CODE: W09P

U NIVERSITY MOOT COURT SELECTIONS, 2017

BEFORE

T HE HONOURABLE SUPREME COURT OF INDIA

Civil Appeal no. 08/2017

Tel Shodhan Limited(TSL),......P ETITIONERS
V

Govt. of Rajasthan & ORS........R ESPONDENT

ALONG WITH
Civil Appeal no. 19/2017
Man Power Supply Limited (MPSL),...P ETITIONERS
V

OGX & ORS..........

RESPONDENT

A LONG WITH
Civil Appeal no. 309/2017.
Oil India Limited(OIL),........P ETITIONERS
V

Tel Shodhan Limited (TSL).........R ESPONDENT

MEMORIAL FOR THE APPELLANT /PETITIONERS
-Table of Contents - - Appellants/Petitioner-

TABLE OF CONTENTS
Table of Contents........................................................................................................................I
Statement of Jurisdiction..........................................................................................................IV
Statement of Facts.....................................................................................................................V
Arguments Presented..............................................................................................................VII
Summary of Arguments.........................................................................................................VIII
Arguments Advanced...............................................................................................................11
prayer........................................................................................................................................28

1|Page
-Index of Authorities- - Appellants/Petitioner-

CASES
6-32 v. Adi Marzban Path, ARBP-842/2009..........................................................................................................12
A.B.C. Laminart Pvt. Ltd. & anr. v. A.P. Agencies, Salem ,(1989) 2 S.C.C. 163...................................................12
A.B.C. Laminart Pvt. Ltd. & anr. v. A.P. Agencies, Salem ,(1989)2 S.C.C 163.....................................................12
A.R. Antulay v. R.S. Nayak ,(1988) 2 S.C.C. 602.................................................................................................19
B.D. Bhanot v. Shri Narmada Enterprises & Ors, 2007 (3) MPHT 206...............................................................22
Bennett Coleman & Co. v. Union of India , A.I.R.1973S.C. 106...........................................................................17
Bharat Aluminium Co v Kaiser Aluminium Technical Services Inc, (2012) 9 S.C.C 552......................................18
Bharat Aluminium Co v Kaiser Aluminium Technical Services Inc, (2012) 9 S.C.C. 552.....................................18
Bharat Aluminium Company and Ors. vs. Kaiser Aluminium Technical Service, Inc and Ors (2012) 9 S.C.C.
552.....................................................................................................................................................................14
Bharat Aluminium Company Ltd. v. Kaiser Aluminium Technical Services, (2012) 9 S.C.C. 552........................26
Bhatia International v. Bulk Trading S.A. and Anr,.(2002) 4 S.C.C. 105..............................................................13
Bhatia International v. Bulk Trading S.A., (2002) 4 S.C.C. 105............................................................................25
Bhatia International v. Bulk Trading SA, (2002) 4 S.C.C. 105..............................................................................23
Bhushan Steel Ltd. v. Singapore International Arbitration Centre and An., (2010) I.L.R Delhi 295....................13
British India Steam Navigation Co. Ltd. v. Shanmughavilas Cashew Industries, (1990) 3 S.C.C. 481................13
Chatterjee International v. Haldia Petrochemcials, 2013 (15) SCALE 45...........................................................16
Chatterjee Petrochem and Anr. v. Haldia Petrochemicals Ltd. and Ors.,2013 (15) S.C.A.L.E. 45......................13
Chennai Container Terminal Pvt. Ltd. v. Union of India, A.I.R. 2007 Mad 327...................................................22
Chiranjilal Chaudhari v. UOI ,[1951] 21cpmp.cas.33..........................................................................................17
Delhi Airport Metro Express Pvt. v. Caf India Pvt. Ltd. & Anr, MANU/DE/1868/2014......................................14
Deutsche Post Bank Home Finance Ltd v. Taduri Sridhar, 2011 (4) CTC 472......................................................21
Deutsche Post Bank Home Finance Ltd. v. Taduri Sridhar & Anr, A.I.R. 2011 S.C. 1899...................................22
Enercon (India) Ltd. And Ors. v. Enercon GBMH and Anr, (2014) 5 S.C.C. 1.....................................................14
Harjinder Singh v. Punjab State Warehousing Corpn., (2010) 3 S.C.C. 192........................................................17
Impex Trading GMBH v. Anunay Fab. Ltd. and Ors, (2008) 1 Arb LR 50 (Delhi)...............................................21
Jagdish Chander v. Ramesh Chander, 2007 (5) S.C.C. 719..................................................................................21
Keshwananda Bharti v. Union of India, (1973) 4 S.C.C. 225................................................................................17
Konkan Railway Corpn. Ltd. v. Rani Construction (P) Ltd., (2000) 8 S.C.C. 159................................................25
M/s. Atlas Export Industries v. M/s. Kotak & Company , (1997) 7 S.C.C. 61......................................................18
M/s. Atlas Export Industries v. M/s. Kotak & Company, (1999) 7 S.C.C. 61.......................................................14
M/s.Angile Insulations v. M/s.Davy Ashmore India Ltd. & anr.,(1995) 4 S.C.C 153............................................12
National Thermal Power Corporation v. Singer Company And Others, (1992) 3 S.C.C. 551..............................26
P.R. Shah Shares and Stock Brokers v. B.H.H. Secu, A.I.R. 2012 S.C. 1866.........................................................20
R.C.Cooper v.Union of india, A.I.R. 1970 SC 564................................................................................................17
Reliance Industries v Union of India ,(2104) 7 S.C.C 603....................................................................................18
Reliance Limited v. Union of India & Anr, (2014) 7 S.C.C 603............................................................................15
S. N. Prasad v. Monnet Finance Ltd , (2011) 1 S.C.C. 320...................................................................................21
S.N. Prasad v. Monnet Finance Ltd. & Ors, A.I.R. 2011 S.C. 442........................................................................22
Sasan Power Limited v. North American Coal Corporation India Private Limited, Civil Appeal No. 8299 of
2016...................................................................................................................................................................26
Sasan Power Ltd v. North America Coal Corporation India Pvt Ltd , (2016) 10 S.C.C. 813................................18
Smita Conductors Ltd v. Euro Alloys Ltd, A.I.R. 2001 S.C. 3730.........................................................................20
TDM Infrastructure Pvt. Ltd. v. U.E. Development India Pvt. Ltd , (2008) 14 S.C.C. 271..................................14
Venture Global Engineering v. Satyam Computer Services Ltd. And Others, (2008) 4 S.C.C. 190.....................27
Venture Global Engg. v. Satyam Computer Services Ltd. (2008) 4 S.C.C. 190.....................................................24
Venture Global Engineering v. Satyam Computer Services Ltd. And Others, (2008) 4 S.C.C. 190.....................26
Yogi Agarwal v. Inspiration Clothes, (2009) 1 S.C.C. 372..............................................................................19, 23

STATUTE
Arbitration and Conciliation Act, 1996 Section 2(1) (f)..........................................................14
Arbitration and Conciliation Act, 1996. Section 2(2)..............................................................14

BOOKS
1 Durga Das Basu, Shorter Constitution of India 312(14th ed. 2011)......................................16

2|Page
-Index of Authorities- - Appellants/Petitioner-

1 L.M.Singhavi,Constitution Of India 951 (3rd ed. 2013).......................................................16

1L.M.Singhvi,Constitution of India 852 (2nd ed. 2013)...........................................................17
Dr.G.K.Kapoor,Corporate law and practice 27 (20th ed. 2015)..............................................17

