indian council of arbitration

5/10/2015 INDIANCOUNCILOFARBITRATION

http://www.icaindia.co.in/icanet/judgment.htm 1/9

Judgments and Awards

Preamble

1999(4)RAJ365(Del)UnionofIndiaVsEastCoastBoatBuilders&EngineersLtd

ThiscaseexploredtheeffectoftheModelLawandRules.Itwasdecidedthatitcannotbesaidthateachandeveryprovisionofthesaid Model Law and Rules forms part of the Act even though the preamble of the Act says that it is expedient to make lawsrespectingArbitrationandconciliation taking intoaccount theUNCITRALModel lawandRules.ThoseModel lawandRulesweretakenintoaccountwhiledraftingandenactingtheActbutwhateverhasbeenenactedisthelawonarbitrationenforceableinIndia.

HadtherebeenalacunaeintheprovisionsoftheIndianArbitrationActonthepointatissueorifitcontainedsuchprovisionswhichis capable of 2 or more different interpretations , then of course the internal aid to the preamble to the Act could be taken forinterpretingsuchprovisionandthentherelevantprovisionsof thesaidModelLawandRulescouldbereadsoas to interpret thatprovisionbecausewhileenactingtheIndianAct,thesaidModelLawandRulesweretakenintoaccount.

1999(4)RAJ365(Del)UnionofIndiaVsEastCoastBoatBuilders&EngineersLtd

ThiscaseexploredtheeffectoftheModelLawandRules.Itwasdecidedthatitcannotbesaidthateachandeveryprovisionofthesaid Model Law and Rules forms part of the Act even though the preamble of the Act says that it is expedient to make lawsrespectingArbitrationandconciliation taking intoaccount theUNCITRALModel lawandRules.ThoseModel lawandRulesweretakenintoaccountwhiledraftingandenactingtheActbutwhateverhasbeenenactedisthelawonarbitrationenforceableinIndia.

HadtherebeenalacunaeintheprovisionsoftheIndianArbitrationActonthepointatissueorifitcontainedsuchprovisionswhichis capable of 2 ormore different interpretations , then of course the internal aid to the preamble to the Act could be taken forinterpretingsuchprovisionandthentherelevantprovisionsof thesaidModelLawandRulescouldbereadsoas to interpret thatprovisionbecausewhileenactingtheIndianAct,thesaidModelLawandRulesweretakenintoaccount.

Section 1(3) - Effective date of coming into force of the Act2001(2)RAJ1(SC)FuerstDayLawsonLtdVsJindalExportsLtd.

Thiscaseclarifiedthatanordinanceoperatesinthefielditoccupies,withthesameeffectandforceasanAct.

The firstOrdinancecame into forceon25.1.1996and theAct came into forceon22.8.1996. Itwasheld that theAct came intoforceincontinuationofthefirstOrdinanceandthismakesthepositionclearthatalthoughtheActcameintoforceon22.8.1996,forallpracticaland legalpurposes, itshallbedeemed tohavebeeneffective from25.1.1996,particularlywhen theprovisionsof theOrdinanceand theAct are similar and there is nothing in theAct to the contrary so as tomake theOrdinance ineffective as toeitheritscomingintoforceon25.1.1996oritscontinuationupto22.8.1996.

Section 2(1)(b) - determination of the existence of a bindingarbitration agreement

2001(3)RAJ531(Del)MMAcquaTechnologiesLtdVsWigBrothersBuildersLtd

Thiscasehelps inexplaining thedefinitionofabindingagreementbetweenparties. Inorder tobeabindingarbitrationagreementbetween the parties, the same must be in writing and the parties should have specifically agreed to settle their disputes byarbitration.Anarbitrationagreementcannotbeinferredbyimplication.

Itwasheld thatexistenceofanarbitrationagreement inpithandsubstanceconferspowerupon theChiefJusticeorapersonorbodydesignatedbyhimtoappointanarbitratorie.Thejurisdictionofthejudgeemanatesfromanexistingarbitrationagreement.

