Kuala Lumpur to London."
48. The other i~sue considered by this Court in Videocon
Industries Ltd. was as to whether a petition under Section 9 of
the Arbitration Act, 1996 would be maintainable in the Delhi High
Court, the parties having specifically agreed that the arbitration
B
agreement would be governed by the English law. This issue was
decided against the Union of India and it was held that the Delhi
High Court did not have the jurisdiction to entertain the petition
filed by the Union of India under Section 9 of the Arbitration Act."
22. It is condign to note here that while discussing about the ratio c
in Videocon Industries Limited (supra), the Court studiedly scrutinized
the agreement, mainly the relevant parts of Articles 33, 34 and 35 and
opined:·
"50 .... The arbitration agreement in this appeal is identical to the
arbitration agreement in Videocon Industries. In fact, the factual
D
situation in the present appeal is on a stronger footing than in
Videocon Industries Ltd. As noticed earlier, in Videocon
Industries, this Court concluded that the parties could not have
altered the seat of arbitration without making the necessary
amendment to the PSC. In the present appeal, necessary
amendment has been made in the PSC. Based on the aforesaid
E
amendment, the Arbitral Tribunal has rendered the final partial
consent award of 14-9-2011 recording that the juridical seat (or
legal place) of the arbitration for the purposes of arbitration initiated
under the claimants' notice of arbitration dated 16-12-2010 shall
be London, England. Furthermore, the judgment in Videocon
F
Industries is subsequent to Venture Global. We are, therefore,
bound by the ratio laid down in Videocon Industries Ltd."
23. Explicating the concept of seat of arbitration, the Court
observed:
"51. ... "123 .... ':··an agreement as to the seat of an arbitration
G
is analogous to an exclusive jurisdiction clause. Any claim for a
remedy ... as to the validity of an existing interim or final award is
agreed to be made only in the courts of the place designated as
the seat of arbitration'."
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24. The Court, in the course of discussion, dealt with the principles
set out in Dozco India Private Limited v. Doosan Infracore Company
Limited12, Sumitomo Heavy Industries Ltd. v. ONGC Ltd. 13, Yograj
Infrastr11ct11re Limited v. Ssang Yong Engineering and Construction
Company Limited14 and Enercon (India) Ltd. (supra) and thereafter
opined thus:
"57. In our opinion, these observations in Sulamerica Cia
Nacional de Seguros SA v. Enesa Engelharia SA 15 are fully
applicable to the facts and circumstances of this case. The
conclusion reached by the High Court would lead to the chaotic
situation where the parties would be left rushing between India
and England for redressal of their grievances. The provisions of
Part I of the Arbitration Act, 1996 (Indian) are necessarily excluded;
being wholly inconsistent with the arbitration agreement which
provides 'that arbitration agreement shall be governed by English
law'. Thus the remedy for the respondent to challenge any award
rendered in the arbitration proceedings would lie under the relevant
provisions contained in the Arbitration Act, 1996 of England and
Wales. Whether or not such an application would now be
entertained by the courts in England is not for us to examine, it
would have to be examined by the court of competent jurisdiction
in England."
25. It is patent from the law enunciated in the aforesaid decision
is that stipulations in the agreement are required to be studiedly analysed
and appropriately appreciated for the purpose of arriving at whether
there is express or implied exclusion and further meaning of the term
"seat of arbitration". The Court has also ruled that it is necessary tq
avoid inconsistency between the provisions in the agreement and Part I
of the Act.
26. At this juncture, we may state that there are other subsequent
authorities that have dealt with express or implied exclusion. There are
also authorities which have declined to accept the stance of implied
G exclusion. We shall refer to the same at the subsequent stage when we
shall refer to the Share Holders Agreement (SHA) and appreciate what
H
"(2011)6SCC 179
"(1998) 1 sec 305
"c2011) 9 sec 735
"(2013) I WLR 102: 2012 EWCA Civ 638: 2012 WL 14764
. ROGER SHASHOUA& OTHERS v. MUKESH SHARMA& OTHERS
459
[DIPAKMISRA, J.]
interpretation needs to be placed on the Clause relating to arbitration.
A
Prior to that we are disposed to think to address the issue as regards the
· approval of Sliashoua principle in BALCO and the legal acceptability
of the observations made by the two-Judge Bench in Enercon (India)
Ltd. (supra) or it is per incuriam as is proponed by the learned senior
counsel for the respondents.
B
27. The Constitution Bench in BAL CO has referred to the
observations in Braes of Doune Wind Farm (Scotland) Ltd •. v. Alfred
McAlpine Business Services Ltd. 16 to lay down the principle that the
observations made in the said case clearly demonstrate that the detailed
examination which is required to be undertaken by the court is to discern
from the agreement and surrounding circumstances the intention of the
C
parties as to whether a particular place mentioned refers to the "venue"
or "seat" of the arbitration. After dealing with the principles stated
therein, it took note of the fact that the ratio laid down in Alfred McAlpine
(supra) has been followed inShasho11a. After stating the facts, it observed
that the construction of the SHA between the parties had fallen for
D
consideration in the said case. Be it noted, the larger Bench has
reproduced few passages from Sliaslio11a case. The analysis made by
the Court in BAL CO is as follows:
"110. Examining the fact situation in the case, the Court observed
as follows (Shashoua case) :
E
"The basis for the court's grant of an anti-suit injunction
of the kind sought depended upon the seat of the arbitration .
. An agreement as to the seat of an arbitration brought in
the law of that country as the curial law and was analogous
to an exclusive jurisdiction clause.