OTHER AUTHORITIES
Can a Corporation or a Company Claim a Right Under Article 19 of the Indian
Constitution?
(sep.28,2014),Http://Www.Gktoday.In/General-Awareness/Can-A-Corporation-Or-A-
Company-Claim-A-Right-Under-Article-19-Of-The-Indian-Constitution/.........................18
Can Indian Parties Have a Foreign Seat of Arbitration?
(nov.16,2015),Https://Blog.Ipleaders.In/Can-Indian-Parties-Foreign-Seat-Arbitration/.
..............................................................................................................................................18
Comprehensive Study Of Fundamental Right To Occupation ,
Http://Shodhganga.Inflibnet.Ac.In/Bitstream/10603/7957/8/08_Chapter%202.Pdf.....16, 17
Indowind Energy Ltd. v. Wescare Ltd. & Anr, A.I.R. 2010 S.C. 1793.....................................20
Whether Judiciary a state under Article 12 of the Constitution of India,(Nov.4,2015),..19

3|Page
-Statement of Jurisdiction - - Appellants/Petitioner-

STATEMENT OF JURISDICTION
The petitioner humbly submits this memorandum for three petitions filed before this
Honourable Supreme Court, which has been posted for final hearing by the Honourable
courts. The first petition invokes the jurisdiction of this Honourable court over the district
courts decision and regarding the Art. 19 of The Constitution of India. The second petition is
regarding the matter that whether a sub-contractor can be made a party to the arbitral
proceedings or not. The third petition deals with the jurisdiction of this court upon the section
34 of the arbitration and conciliation act, 1996, whether Honourable court have the
jurisdiction over the matters of the arbitration being held in different country and that to
being governed by the laws of that country.
This memorandum set forth the facts, contentions and the arguments on behalf of the
appellant/respondant.

4|Page
-Statement of Fact - - Appellants/Petitioner-

STATEMENT OF FACTS

I. In Rajasthan, Petroleum Exploration & Development activities have gained momentum

after the largest oil discovery Mangla in 2004 in Barmer-Sanchore Basin in last three
decades of the country. Presently, exploration for Oil, Gas & CBM (Coalbed Methane) is
underway in 12 Blocks of Rajasthan by National/Multinational Companies against 21
blocks carved out covering about 65ooo sq. km area. Rajasthan has about 1,50,000 sq. km
on-land area under 4 petroliferrous basins. Thus, Rajasthan has the maximum on-land
area of the country available for exploration.
II. For Petroleum Exploration & Development (PED) the state government signed a
multiparty Petroleum Exploration & Development Agreement (PEDA) with Desert
Land Petroleum Resource Corporation (DLPRC), OGX Petrleo e Gs Participaes
S.A. (OGX), Tel Shodhan Limited (TSL), and Oil India Limited (OIL). All the
parties are jointly known as Barmer-Bikaner Basin Consortium (Consortium). DLPRC
is a residence company of United Kindom, OGX is Brazilian publicly listed oil and gas
company, TSL is a company registered under the Companies Act, 1956 and Oil India
Limited (OIL) is a Government of India enterprise. III. PEDA, inter alia, provided for
resolution of disputes between the parties by way of arbitration to be administered by
International Chambers of Commerce (ICC) in London, England, under laws of the
United Kingdom. The Clause 19(1) provides that Law of the United Kingdom and
international customary commercial laws will be applicable on disputes arising out of
agreement between the parties.
IV. In terms of the agreement, man power supply agreement was executed between
DLPRC and Man Power Supply Limited (MPSL), a company registered under the
Companies Act, 2013 and engaged in supplying semi-skilled and skilled workers. This
agreement also contained an arbitration clause having seat of arbitration in ICC, London.
The man power supplied by MPSL is used for the Consortium works but payment was
made by DLPRC only.
V. In 2016, TSL initiated an arbitration proceeding in ICC, London against OIL and the
Government of Rajasthan. The issue was related to encashment of Bank Guarantees and
deduction of Service Tax on the services provided under the PEDA by TSL to OIL and
State of Rajasthan. On receipt of arbitration proceeding notice, the Govt. of Rajasthan
filed an antiarbitration injunction suit before the District Court, Jaipur. However, OIL
agreed to get involved in arbitration proceeding in London. The Govt. of Rajasthan
contended that the agreement between the Govt., OIL and TSL pertaining to applicability

5|Page
-Statement of Fact - - Appellants/Petitioner-

of law of foreign country on dispute arising out of the agreement and on arbitration
proceedings is void under Section 23 of Indian Contract Act as it is against the public
policy of the nation. The court granted the injunction in favour of the Government and
also declared the arbitration clause and Clause 19(1) void as it is applicable on disputes
between Govt. of Rajasthan, OIL and TSL only. The court observed that under the public
policy of the country Indian nationals are not permitted to derogate from Indian law.
VI. Meanwhile, OGX initiated arbitration proceedings against DLPRC and MPSL for
compensation for damage occurred due to negligence of workers. The damage was
allegedly caused by the workers engaged by DLPRC through MPSL. In response to it,
MPSL filed an injunction suit before District Court with contention that MPSL does not
have any direct relation with OGX, and there isnt any arbitration agreement between
them. It argued that merely because workers of MPSL are engaged for consortium as
whole does not bring MPSL into the ambit of disputes under PEDA.
VII. The District Court rejected the suit filed by MPSL on the ground that seat of
arbitration is outside India thus such suit cannot be entertained by Indian courts. Further,
the court ruled that there is no prohibition under law in making sub-contractors like
MPSL a party in arbitration proceeding between leading parties of a contract. Aggrieved,
MPSL also filed an SLP before the Supreme Court.
VIII. Before the Supreme Court decided the above SLPs, arbitrators of ICC, London
issued an award in the proceeding between TSL and OIL. The award was in the favour of
TSL. Taking note of the legal proceeding between TSL and the Govt. of Rajasthan, OIL
filed an application under Sec. 34 of the Arbitration and Conciliation Act, 1996 for setting
aside the award. High Court of Rajasthan rejected the application of OIL and ruled that
there is no bar under the Indian law in deciding the seat of arbitration outside India and
applicability of foreign law on Indian nationals in international commercial arbitration
wherein at least one party is foreign national or company. OIL filed a regular appeal
before the Supreme Court against the decision of High Court, which has been admitted by
the Supreme Court.

6|Page
-Summary of Arguments - - Appellants/Petitioner-

I. ARGUMENTS PRESENTED
II. CASE- I
III. CIVIL APPEAL NO. 08/2017
IV. TEL SHODHAN LIMITED (TSL) V.GOVT. OF RAJASTHAN & ORS
I. WHETHER THE DECISION OF THE DISTRICT COURT IS PER-IN CURIUM OF
LAWS ENACTED BY THE PARLIAMENT AND LAWS DECLARED BY THE
SUPREME COURT IN RELATION TO CHOOSING THE SEAT OF
ARBITRATION OUTSIDE INDIA, CHOICE OF LAW GOVERNING THE
PROCEEDINGS, AND SUBSTANTIVE LAWS OF GOVERNING THE
CONTRACT?
II. WHETHER THE DECISION OF THE DISTRICT COURT AND ACTION OF THE
GOVERNMENT VIOLATES TSLS FUNDAMENTAL RIGHT OF TRADE AND
OCCUPATION GUARANTEED UNDER ART. 19 OF THE CONSTITUTION?
V.
VI. CASE II
VII. CIVIL APPEAL NO. 19/2017
VIII. MAN POWER SUPPLY LIMITED (MPSL) V. OGX & ORS
III. WHETHER MPSL CAN BE MADE A PARTY TO ARBITRATION
PROCEEDINGS?
IX.
X. CASE III
XI. CIVIL APPEAL NO. 309/2017.
XII. OIL INDIA LIMITED (OIL) V. TEL SHODHAN LIMITED (TSL)
IV. WHETHER THE HIGH COURT WAS CORRECT IN NOT SETTING ASIDE THE
APPLICATION UNDER S. 34 OF THE ARBITRATION AND CONCILIATION
ACT OF 1996?
XIII.
XIV.
XV.
XVI.
XVII.
XVIII.
XIX.
XX.