Itwasheldthatasthereisnoarbitrationagreementinwritingbetweenthepetitionerandtherespondent,theclausesofthecontractbetweentherespondentsintersewillnotinanywaybebindingonthepetitioner.Itwasalsoheldthatintheeventthepetitioner isnot able to raise any dispute about the obligations which the respondents have entered into amongst themselves, there is noquestionofanydisputebeingreferred to thearbitrator.Therefore, therebeingnoarbitrationagreementbetween thepetitionerandthesecondrespondent,thequestionofappointingthearbitratordoesnotarise.

Section 2(1)(b) - Essential ingredients of an arbitrationagreement

2000(1)RAJ117(Bom)JayantN.SethVsGyaneshwarApartmentCooperativeHousingSocietyLtd

ThecourtlaiddowntheessentialingredientsofanarbitrationagreementasdefinedinClause2(1)(b)readwithSection7asgivenbelow:

i.Thereshouldbeavalidandbindingagreementbetweentheparties.ii.Suchanagreementmaybecontainedasaclauseinacontractorintheformofaseparateagreement.iii.Suchanagreementisdeemedtobeinwritingifitiscontainedinadocumentsignedbythepartiesorinanexchangeofletters,telex, telegramsorothermeansof telecommunicationwhichprovidea recordof theagreementoranexchangeof statementsofclaim and defense inwhich the existence of the agreement is alleged by one party and not denied by the other. Reference inacontracttoadocumentcontaininganarbitrationclausealsoconstitutesanarbitrationagreement,providedthecontractisinwritingandthereferenceissuchastomakethatarbitrationclausepartofthecontract.iv.Partiesintendtoreferpresentorfuturedisputestoarbitrationv.Thedisputetobereferredtoanarbitratorisinrespectofadefinedlegalrelationship,whethercontractualornot.

Section 2(1)(b) - Definition of 'parties' to a valid arbitration

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agreement2001(4)RAJ660(Del)Pyrites,PhosphateandChemicalsVsExcelShippingEnterprises

Therewasanagreementbetweenthepartieswhichwasrenewed.Theoriginalagreementcontainedanarbitrationclause,however,there was no signature by or on behalf of the petitioner company the signatures belonged to two employees of the petitioner,withouttherebeingaresolutionintheirbehalftosignonbehalfofthepetitionercompany.Theyhadsignedaswitnesses.

Thepetitionerurgedthatsincethe2personswereemployeesofthepetitioner,itcouldbetakenthattheysignedforandonbehalfofthepetitioner.

Itwasheldthatmerelybecausetheywereemployeesof thepetitionerwouldnotgivethemthestatustosay that theysigned forandonbehalfofthepetitioner.Theyhadnotsignedonthebasisofanyresolutionofthepetitionersoastopermitthecourttoholdthattheyhadsignedonbehalfofthepetitioner.Theyhadsignedaswitnessesandtheirstatuswouldremaintobethatofawitness,rather than a party. The difference of signing as a witness and signing for and on behalf of the company is like the differencebetweenchalkandcheese.

Section 2(1)(c), 31- Meaning and scope of interim and finalaward

2001(4)RAJ209(Del)JindalFinancial&InvestmentServicesVs.PrakashIndustriesLtd.

According toSection2(1)(c),anaward includesan interimawardandassuchwillalsohave tosatisfy thesame requirementsofSection31,tobetreatedasanaward.

The court held that all orders/decisions passed under the Act do not necessarily fall under the expression 'awards' it is only adecision/orderwhichsatisfiestherequirementsofsection31whichisanaward.Allothersareorders/decisionsinthecourseoftheproceedingsdecidingperipheral issuesor terminatingthearbitralproceedingsthemselveson theground that thesubmissiondoesnot fallwithinthearbitralagreementorthatthereisnoarbitralagreementorthatthere isnodisputerequiredtobedecidedbytheArbitralTribunal.