7|Page
-Summary of Arguments - - Appellants/Petitioner-

XXI.
XXII.
XXIII.
XXIV.
XXV.
XXVI.
XXVII. SUMMARY OF ARGUMENTS
I. Whether the decision of the district court is per-in curium of laws enacted by the
Parliament and laws declared by the Supreme Court in relation to choosing the
seat of arbitration outside India, choice of law governing the proceedings, and
substantive laws of governing the contract?
XXVIII. Under Section 23 of the Contract Act, the consideration or object of an
agreement is lawful, unless it is opposed to public policy. The parties to the contract do
not oust the jurisdiction of the Courts, which would otherwise have jurisdiction to decide
the cause of action under the law it cannot be said that the parties have by their contract
ousted the jurisdiction of the Court. it would not completely oust the jurisdiction of the
court, There was no exclusivity in such submission there is no such term like alone, only,
exclusive which exclude the other jurisdiction. Out of two jurisdictions one was excluded,
it would not absolutely oust the jurisdiction of the Court and, therefore, would not be void
against the public policy and would not violate Section 23 of the Contract Act.
XXIX.
II. Whether the decision of the district court and action of the Government violates
TSLs fundamental right of trade and occupation guaranteed under Art. 19 of
the Constitution?
XXX. Fundamental rights can only claim against the state and judiciary also comes under
the definition of article 12 of the Indian constitution. So here TSL can also claim
fundamental rights against district court. Action of the Government and the decision of
the District Court violate the TSLS fundamental right of trade and occupation guaranteed
under Article 19(1) (g) of the Constitution because there is no restriction for choosing
foreign seat of arbitration. It doesnt go against public policy.

XXXI. Also
courts do not have any jurisdiction to pass interim order in case where seat of arbitration
is located outside India. A person must be held to have access to justice if his right in any

8|Page
-Summary of Arguments - - Appellants/Petitioner-

manner whether to carry on business is infringed or there is threat to his liberty. Clause 6
of art.19, however, places a restriction that nothing would prevent the state from making
reasonable restrictions in exercise of the right in interest of the general public. It talks
about reasonable restrictions but in this case restriction was unreasonable because there
are precedents in which courts have allowed parties to choose seat of arbitration in
foreign country and also parties can deviate from domestic law and this deviation in no
manner violates the public policy. Arbitration agreement is not against any public policy
as contented by the defendant .Here, TSL is also free to choose arbitration seat and
choose foreign law.
XXXII.
III.Whether MPSL can be made a party to arbitration proceedings?
XXXIII. Sections 7 and 8 of the Act refer to the existence of an arbitration agreement
between the parties; they necessarily refer to an arbitration agreement. In this case, the
Court took a strictly contractual view of the arbitration agreement and held that non-
signatories cannot be made a party to the arbitral proceedings. party u/s 2(h) read with
sections 7 and 2(b), Indowind, not being a signatory to the arbitration agreement between
Wescare and Subuthi, could not be made a party to the arbitration proceedings. Only
parties to an agreement could be made party to arbitral proceedings.
IV. Whether the High Court was correct in not setting aside the application under S.
34 of the Arbitration and Conciliation Act of 1996?
XXXIV. Whether the High Court was correct in not setting aside the application under
S. 34 of the Arbitration and Conciliation Act of 1996?
XXXV. It is humbly presented that there is nowhere provided that part I will only
apply to the arbitration that takes place in India. Thus legislature has not provided that
part I is not be apply to arbitration which takes place outside the India. Section 1(2) of
the arbitration act, 1996 reads as follow: It extend to the whole of India: Provided that
part I, III and IV shall extend to the Jammu and Kashmir only insofar as they relate to
international commercial arbitration or, as the case may be, international commercial
conciliation and sub section 2 of the section 2 reads as this part shall apply where the
place of arbitration is in India. The two sections come in conflict with each other. If the
word only is read into section 2(2), it would then render the sub-section inconsistent with
sub-section (4) and (5) of section 2 which apply to part I to all arbitration, means thereby,
including foreign international arbitration. There would be arbitrariness as even if the
international arbitration takes place outside the India, part I would continue to apply in
9|Page
-Summary of Arguments - - Appellants/Petitioner-

Jammu and Kashmir, but it would not apply to rest of the India. The legislatures of India
could not have intended so.
XXXVI. The word court would have been used under section 5 and 8 of the
arbitration and conciliation act, 1996, if part I was only meant to be used for the
arbitration held within India. Substantive law is the proper law of contract governing the
contract between the parties.

10 | P a g e
-Prayer- -Appellants/Petitioner-

XXXVII. ARGUMENTS ADVANCED

I. Whether the decision of the district court is per-in curium of laws enacted by the
Parliament and laws declared by the Supreme Court in relation to choosing the
seat of arbitration outside India, choice of law governing the proceedings, and
substantive laws of governing the contract?
XXXVIII.
XXXIX. 1.1 Whether the decision of the district court is per-in curium of laws
enacted by the Parliament in relation to choosing the seat of arbitration outside
India, choice of law governing the proceedings, and substantive laws of governing
the contract?
XL.
XLI. Section 2
XLII. (f) international commercial arbitration means an arbitration relating to disputes
arising out of legal relationships, whether contractual or not, considered as commercial
under the law in force in India and where at least one of the parties is
XLIII. (i) An individual who is a national of, or habitually resident in, any country other than
India;

XLIV. Section 20-Place of arbitration.

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

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

XLVII. 3. Notwithstanding sub-section (1) or sub-section (2), the arbitral tribunal

may, unless otherwise agreed by the parties, meet at any place it considers appropriate for
consultation among its members, for hearing witnesses, experts or the parties, or for
inspection of documents, goods or other property.

XLVIII. Section-5. Extent of judicial intervention.

XLIX. Notwithstanding anything contained in any other law for the time being in force, in
matters governed by this Part, no judicial authority shall intervene except where so
provided in this Part.

L.

LI.

11 | P a g e
-Prayer- -Appellants/Petitioner-

LII. 1.2 Whether the decision of the district court is per-in curium of laws declared by
the Supreme Court in relation to choosing the seat of arbitration outside India,
choice of law governing the proceedings, and substantive laws of governing the
contract?

LIII. 1.2.1 Weather that agreement is valid under section 23

LIV. Under Section 23 of the Contract Act, the consideration or object of an agreement is
lawful, unless it is opposed to public policy. The parties to the contract do not oust the
jurisdiction of the Courts, which would otherwise have jurisdiction to decide the cause of
action under the law it cannot be said that the parties have by their contract ousted the
jurisdiction of the Court. If under the law several Courts would have jurisdiction and the
parties have agreed to submit to one of these jurisdictions and not to other or others of
them it cannot be said that there is total ouster of jurisdiction. If on the other hand the
jurisdiction they agreed to submit to would not otherwise be proper jurisdiction to decide
disputes arising out of the contract it must be declared void being against public policy1.
LV.If we see the arbitral agreement Law of the United Kingdom and international customary
commercial laws will be applicable on disputes arising out of agreement between the
parties it would not completely oust the jurisdiction of the court, There was no
exclusivity in such submission there is no such term like alone, only, exclusive which
exclude the other jurisdiction2
LVI. Same issue arises in the case of A.B.C. Laminart Pvt. Ltd. & anr. v. A.P. Agencies,
Salem, (1989)2 S.C.C 1633 It was observed that an agreement, which ousts the jurisdiction
of the Court absolutely, would be contrary to public policy and hence, void under Section
23 of the Indian Contract Act, though the parties can agree as to the jurisdiction to which
their dispute would be subject.
LVII. Consequently, it was held that if out of two jurisdictions one was excluded, it would
not absolutely oust the jurisdiction of the Court and, therefore, would not be void against
the public policy and would not violate Section 23 of the Contract Act.

1 6-32 v. Adi Marzban Path, ARBP-842/2009.