Theaward,whether interimor final,mustmean the finaldeterminationofaclaim,partofaclaimorcounterclaimby theArbitralTribunal,ofasubmissiontothatTribunal.ThedecisionmustbesupportedbyreasonsintermsofSection31(3),unlessotherwiseprovidedfor.However,afinalorinterimawardunsupportedbyreasonsisstillanaward,butitischallengeableunderSection34.

TheawardmustbesignedbyarbitratorsoramajorityofarbitratorsanditmustresultintheTribunalbeingrenderedfunctusofficioinrespectofthesubjectmatteroftheaward.

Section 2(1)(e) - Determination of 'Principal civil court oforiginal jurisdiction'

2003(2)RAJ433(AP)AnkatiSatyamaiahVs.SallangulaLalaiah

ThefactsofthecasearethatthepartiesresidedatMiryalaguda,HyderabadandNalgondawhoreferredthemattertoarbitratorsatHyderabad and the awardwas passed inHyderabad. An execution petition for enforcement of award was filed by the petitionerbeforetheseniorciviljudgeatMiryalaguda,whoreturnedthepetitionforwantofjurisdiction,tobepresentedbeforetheappropriatecourt.

Itwasheld that thedefinitionof theword 'court' in theexpression 'Principalcivilcourtoforiginal jurisdiction' inSection2(1) (e) inconjunctionwith themeaninggiven inSection2(4)ofCPCandSection3(17)of theGeneralClausesAct, indicates that it impliestheCourtofDistrict Judge ie. 'Principalcivil courtoforiginal jurisdiction' inadistrict.Also, thedefinitionexpressly excludes anyothercivilcourtofagradeinferiortosuchcourts.

Therefore,inthiscase,thesuitshouldhavebeenfiledbeforethePrincipalcivilcourtoforiginaljurisdictioneitheratNalgondaoratHyderabad.

Section 2(1)(h) and 34 (3) - Meaning of delivery of award bythe Tribunal to the 'party'

2005(1)RAJ506(SC)

Union of India Vs Tecco Trichy Engineers & Contractors Decidedon 16.3.2005TheSouthernRailwayenteredintoacontractwiththeRespondentandthecontractwassignedbythethenChiefProjectManager,presentlytheChiefEngineer(CE).Whendisputesarose,inexerciseofthepowerconferredbythearbitrationclauseinthecontract,theGeneralManager(GM),SouthernRailway,appointedanarbitratoraswellasthepresidingarbitrator.Thetribunalsoconstitutedgave its award, a copy of which was delivered on 12.3.2001 in theGM's office and receipt of the same was acknowledged bysomeoneintheoffice.TheCEreceivedtheawardcopyon19.3.2001.

On10.7.2001, theCEapplied forsettingaside theawardandanapplication for condonationofdelayof27dayswas filed underS.34(3),basedontheassumptionthattheawardwasreceivedon19.3.2001.TheRespondentcontestedthisapplicationsayingthattheawardwasdeliveredon12.3.2001andtheHighCourtagreedwiththeRespondent.

ItwasheldthataccordingtoSection31(5),'afterthearbitralawardismade,asignedcopyshallbedeliveredtoeachparty'.Section2(1)(h)definesa "party"asmeaning 'aparty to anarbitrationagreement'. The court examined themeaning assigned to the term"party"inthecontextoftheStateoraGovernmentDepartment,esp.alargeorganizationliketheRailways.

It iswell known that theMinistryofRailwayshasa very largeareaofoperationcoveringseveraldivisionswith different divisionheadsanddepartmentswiththeirowndepartmentheads.TheGM,attheapexposition,holdsresponsibilityforstrategicdecisions,organizational policies, administrative instructions etc. The day to daymanagement and operations of different departments restwithdifferentdepartmentheads,whoaredirectlyconnectionwiththeirdepartment'sfunctioningand isaloneexpectedtoknowtheprogressofthematterpendingbeforethearbitraltribunal.

Thus,inalargeorganizationliketheRailways,"party"asreferredtoinSection2(1)(h)r/wSection34(3)hastobeconstruedtobeapersondirectlyconnectedandinvolvedintheproceedingsandwhoisincontroloftheproceedingsbeforethearbitrator.

Thedeliveryofanarbitralaward,tobeeffective,hastobe'received'bythepartyandthisdeliverybythetribunalandreceiptbythe



partysetsinmotionseveralperiodsoflimitation,thereforeitisanimportantstageinthearbitralproceedings.

Thecourtheldthatinthepresentcase,theCEhadsignedtheagreementonbehalfoftheRailways.Inthearbitralproceedings,herepresentedtheorganizationandnoticeswereservedonhim.EventheawardclearlymentionedthattheRailwaysisrepresentedbyDY.CE/GaugeConversion, Chennai. The subjectmatter of arbitration related to the department of the CE. Therefore, the HighCourthaderredinitsdecisionandtheClaimant'sapplicationforsettingasidetheawardisallowed.

Section 2(2) - Arbitration proceedings held in India-applicability and scope of Part I

2002AIRSC1432BhatiaInternationalVsBulkTradingS.A.

InthiscaseitwasheldthatthelegislatureprovidedthattheprovisionsofPartIwouldapplytoarbitrationswhichtakeplaceinIndiabutdidnotprovidethat theprovisionsofPart Iwillnotapply toarbitrations takingplaceoutof India.ThewordingofSection2(2)suggeststhattheintentionoftheLegislaturewastomakeprovisionsofPartIcompulsorilyapplicabletoanarbitration,includinganinternationalcommercialarbitration,whichtakesplaceinIndia.Partiescannot,byagreement,overrideorexcludethenonderogableprovisionsofPartIinsucharbitrations.

ByomittingtoprovidethatPartIwillnotapplytointernationalcommercialarbitrationsoutsideIndia,theeffectwouldbethatPartIwouldalsoapplytointernationalcommercialarbitrationsoutsideIndia.ButbynotspecificallyprovidingthattheprovisionsofPartIapplytointernationalcommercialarbitrationsoutsideIndia,theintentionoftheLegislatureappearstobetoallypartiestoprovidebyagreementthatPartIoranyprovisionthereinwillnotapply.Suchasagreementmaybeexpressorimplied.

Section 2(2) & 9 - Mainatinability1999(1)RAJ385(Del)KitechnologyNVVsUnicorGMBHPlastmaschinen

BoththepartiestotheagreementwereforeignersandtheagreementspecificallyagreedthattheagreementwastobegovernedbyGermanlaws,thedisputewastoberesolvedbyarbitrationandtheseatofarbitrationwastobeatFrankfurt.

ItwasheldthatthisActappliesincaseswhereoneormorepartiesisaforeignerbuttheplaceofarbitrationisIndia.Accordingtothearbitrationagreementoftheparties,theGermancourthasexclusiveandcompetentjurisdictionwithrespecttothedispute.

ItfollowsthatwherethepartiestotheagreementwereforeignersandtheplaceofarbitrationwasnotinIndiaandaforeignlawwasapplicable, then provisions of Part I of this Act are not applicable. In view of Section 2(2), this is not international commercialarbitrationtowhichPartIwillapply.ThereforeanapplicationunderSection9isnotmaintainable.

Section 2(4) - Scope of protection of this section2000(1)RAJ336(Bom)AnuptechEquipmentsPvtltdVsGanpatiCooperativeHousingSocietyLtd.

Rules are usuallymadeby government, unlike statutoryByelawswhich aremade by local bodies or associations.Under thesecircumstances, itwasheld that theprovisions in the statutory contract of theBombayStockExchange regarding thenumber ofarbitrators,whichwaseven,wascontrarytoSection10oftheAct.ThiswouldnotbeprotectedbySection2(4)asthissectiononlyprotects inconsistentprovisionsinsofarastheenactmentandRulesareconcernedandnotByelaws.Theexpression 'enactment'hasbeenheldtobeanActorRuleanddoesnotincludebyelaws.

Section 2(7) - determination of domestic and foreign award2002AIRSC1432BhatiaInternationalVsBulkTradingS.A.