2 A.B.C. Laminart Pvt. Ltd. & anr. v. A.P. Agencies, Salem ,(1989) 2 S.C.C. 163.

3 A.B.C. Laminart Pvt. Ltd. & anr. v. A.P. Agencies, Salem ,(1989)2 S.C.C 163.

12 | P a g e
-Prayer- -Appellants/Petitioner-

LVIII. If the parties to the contract agreed to vest jurisdiction in one such court to try the
dispute which might arise as between them, the agreement would be valid 4. So in our case
party they choose the place of arbitration out of different seat. So there is no point of that
is against the public policy.
LIX. The agreements are construed in accord with the Indian Laws and that law will be the
"proper law" of the subject agreements, if parties have agreed that the agreements be
construed in accord with the English Laws and that law will be the "proper law"
LX. of the subject agreements. Therefore contends that if this position is conceded then it
necessarily follows that the English courts will have exclusive jurisdiction to try and
decide the matter between the parties arising under the subject agreements5.
LXI. 1.2.2 Indian parties can derogate from domestic law.
LXII. Under section 5
LXIII. The Arbitration Clause provides for the seat of arbitration to be outside India i.e.
London (Article 19).The suit instituted by the appellant against the request of arbitration
by the appellant is not maintainable in law, the suit instituted by the appellant to restrain a
foreign arbitration for resolution of the disputes between the parties was in violation of
Section 5 of the A & C Act which limits judicial authoritys intervention in arbitration and
therefore the impugned order of injunction passed by the High Court of Judicature at
Calcutta was contrary to law and therefore, the same is liable to be set aside. In this
regard, the learned senior counsel relied upon the three Judge Bench decision of this
Court in Bhatia International v. Bulk Trading S.A. and Anr,(2002) 4 S.C.C. 1056. To
contend that section 5 of the A & C Act provides that no judicial authority shall intervene
except where it is provided. Section 5 of the A&C act will be applicable to Part II of the
Act as well. The Agreement remains valid and the arbitration clause will be applicable to
the parties concerned to get their disputes arbitrated and resolved in the Arbitration as per
the Rules of ICC.7 The "Part" referred to in this sub-section is Part I of the 1996 Act
which deals with domestic arbitrations. The proceedings before the Council, therefore, are
4 M/s.Angile Insulations v. M/s.Davy Ashmore India Ltd. & anr.,(1995) 4 S.C.C 153.

5 British India Steam Navigation Co. Ltd. v. Shanmughavilas Cashew Industries, (1990) 3
S.C.C. 481.

6Bhatia International v. Bulk Trading S.A. and Anr,.(2002) 4 S.C.C. 105.

13 | P a g e
-Prayer- -Appellants/Petitioner-

proceedings under the 1996 Act, pursuant to a deemed agreement between the parties to
the dispute. With the applicability of Part I of the 1996 Act in all its force 8, the extent of
judicial intervention in arbitrations is limited by the non obstante provisions of Section
5 of the 1996 Act9.
LXIV. Bharat Aluminium Company and Ors. v. Kaiser Aluminium Technical Service, Inc
and Ors. (2012) 9 S.C.C. 552, ("BALCO") This Court lacks jurisdiction to entertain the
present matter as admittedly the seat of arbitration under the Maintenance Agreement is
London. The arbitration agreement is therefore governed by a foreign law i.e. the English
Arbitration Act, 1996. In accordance thereof and the law in London, it is the courts of
London who have exclusive jurisdiction to deal with all disputes under the arbitration
agreement. Hence this Court's jurisdiction is ousted by the agreement of the parties10. In
the case of TDM Infrastructure Pvt. Ltd. v. U.E. Development India Pvt. Ltd. 2008 (14)
SCC 27111 and pointed out that the issue at hand was not adjudicated upon therein as it was
a case under Section 11 of the Act. The Apex Court relying upon Balco judgment and
applying an inverse logic in Enercon (India) Ltd. And Ors. v. Enercon GBMH and Anr.
(2014) 5 S.C.C. 112, has held that if the parties have chosen Indian Arbitrational law i.e.
Part I of the Act to apply then they have chosen India as the seat of arbitration. Thus, even
in the much appreciated Balco judgment, the Apex Court left the unaddressed issue open.
However, it may not be too far-fetched to apply the decision in the Balco judgment that

7 Chatterjee Petrochem and Anr. v. Haldia Petrochemicals Ltd. and Ors.,2013 (15)
S.C.A.L.E. 45.

8 Bhushan Steel Ltd. v. Singapore International Arbitration Centre and An., (2010) I.L.R
Delhi 295.

9 The Arbitration Act, 1940. Section 5

10 Bharat Aluminium Company and Ors. vs. Kaiser Aluminium Technical Service, Inc and
Ors (2012) 9 S.C.C. 552.

11 TDM Infrastructure Pvt. Ltd. v. U.E. Development India Pvt. Ltd , (2008) 14 S.C.C. 271.

12 Enercon (India) Ltd. And Ors. v. Enercon GBMH and Anr, (2014) 5 S.C.C. 1.

14 | P a g e
-Prayer- -Appellants/Petitioner-

Part I of the Indian Arbitration Act, 1996, will not apply to arbitrations seated beyond the
territory of India,13 to a scenario where the foreign-seated arbitration is between Indian
parties (even though Balco primarily focused on international commercial arbitration14).
LXV. Delhi Airport Metro Express Pvt. v. Caf India Pvt. Ltd. & Anr.
MANU/DE/1868/201415 On 14 August, 2014. The legal position on two Indian parties
choosing a foreign seat remains untested under Indian Law. The Court in the present case
approached the issue from the perspective of the persons who remained parties to the
arbitration agreement and held that the arbitration continued to remain in the nature of an
international commercial arbitration. Another approach which could have been adopted
was to determine if two Indian parties could choose foreign seated arbitration.2.3 Weather
derogation is against the public policy. The principle has been settled that two Indian
parties can agree to have a seat of arbitration outside India and the same is not against
public policy. The arbitral award arising out of a foreign-seated arbitration (London)
between Indian parties was not held to be unenforceable or opposed to the public policy
read with Sections 23 and 28 of the Indian Contract Act, 1872. The Apex Court in M/s.
Atlas Export Industries v. M/s. Kotak & Company16 that: "the award should have been
held to be unenforceable inasmuch as the very contract between the parties relating to
arbitration was opposed to public policy under Section 23 read with Section 28 of the
Contract Act. It was submitted that Atlas (Appellant seller) and Kotak, the parties
between whom the dispute arose, are both Indian parties and the contract which had the
effect of compelling them to resort to arbitration by foreign arbitrators and thereby
impliedly excluding the remedy available to them under the ordinary law of India should
be held to be opposed to public policy". The Apex Court responded to the submission
holding that: "Merely because the arbitrators are situated in a foreign country (London)
cannot by itself be enough to nullify the arbitration agreement when the parties have with

13 Arbitration and Conciliation Act, 1996. Section 2(2).

14 Arbitration and Conciliation Act, 1996 Section 2(1) (f).

15 Delhi Airport Metro Express Pvt. v. Caf India Pvt. Ltd. & Anr, MANU/DE/1868/2014.

16 M/s. Atlas Export Industries v. M/s. Kotak & Company, (1999) 7 S.C.C. 61.

15 | P a g e
-Prayer- -Appellants/Petitioner-

their eyes open willingly entered into the agreement. In Reliance Limited v. Union of
India & Anr, (1999) 7 S.C.C. 61.17 Wherein, two agreements under question were
between Union of India and Reliance India Limited as well as between Union of India
and BG Group (foreign party) respectively throws some light on the unaddressed issue. In
the said case, at least in relation to one agreement, the parties were Indian, the seat was
London, the proper law of the contract was Indian and the law of arbitration agreement
was English. The Apex Court held that seat of arbitration is analogous to exclusive
jurisdiction clause. Moreover, the argument that the issues involved in the case at hand
related to violation of public policy of India and hence, the applicability of Part I of the
Indian Arbitration Act cannot be excluded even if the seat of arbitration is London was
rejected. The Apex Court noted that the law of arbitration being agreed upon as English
Laws coupled with the choice of a foreign seat is a strong indicator that the parties
deliberately and intended to exclude the applicability of Part I of the Act.
LXVI. The arguments in favour of considering the choice of Indian parties of a foreign seat
for arbitration and excluding the applicability of Part I of the Act in relation to an entirely
domestic transaction/ dispute as lawful and not void for being opposed to public policy
include: (a) free will of parties to a contract, (b) reduction in burden of cases under Part I
of the Act on Indian Courts, (c) parity in logic applicable to international commercial
arbitration and foreign seated arbitration between Indian parties and (d) liberal pro-
arbitration approach setting international standards.
LXVII. It is not a bar for Indian parties to choose non-domestic curial and substantive
law provided the arbitration is seated outside India. Arbitration is a private process and
the parties should indeed have the right to choose the law that they desire to be bound by.
The Indian Supreme Court, of late, in decisions such as Chatterjee International v
Haldia Petrochemcials, 2013 (15) SCALE 4518 has also commented that the Courts
should always strive to give effect to the free will of the parties to arbitrate.
LXVIII.
LXIX.

17 Reliance Limited v. Union of India & Anr, (2014) 7 S.C.C 603.

18 Chatterjee International v. Haldia Petrochemcials, 2013 (15) SCALE 45.

16 | P a g e
-Prayer- -Appellants/Petitioner-

LXX. II. Whether the decision of the district court and action of the
Government violates TSLs fundamental right of trade and occupation guaranteed
under Art. 19 of the Constitution?
LXXI. Whether the decision of the district court and action of the Government violates
TSLs fundamental right of trade and occupation guaranteed under Art.19 of the
Constitution?
LXXII. Action of the Government and the decision of the District Court violate the
TSLS fundamental right of trade and occupation guaranteed under Article 19(1) (g) of
the Constitution because there is no restriction for choosing foreign seat of arbitration. It
doesnt go against public policy. Also courts do not have any jurisdiction to pass interim
order in case where seat of arbitration is located outside India. A person must be held to
have access to justice if his right in any manner whether to carry on business is infringed
or there is threat to his liberty.19 Clause 6 of art.19, however, places a restriction that
nothing would prevent the state from making reasonable restrictions in exercise of the
right in interest of the general public. 20 It talks about reasonable restrictions but in this
case restriction was unreasonable because there are precedents in which courts have
allowed parties to choose seat of arbitration in foreign country and also parties can
deviate from domestic law and this deviation in no manner violates the public policy.
Here, TSL is also free to choose arbitration seat and choose foreign law.
LXXIII.
LXXIV. Article 19 (1) (g) is Available only against the State
LXXV.Any restriction imposed by the state by any law on the right guaranteed under Article
19(1) (g) can be challenged on the ground either that the restriction is unreasonable or
that the restriction is in excess of the right or that even activities which are not pernicious
or that the procedure laid down for curbing any activity is unjust, arbitrary or
unreasonable.21 For a considerable period, the approach of the Judiciary had been that the
rights which are given to the citizens by way of fundamental rights as included in Part III
19 1 Durga Das Basu, Shorter Constitution of India 312(14th ed. 2011).

20 1 L.M.Singhavi,Constitution Of India 951 (3rd ed. 2013).

21Comprehensive Study Of Fundamental Right To Occupation ,

Http://Shodhganga.Inflibnet.Ac.In/Bitstream/10603/7957/8/08_Chapter%202.Pdf.

17 | P a g e
-Prayer- -Appellants/Petitioner-

of the Constitution are the guarantee to the citizens against State. 22 Judiciary also comes
under definition of article 12 of the constitution. In case of Harjinder singh v. Punjab
state warehousing corpn.23 In view of such an authoritative pronouncement the definition
of state under article 12 of the constitution encompass the judiciary and in keshwananda
case24 it was held that judicial process is also state action. So, according to this
pronouncement District Court also comes under the definition of state under Art. 12 of
the Constitution of India. TSL can also claim fundamental rights against district court.

LXXVI. Company can claim Fundamental Right

LXXVII. A company can claim fundamental rights against the state. This statement is
supported by Chiranjilal chaudhari v. UOI25, the Supreme Court held that the
fundamental rights guaranteed by the constitution are available not merely to individual
citizen but to corporate bodies as well except where the language of the provision or the
nature of the right compels the inference that they are applicable only to natural persons. 26
The bank R.C.Cooper v.union of india case27 has established the view that the
fundamental rights of shareholders as citizens are not lost when they associate to form a
company.28

22Comprehensive Study Of Fundamental Right To Occupation ,

Http://Shodhganga.Inflibnet.Ac.In/Bitstream/10603/7957/8/08_Chapter%202.Pdf.

23Harjinder Singh v. Punjab State Warehousing Corpn., (2010) 3 S.C.C. 192.

24 Keshwananda Bharti v. Union of India, (1973) 4 S.C.C. 225.

25 Chiranjilal Chaudhari v. UOI ,[1951] 21cpmp.cas.33.

26 Dr.G.K.Kapoor,Corporate law and practice 27 (20th ed. 2015).

27 R.C.Cooper v.Union of india, A.I.R. 1970 SC 564.

28 1L.M.Singhvi,Constitution of India 852 (2nd ed. 2013).

18 | P a g e
-Prayer- -Appellants/Petitioner-

LXXVIII. Citizens under this Article 19 means only natural persons who have the status
of citizenship under the law and in case of Bennett Coleman & Co. v. Union of India 29
the Court said that the Fundamental Rights of the citizens are not lost when they associate
to form a company. When their Fundamental Rights as shareholders are impaired by State
action their rights as shareholders are protected. The reason is that the shareholders rights
are equally and necessarily affected if the rights of the company are affected. 30 So TSL
can claim fundamental rights because its a corporate body and corporate body is formed
by citizens and state cannot infringe a citizens fundamental right. If the fundamental right
of a corporate body gets infringed it will directly affect the rights of the citizen.
LXXIX.
LXXX. Choosing seat of arbitration in foreign is not against Public policy
LXXXI. In the case of Sasan Power Ltd v. North America Coal Corporation India Pvt
Ltd31, the Madhya Pradesh High Court has stated that two Indian parties may conduct
arbitration in a foreign seat under English law.32In M/s. Atlas Export Industries v. M/s.
Kotak & Company33 The Apex Court responded to the submission holding that "Merely
because the arbitrators are situated in a foreign country (London) cannot by itself be
enough to nullify the arbitration agreement when the parties have with their eyes open
willingly entered into the agreement." Thus, in the said case, the arbitral award arising out
of a foreign-seated arbitration (London) between Indian parties was not held to be
unenforceable or opposed to the public policy read with Sections 23 and 28 of the Indian
Contract Act, 1872. Atlas also court said that the arbitration is situated in a foreign
country would not by itself be enough to nullify the arbitration agreement that the parties

29Bennett Coleman & Co. v. Union of India , A.I.R.1973S.C. 106.

30Can a Corporation or a Company Claim a Right Under Article 19 of the Indian

Constitution?
(sep.28,2014),Http://Www.Gktoday.In/General-Awareness/Can-A-Corporation-Or-A-
Company-Claim-A-Right-Under-Article-19-Of-The-Indian-Constitution/.
31

Sasan Power Ltd v. North America Coal Corporation India Pvt Ltd , (2016) 10 S.C.C. 813.
32

Can Indian Parties Have a Foreign Seat of Arbitration?(nov.16,2015),Https://Blog.Ipleaders.In/Can-Indian-

Parties-Foreign-Seat-Arbitration/.
33

M/s. Atlas Export Industries v. M/s. Kotak & Company , (1997) 7 S.C.C. 61.
19 | P a g e
-Prayer- -Appellants/Petitioner-

entered into on their own volition.In case of Reliance Industries v Union of India34 based
on the 1996 Act, also allowed the Indian parties to deviate from domestic curial law by
choosing to arbitrate in London.35 Arbitration agreement is not against any public policy
as contented by the defendant.
LXXXII. Courts cant grant interim relief
LXXXIII. In Bharat Aluminium Co v Kaiser Aluminium Technical Services Inc 36The
Indian courts cannot order interim relief under Section 9 or any other provision of the Act
in support of foreign seated arbitrations.37 In present case district court had gone beyond
this rule and gave interim relief and also the act was not even against public policy. TSL
was free to choose any seat of arbitration according to law. The Balco38 judgment that
Part I of the Indian Arbitration Act, 1996, will not apply to arbitrations seated beyond the
territory of India, to a scenario where the foreign-seated arbitration is between Indian
parties.39 A.R. Antulay V. R.S. Nayak40, it was held by the Supreme Court that the courts
cannot pass any order or issue any direction which would violate the fundamental rights

34

Reliance Industries v Union of India ,(2104) 7 S.C.C 603.