Itwasheld that foreignawardsare thosewherearbitration takesplace inaconventioncountryawards in arbitration proceedingswhichtakeplaceinanonconventioncountryareneitherconsideredasforeignawardsnorasdomesticawardsundertheAct.

Thecourtalsostressed that 'DomesticAwards' includeallawardsmadeunderPart Iof theAct.Awardsmade inan internationalcommercialarbitrationheldinanonconventioncountrywillalsobeconsideredtobea'domesticaward'.

Section 4 - Waiver of right to object

2003(2)RAJ58(Del)PrecisionEngineersandFabricatorsVsDelhiJalBoard

ThepetitionerfiledanarbitrationpetitionforappointmentofarbitratorunderSection11oftheAct,duringthependencyofwhichtherespondentappointedasolearbitratortoadjudicateuponthedisputebetweentheparties.

Thepetitionerdiligentlypursuedtheclaimsbeforethearbitratorwithoutanyobjectiontohisappointment.Therewerenodocumentson record to show that the petitioner raised any objection to the appointment of the arbitrator by the respondent. Even after thearbitratorpassedanorderon18.5.2005,thepetitioner,on25.5.2005,requestedthearbitratorforextensionoftimetofilerejoinder.Underthesecircumstances,itwasheldthatthepetitionerhadwaiveditsrightsasperSection4oftheAct.

2003(3)RAJ335(Bom)UnionofIndiaVsMAAAgency

Thebrieffactsof thecasearethat thepetitionerreferred2claimsand therespondent referred3claimsbefore thearbitrator.Thepetitionerdidnot raiseanyobjection in respectof the3rdClaimandanawardwasmadeunderall the3claims.The issue arosewhetherthepetitionerwasentitledtoraiseobjectioninrespectofthe3rdclaiminapetitionforsettingasidetheaward.

Itwasheld that itwasopen to thepetitioner to challengeeither the jurisdictionof thearbitral tribunal to adjudicate upon the 3rdclaimor to raise the plea that the tribunal was exceeding its scope of authority. However, the petitioner did not raise any suchobjectionandonthecontrary,proceededwithadefensetotheclaimonmerits,thereafterwhichanawardwaspassed.Thisbeingthecase,itmaybedeemedthatthepetitionerhadwaiveditsrightsunderSection4,toobjectonthegroundthatanyrequirementofthearbitrationagreementhadnotbeencompliedwith.

Section 5 - Scope of judicial intervention



2001(57)DRJ154(DB)BHELVsCNGarg&Ors.

ThescopeofSection5cameupforconsiderationinthiscaseandthecourtheldthattheschemeofthenewActhasdoneawaywith court interference during arbitration proceedings. The new Act deals with situations even when there is a challenge to theconstitutionof thearbitral tribunal it is left to thearbitrator todecidethesame. If thechallenge isunsuccessful, the tribunalmaycontinuetheproceedingsandpassanaward.Suchachallengetotheconstitutionofthetribunalbefore thecourt is thendeferredand it couldbeonlyafter thearbitral award ismade that theparty challenging thearbitratormaymake an application for settingasidetheawardanditcantakethegroundofconstitutionofthetribunalwhilechallengingtheaward.

ThecourtfurtherdrewtheconclusionthatSection5wasinsertedtodiscouragejudicial intervention.It isseenthatapartyhavinggrievancesagainstanarbitratoronaccountofbiasorprejudiceisnotwithoutremedy.ItonlyhastowaittilltheawardismadeandthenitcanchallengetheawardonvariousgroundsunderSection34.

Section 5 - Scope of jurisdiction of Civil Court2000AIR(P&H)276PappuRiceMillsVsPunjabStateCooperativeSupplyandMarketingFederationLtd.

ThiscasereiteratedthepointthatcourtswillhavenojurisdictionwhereremedyisprovidedundertheAct.Brieflystating the fact,theplaintiffhadfiledapetitionunderOrder39Rules1&2r/wSection151ofCPCforadinteriminjunctioninspiteofthefactthatthe defendant had already appointed an arbitrator in respect of the dispute and that arbitrator had already issued notice to thepartiesinthearbitralproceedingspendingbeforehim.