35

Whether two Indian parties can derogate from domestic law in the context of arbitration
(Feb.14,2016),http://indiacorplaw.blogspot.in/2016/02/whether-two-indian-parties-can-derogate.html.

36

Bharat Aluminium Co v Kaiser Aluminium Technical Services Inc, (2012) 9 S.C.C. 552.
37

Landmark judgment delivered from the Indian Supreme Court in Bharat Aluminium Co v Kaiser Aluminium
Technical Services Inc.
(sep,2012),Http://Www.Nortonrosefulbright.Com/Knowledge/Publications/70563/Landmark-Judgment-
Delivered-From-The-Indian-Supreme-Court-In-Bharat-Aluminium-Co-V-Kaiser-Aluminium-Technical.

38

Bharat Aluminium Co v Kaiser Aluminium Technical Services Inc, (2012) 9 S.C.C 552.
39

India: Whether Two Indian Parties Can Choose A Foreign Seat And Exclude The Applicability Of Part I Of The
Arbitration And Conciliation Act, 1996( Aug. 20, 2015),
http://www.mondaq.com/india/x/415868/Arbitration+Dispute+Resolution/Whether+Two+Indian+Parties+Can+
Choose+A+Foreign+Seat+For+Arbitration+And+Exclude+The+Applicability+Of+Part+I+Of+The+Arbitration
+And+Conciliation+Act+1996.
40

A.R. Antulay v. R.S. Nayak ,(1988) 2 S.C.C. 602.

20 | P a g e
-Prayer- -Appellants/Petitioner-

of the citizens, and hence, it can be asserted that the expression State as defined under
Article 12 of the Constitution of India includes judiciary also.41
LXXXIV. The decision of district court violated TSLs fundamental right provided by
article 19(1)(g). District Court has no power to pass any order for interim relief in foreign
seated arbitration but here District Court infringed TSLs fundamental right by passing
injunction in favour of Govt. of Rajasthan. They took away the liberty of TSL.

LXXXV.
LXXXVI. III. Whether MPSL can be made a party to arbitration proceedings?
LXXXVII. 3.1 Sub-contractor like MPSL can made party to the proceeding.
LXXXVIII. The issue regarding the position of third parties under the Indian Arbitration
and Conciliation Act, 1996 needs to be looked into with respect to Section 7 of the 1996
Act which provides for an arbitration agreement, when read with section 8 of the 1996
Act provides for a judicial authority to refer the parties to arbitration, who have, in a
well-defined legal relationship agreed to arbitrate any dispute arising between them to.
The question which often arises while interpreting section 7 with section 8 is that whether
a third party which is not a signatory to the arbitration agreement and not in a well-
defined legal relationship can ask a judicial authority before whom an action has been
brought to refer the matter to arbitration.
LXXXIX. The Court relied upon Yogi Agarwal v Inspiration Clothes (2009) 1 SCC 372.
42
and made an observation that when Sections 7 and 8 of the Act refer to the existence of
an arbitration agreement between the parties; they necessarily refer to an arbitration
agreement. In this case, the Court took a strictly contractual view of the arbitration
agreement and held that non-signatories cannot be made a party to the arbitral
proceedings.
XC. What needs to be understood in this context is that the agreement to submit to
arbitration must be in writing. An agreement in writing is includes an arbitral clause (1) in
a contract containing an arbitration clause signed by the parties, (2) an arbitration

41

Whether Judiciary a state under Article 12 of the Constitution of India,

(Nov.4,2015),http://iilsindia.com/blogs/2015/11/04/whether-judiciary-a-state-under-article-12-of-the-
constitution-of-india/.

42

Yogi Agarwal v. Inspiration Clothes, (2009) 1 S.C.C. 372.

21 | P a g e
-Prayer- -Appellants/Petitioner-

agreement signed by the parties, (3) an arbitral clause in a contract contained in exchange
of letters or telegrams, and (4) an arbitral agreement contained in exchange of letters or
telegrams. If an arbitration clause falls in any one of these four categories, it must be
treated as an agreement in writing43

XCI. In Indowind Energy Ltd. v Wescare Ltd. & Anr. AIR 2010 SC 179344, the same
position was adopted by the Supreme Court that as per the definition of party u/s 2(h)
read with sections 7 and 2(b), Indowind, not being a signatory to the arbitration
agreement between Wescare and Subuthi, could not be made a party to the arbitration
proceedings. Indowind and Wescare were two different companies having a distinct legal
identity from the other. Since Indowind had not entered into any arbitration agreement
with Wescare, it could not be made a party to the proceedings commenced by Wescare
against Subuthi.

XCII. A slightly liberal approach regarding the position of third parties to an arbitration
agreement was taken by the Supreme Court in P.R. Shah Shares and Stock Brokers v
B.H.H. Securities AIR 2012 SC 1866.45. As per the facts of this case, the appellant and
the second respondents were sister concerns and had a common director. The director had
approached the first respondent for a sauda on the Stock Exchange. The first respondent
secured the sauda, delivered the bill and contract to the second respondent and only the
second respondents name was on the contract. A dispute arose regarding full payment to
the first respondent not made by the appellant and the second respondent which led to
arbitration proceedings as per the Bye-laws of the Mumbai Stock Exchange. An award
was made which was challenged by the appellant before the Bombay High Court on the
grounds that:-
XCIII. 1. There was no arbitration agreement between itself and the first respondent.

43

Smita Conductors Ltd v. Euro Alloys Ltd, A.I.R. 2001 S.C. 3730.
44

Indowind Energy Ltd. v. Wescare Ltd. & Anr, A.I.R. 2010 S.C. 1793.
45

P.R. Shah Shares and Stock Brokers v. B.H.H. Secu, A.I.R. 2012 S.C. 1866.
22 | P a g e
-Prayer- -Appellants/Petitioner-

XCIV. 2. The appellant also contended that there could not have been a single arbitration as
per the Bye-Laws of the Stock Exchange between two members and a member and a non-
member.
XCV. The High Court dismissed the petition and on appeal to the Supreme Court the
appellant contended that as the provisions for arbitration are different in regard to a
dispute between a member and a non-member and in regard to a dispute between two
members, there cannot be a common arbitration in regard to a claim or dispute by a
member against another member and a non-member.
XCVI. Supreme Court in Deutsche Post Bank Home Finance Ltd v Taduri Sridhar 2011
(4) CTC 47246, where Raveendran J took a strictly contractual view of arbitration
agreements, and held that only parties to an agreement could be made party to arbitral
proceedings under it. As a result, in arbitration between the prospective purchaser of
property and the developer, the bank providing a loan for the purchase (with whom the
purchaser had an independent arbitration agreement) was not impleaded.
XCVII. In Impex Trading GMBH v Anunay Fab. Ltd. and Ors (2008) 1 Arb LR 50
(Delhi).47 The relief was sought against the bankers of the Respondent No. 1 and
Petitioner respectively. The Court found as of fact that liability of the Bank under the
document was independent of any dispute as to breach of contract between the seller and
the buyer. On this finding, the Court went on to hold that Petition under Section 9 of the
Act against the Bankers who are not even party to the consignment Agreement and the
Arbitration Clause is not maintainable and deserves dismissal qua them. In Jagdish
Chander vs. Ramesh Chander 2007 (5) SCC 71948 this court in this case observe that
"The existence of an arbitration agreement as defined under Section 7 of the Act is a
condition precedent for exercise of power to appoint an arbitrator/Arbitral Tribunal,
under Section 11 of the Act by the Chief Justice or his designate. It is not permissible to
appoint an arbitrator to adjudicate the disputes between the parties in the absence of an
arbitration agreement or mutual consent."