Itwasheldthatthearbitraltribunaliscompetenttodecidethequestionsofitsownjurisdictionandwhereitrejectsthepleaof theobjector regarding jurisdiction, the arbitral tribunalwould be competent to proceedwith the arbitration and to give its award. TheaggrievedpartyisentitledtochallengethesameunderSection34.Thus,theremedybeingavailabletotheplaintiff,thecivilcourtwouldnotbecompetenttorestrainthearbitratorfromproceedingwitharbitration,inviewofSection5.

Thisbeingthecase,thecourtisjustifiedinrefusingtograntadinteriminjunctioninfavouroftheplaintiff.

Section 7 - Attributes of an arbitration agreement1998AIRSC1297KKModiVsKNModi

Thiscasediscussedtheattributeswhicharenecessaryforconsideringanagreementasanarbitrationagreement.Itwasheldthatamongtheattributeswhichmustbepresentare:

1. Thearbitrationagreementmustcontemplatethatthedecisionofthetribunalwillbebindingonthepartiestotheagreement.2. Thejurisdictionofthetribunaltodecidetherightsofthepartiesmustderivefromtheirconsent,orfromanorderoftheCourt

orfromastatute,thetermsofwhichmakeitclearthattheprocessistobeanarbitration.3. Theagreementmustcontemplatethatsubstantiverightsofthepartieswillbedeterminedbytheagreedtribunal.4. Thetribunalwilldeterminetherightsofthepartiesinanimpartialandjudicialmannerwiththetribunalbeingfairandequalto

bothsides.5. Theagreementofthepartiestorefertheirdisputestothedecisionofthetribunalmustbeintendedtobeenforceableinlaw6. Theagreementmust contemplate that the tribunalwillmakeadecisionuponadisputewhich is already formulated at the

timewhenareferenceismadetothetribunal.

Other important factors includewhether the agreement contemplates that that tribunalwill receiveevidence fromboth sides andgivethepartiesopportunitytoputforththeirissuesandheartheircontentionswhetherthewordingoftheagreementisconsistentwith the view that the processwas intended to be an arbitration andwhether the agreement requires the tribunal to decide thedisputeaccordingtolaw.

Thecourtshavelaidemphasison(i)existenceofdisputesasagainstintentiontoavoidfuturedisputes(ii)thetribunalorforumsochosenisintendedtoact judiciallyafter taking intoaccountrelevantevidenceandsubmissionsmadebypartiesbefore it (iii) thedecisionisintendedtobindparties(iv)nomenclatureusedbypartiesneednotbeconclusive.

Section 7 & 19 - Existence of arbitration agreement2003(2)RAJ152(Bom)SkanskaCementationIndiaLtdVs.BajranglalAgarwal

Accordingto thefacts,apurchaseorderwasplacedbythepetitionerson therespondents.Thedeliverychallancontaineda termthat disputes if any should be referred to Bharat Chamber of Commerce for arbitration. There was also an arbitration clause ininvoicessentbytherespondentwhichwereacceptedbythepetitionerandmoneywaspaidunderthoseinvoiceswithoutprotest.

Itwasheld that thepurchaseorderby itselfwouldnotbeacontractbetween theparties' it isonlyonaccepting the termsof theorderwhenacontractcomesintobeing.ClauseIofthepurchaseorderdoesprovidethatexecutionofthisordershallbedeemedtobeacceptanceoftheconditionsstatedtherein.Clause11ofthepurchaseorderprovidedthattherespondentscouldindicateto thepetitionerconditionstheyfoundunacceptable.

Bythetermscontainedinthedeliverychallan,thepetitionerisdeemedtohavebeeninformedthattheconditionthattheirdecisionwasfinalwasnotacceptabletotherespondentandthatthedispute,ifany,shouldbereferredtoarbitration.Therespondentsalsosentinvoicesunderwhichtherewasanarbitralclause,whichwasacceptedbythepetitioner.Therefore itwasconcluded that thecontractbetweenthepartiesclearlycontemplatedaprovisionforarbitration.