46

Deutsche Post Bank Home Finance Ltd v. Taduri Sridhar, 2011 (4) CTC 472.
47

Impex Trading GMBH v. Anunay Fab. Ltd. and Ors, (2008) 1 Arb LR 50 (Delhi).
48

Jagdish Chander v. Ramesh Chander, 2007 (5) S.C.C. 719.

23 | P a g e
-Prayer- -Appellants/Petitioner-

XCVIII. In S. N. Prasad vs. Monnet Finance Ltd (2011) 1 SCC 32049, this Court
observe that "There can be reference to arbitration only if there is an arbitration
agreement between the parties. If there is a dispute between a parties to an arbitration
agreement, with other parties to the arbitration agreement as also non-parties to the
arbitration agreement, reference to arbitration or appointment of arbitration can be only
with respect to the parties to the arbitration agreement and not the non-parties. As there
was no arbitration agreement between the parties, the impleading of the appellant as a
respondent in the proceedings and the award against the appellant in such arbitration
cannot be sustained."
XCIX. 3.2 POSITION OF THIRD PARTIES UNDER SECTION 34 OF THE 1996 ACT

C. Section 34 of the Arbitration and Conciliation Act, 1996 provides for setting aside of an
arbitral award by a party on an application and on the grounds mentioned in sub-section
2. In Chennai Container Terminal Pvt. Ltd. v Union of India AIR 2007 Mad 32750 The
Court looked into section 2(1) (h) and section 34 of the 1996 Act and came to the
conclusion that the word party wherever it occurs in the Act unless the context otherwise
requires could only mean such person who is a party to an arbitration agreement as
defined in Section 2(1)(b) of the Act as an agreement referred to in Section 7. A plain
reading of Section 34 shows that only party to the arbitration agreement and party to the
arbitration award can file an application to set aside the arbitration award and that
too only on the grounds provided under Section 34(2) of the Act.

CI. In B.D. Bhanot v Shri Narmada Enterprises & Ors. 2007 (3) MPHT 206,51 the Division
Bench of the High Court of Madhya Pradesh dealt with the question, namely, whether a
third party or non-signatory to an arbitration agreement could seek to set aside an arbitral
award by invoking extra-ordinary jurisdiction of the Writ Court under Article 226 of the
Constitution of India. The Single Judge was of the view that though the Writ Petitioners
were not a party to the arbitration agreement and could not challenge an award u/s 34 or

49

S. N. Prasad v. Monnet Finance Ltd , (2011) 1 S.C.C. 320.

50

Chennai Container Terminal Pvt. Ltd. v. Union of India, A.I.R. 2007 Mad 327.
51

B.D. Bhanot v. Shri Narmada Enterprises & Ors, 2007 (3) MPHT 206.
24 | P a g e
-Prayer- -Appellants/Petitioner-

appeal against an order u/s 37 of the 1996. In S.N. Prasad v Monnet Finance Ltd. & Ors.
AIR 2011 SC 442,52 the award was passed against the appellant who was not a party to
the arbitration agreement. The awards against the appellant were therefore liable to be set
aside under section 34(2) (a) (ii) of the Act. The Court after looking into the relevant
provisions of the 1996 Act came to the conclusion that as there was no arbitration
agreement between the parties (the first respondent and appellant), the impleading of
appellant as a respondent in the arbitration proceedings and the award against the
appellant in such arbitration could not be sustained. If was not a party to the arbitration
agreement and therefore, should not be made a party to the arbitral proceedings. A certain
amount of clarity regarding the position of third parties was provided by the Supreme
Court in Deutsche Post Bank Home Finance Ltd. v Taduri Sridhar & Anr. AIR 2011 SC
189953 Wherein it was held by the Court that in case of tripartite agreement between
Respondents and Appellant, where the Respondent had not raised any dispute against the
Appellant with reference to an arbitration agreement, the Appellant could not be made a
party to the arbitration. The arbitration agreement in this case was between the first
respondent and the second respondent, to which the Appellant was not a party to. I relied
upon Yogi Agarwal v Inspiration Clothes (2009) 1 SCC 372 54 and made an observation that
when Sections 7 and 8 of the Act refer to the existence of an arbitration agreement
between the parties; they necessarily refer to an arbitration agreement in regard to the
current dispute between the parties or the subject-matter of the suit. It is fundamental that
a provision for arbitration, to constitute an arbitration agreement for the purposes of
Sections 7 and 8 of the Act, should satisfy two conditions. Firstly, it should be between
the parties to the dispute and secondly, it should relate to or be applicable to the dispute.

CII. 3.3 The District Court rejected the suit filed by MPSL on the ground that seat of
arbitration is outside India thus such suit cannot be entertained by Indian courts.
CIII. Since the Indian laws apply to the contract as a whole, it also applies to the arbitration
agreement which is an integral part of the contract. It is further urged that Singapore was
52

S.N. Prasad v. Monnet Finance Ltd. & Ors, A.I.R. 2011 S.C. 442
53

Deutsche Post Bank Home Finance Ltd. v. Taduri Sridhar & Anr, A.I.R. 2011 S.C. 1899
54

Yogi Agarwal v. Inspiration Clothes, (2009) 1 S.C.C. 372.

25 | P a g e
-Prayer- -Appellants/Petitioner-

merely the venue' of the arbitration and not the seat' of arbitration. There was no
implied exclusion of the applicability of Indian law to the arbitration proceedings.
CIV. Bhatia International v. Bulk Trading SA (2002) 4 SCC 10555 (hereafter referred to
as Bhatia International) which held that Courts in India have jurisdiction over
arbitration Awards whether the arbitration was held in India or outside, and Part
I of the Act would apply to such proceedings. He also referred to the decision
in Venture Global Engg. v. Satyam Computer Services Ltd. (2008) 4 SCC 19056 which,
following Bhatia International, He submitted that the test was to examine
whether there was either an express or implied exclusion of the Indian law in the
agreement between the parties and that in the instant case there is no such
exclusion, express or implied, of Indian law. The Supreme Court followed the
dictum in Bhatia International (supra) and held that Part I of the Act would apply
to international commercial arbitrations as well, unless the parties had by
agreement, express or implied, excluded any or all of its provisions. The Court
reiterated that Part I of the Act was applicable to the Award in question "even
though it is a foreign Award"
CV. In the present case the parties chose London as a venue of arbitration. However,
there is nothing in Clause 19 which indicates that there is any implied exclusion of the
applicability of Indian law. On the other hand, the clause begins by stating that the
agreement is being negotiated by the Law of the United Kingdom and international
customary commercial laws will be applicable on disputes arising out of agreement
between the parties.. This reflects the close connection of Indian law to the arbitration
agreement as well since it forms part of the contract.
CVI.
CVII. In Venture Global Engg. Which followed Bhatia; the Supreme Court emphasized
the aspect of 'closest and most real connection'. Likewise in National Thermal Power
Corporation v. Singer Company (supra) one of the tests that were applied was to
examine whether the contract "has in every respect the closest and most real connection
with the Indian system of law". It was observed in the said case although the venue of the

55

Bhatia International v. Bulk Trading SA, (2002) 4 S.C.C. 105.

56

Venture Global Engg. v. Satyam Computer Services Ltd. (2008) 4 S.C.C. 190.
26 | P a g e
-Prayer- -Appellants/Petitioner-

arbitration was outside India, that venue had no connection with the contract of the
parties, except that it was a neutral place.
CVIII. In the present case, there is absolutely no connection between London and the present
contract except that the arbitration took place there. The Petitioner is an Indian party and
the Respondent Company is incorporated in the U.S.A. The contract was to be performed
entirely in India. As already noted the governing law of contract is Indian law. Applying
the closest and most real connection" test, it can safely be concluded that there is no
implied exclusion of the applicability of Indian law to the arbitration proceedings.
CIX. Civil Appeal no. 309/2017
CX. IV. Whether the High Court was correct in not setting aside the
application under S. 34 of the Arbitration and Conciliation Act of 1996?
CXI. The appellant humbly submits that this regular civil suit has been filed to seek remedy
under section 34 of the Arbitration and Conciliation Act, 1996. The section deals with the
setting aside of the arbitral award passed by the seat of International Commercial
Arbitration. For the Court to grant relief under section 34, first, it must be shown that
provisions of this arbitration act, 1996, allow the Indian courts to interfere in the matters
of the foreign arbitral proceedings being held between the parties, both of which are
Indian nationals and, second, in the absence of the substantive law of contract governing
the contract, law of which country will govern the contract. The detail arguments follow.
CXII. 4.1. That the provisions of the arbitration act, 1996 supports the interference of
Indian courts.
CXIII. It is nowhere provided that part I will only apply to the arbitration that takes place in
India. Thus legislature has not provided that part I is not be apply to arbitration which
takes place outside the India.57 Section 1(2) of the arbitration act, 1996 reads as follows:
It extends to the whole of India: Provided that part I, III and IV shall extend to the
Jammu and Kashmir only insofar as they relate to international commercial arbitration or,
as the case may be, international commercial conciliation 58 and section 2(2) reads as
this part shall apply where the place of arbitration is in India. The two sections come in
conflict with each other. If the word only is read into section 2(2), it would then render the

57

Bhatia International v. Bulk Trading S.A., (2002) 4 S.C.C. 105.

58

Arbitration and Conciliation Act, 1996. Section 1(2).

27 | P a g e
-Prayer- -Appellants/Petitioner-

sub-section inconsistent with sub-section (4) and (5) of section 2 which apply to part I to
all arbitration, meaning thereby, including foreign international arbitration. There would
be arbitrariness as even if the international arbitration takes place outside the India, part I
would continue to apply in Jammu and Kashmir, but it would not apply to rest of the
India. The legislature of India could not have intended so.
CXIV. The opening words of the section 45 and section 54, which are in part II of the
arbitration act, 1996 read as notwithstanding anything contained in part I. Such a non
obstante clause had to be used because the provisions of part I apply to part II of the act.
The omission of the word only clearly indicates that the Model Law has not been bodily
adopted by the arbitration act, 1996. So, the provisions of the said act have to be
construed literally without the addition of any word to any provision. 59 Similarly if the
part I was to be applied where the place of arbitration is in India then the words Where
the place of arbitration is situated in India in Section 28(1) were to be completely
unnecessary. This arbitration act, 1996 is subject matter centric and not seat centric.
The reliance is placed on section 2(1)(e), which reads as jurisdiction to decide the
question forming the subject matter of the arbitration if the same had been the subject
matter of the suit, this should be an essential pre-condition for the courts to assume their
jurisdiction under part I.60
CXV. The word court would have been used under section 5 and 8 of the arbitration and
conciliation act, 1996, if part I was only meant to be used for the arbitration held within
India. This is also because legislatures were also aware while drafting the legislation that
in international commercial arbitration, a matter can be taken to the judicial authorities
outside India but as the part I of the arbitration act would also be applied to the
international commercial arbitration held outside the India the term judicial authority
has been used in the section 5 and 8 of the act.
CXVI.
CXVII. 4.2. That the substantive law of India will prevail.
CXVIII. Substantive law is the proper law of contract governing the contract between
the parties. In case, where substantive law governing the contract between the parties is
59

Konkan Railway Corpn. Ltd. v. Rani Construction (P) Ltd., (2000) 8 S.C.C. 159.
60

Bharat Aluminium Company Ltd. v. Kaiser Aluminium Technical Services, (2012) 9 S.C.C.
552.
28 | P a g e
-Prayer- -Appellants/Petitioner-

not mentioned, as in the present case, substantive law being the very first law that should
be kept in mind while doing an arbitration agreement leads to a conclusion that where the
substantive law is not mentioned it should be presumed that the country where the
contract is taking place, law of contract of that country should be applied as the
substantive law. As the governing the contract is the Indian Law in the arbitration
agreement, so it necessarily follows that the Indian courts will have jurisdiction
regarding all the matters of the arbitration.61
CXIX. It is also possible that in a given case parties agree that the governing law of the
substantive contract be that of the one country and the governing law of the arbitration
agreement be that of the another country. The principles in regard of this law are well
settled.62
CXX. The conjoint reading of all the provisions of the part is to apply to all the international
commercial arbitration which takes place out of India, unless parties have expressly or
impliedly, exclude it or any of its provision. Such an interpretation does not lead to any
conflict between the parties and also does not leave any party remediless. 63 By omitting
to provide that part I will not apply to international arbitration which takes place outside
of India, the effect would be that part I would apply to international commercial
arbitrations held out of India. By not specifically providing that the part I apply to
international commercial arbitration held out of India, the intention of the legislature
appears to be allow parties to provide by agreement that part I or any other provision
therein will not apply. In respect of the arbitration being held outside the India even the
non-derogable provisions of part I can be excluded. Such an agreement may be expressed
or implied.64 Section 2(1) (f) defines an international commercial arbitration. The

61

National Thermal Power Corporation v. Singer Company And Others, (1992) 3 S.C.C. 551.
62

Sasan Power Limited v. North American Coal Corporation India Private Limited, Civil
Appeal No. 8299 of 2016.
63

Venture Global Engineering v. Satyam Computer Services Ltd. And Others, (2008) 4 S.C.C.
190.
64

Venture Global Engineering v. Satyam Computer Services Ltd. And Others, (2008) 4 S.C.C.
190.
29 | P a g e
-Prayer- -Appellants/Petitioner-

definition makes no difference between the international commercial arbitration held in

India or outside the India.
CXXI. In the present case, the law governing the arbitration agreement was given but there
was no reference regarding the substantive law governing the contract, as was given Para
III of the statement of facts that the law governing the arbitration agreement is the law of
the United Kingdom, but there is no reference regarding the substantive law governing
the contract between the parties. But because the contract took place in India between the
parties, the place where the contract takes places is of great importance for determining
the substantive law that will be applicable on the contract between the parties.
CXXII.
CXXIII.
CXXIV.
CXXV.
CXXVI.
CXXVII.
CXXVIII.
CXXIX.
CXXX.
CXXXI.
CXXXII.
CXXXIII.
CXXXIV.
CXXXV.
CXXXVI.
CXXXVII.
CXXXVIII.
CXXXIX.
CXL.
CXLI.
CXLII.
CXLIII.
CXLIV.
CXLV.
CXLVI.
30 | P a g e
-Prayer- -Appellants/Petitioner-

CXLVII.
CXLVIII.
CXLIX.
CL.
CLI.
CLII.
CLIII.
CLIV. PRAYER

CLV. In the light of arguments advanced and authorities cited, the Appellants/ Petitioner
humbly submit that the Honble Court may be pleased to adjudge and declare that:
1 Govt. of Rajasthan contention was wrong that applicability of foreign law is
against the public policy.
2 The SLP of the petitioner should be accepted and overrule the decision of the
District Court and remove the injunction.
3 The SLP of the petitioner should be accepted and initiation of arbitration
proceeding by OGX was wrong as isnt there any arbitration agreement between
them.
4 The appeal of the appellant should be accepted and set aside the arbitral award
under section 34 the 1996 Act, passed by the foreign arbitral tribunal
CLVI.
CLVII. Any other order as it deems fit in the interest of equity, justice and good
conscience.

CLVIII.
Sd/-

CLIX. (Counsels for the

Petitioner)

CLX.

31 | P a g e