Section 7 & 2(1)(b) - Definition of an arbitration agreement1999(3)RAJ73MohanSinghVs.HPstateForestCorporation

Thiscasediscussed theeffect of the failure touse thewords 'arbitrator' or 'reference' inanagreement. Itwas held that it is notnecessary toconstituteanarbitrationagreement that thewords 'arbitrator' or 'reference' or similarexpressionsshouldactually beusedintheagreement.Theagreementshould,insubstance,amounttoanarbitrationagreementandtheintentionofthepartiesatthetimeofexecutionoftheagreementwouldbethedecidingfactor.

Thecourt furtherelaborated that it isnotalways thatwhen2personsagreed tobeboundbyadecisionof their own choice thatwouldconstituteanarbitrationagreement. Inorder todetermine the realnatureof theagreement, it isnecessary to ascertain theintentionofthepartiesatthetimeofenteringtheagreement.Forthisspecificpurpose,considerationmustbegivennotonlytotheexact words of the agreement but also to the position, knowledge and skill of the person who whom the matter is referred fordecision.

On theotherhand, if the intentionof thepartiesappears tobenot tosettle thedifferencesafter theyhave arisen but to preventdifferencesfromarising,thatwouldnotbearbitration.Itistheintentionofthepartieswhichistobegatheredfromtheworkingoftheclauseandincertaincases,eveniftheword'arbitrator'ismissing,ithastobeinferredinbetweenthelinesusedbytheparties.



Section 7, 2(1)(b), 8, 11 - Printed condition on invoice2000(1)RAJ320(Bom)DivyaShivlaksImpexVs.ShantilalJamnadasTextiles(P)Ltd

The issuewaswhetheraprintedconditionon the invoiceamounted toanarbitrationagreement.The respondentscontended thatafter thedetailsofparticularsof thegoodssupplied,quality,priceetc, there is aprintednoteon the lowerportionof the invoicewhichstates: 'Thissale issubject to thesale.DisputesandArbitrationRulesofMumbaiPieceGoodsMerchantsMahajan'. TherespondentscontendedthatthisamountstoanagreementtoreferthedisputetotheMahajan.

ThecourtheldthattheprintedclausewasnotintelligibleandthisclausedoesnotstatethatthesalewassubjecttothearbitrationrulesoftheMumbaiPieceGoodsMerchantsMahajan.Itisdifficulttoappreciatetheexactmeaningoftheprintedwords.Onaplainreading, in the absence of any othermaterial to explain the said printed clause, it cannot be concluded that the printed clauseamountstoanarbitrationagreement.

Section 7(1), 8 & 2(1)(b) - Existence of arbitrationagreement

2002(3)RAJ403(Bom)MotilalVsKedarmalJainarayanBharadiya

Thedispute involvedpartitionandseparatepossessionofa familypropertyand thematterwas inprogress towardsdrawingofafinal decree of partition. The document in issue did not contemplate adjudication upon issues by the nominated person. Thenominatedpersonswerenotobligedtoinvitethepartiestoputforththeirsubmissionsandadjudicatethereupon theyweremerelyput in theshoesofconflictingparties toeffectpartitionandwereempowered to takeanyappropriatedecision they felt tobe justandfair.

ThecourtheldthatthedocumentdidnotmeettherequirementofSection7(1)'agreementbythepartiestosubmittothearbitrationallorcertaindisputeswhichhavearisen'.Infact,thepartieshadagreedthattheywouldnotraiseanydisputebeforethenominatedpersonandsubmittotheirjudgmentorsuggestion.Thereforethedocumentisnotanarbitrationagreement.

The court further elucidated that arbitration is an alternate dispute resolution system of quasi judicial nature and if no judicialfunctionareattributedtothenominatedpersons,thedocumentcannotbesaidtobeanarbitrationagreement.

Section 7(2) - Form of arbitration agreement003(4)RAJ176(Bom)VirajHoldings,MumnaiVs.MotilalOswalSecuritiesPvtLtd

Thiscaseconsideredtheeffectofacontractnotesignedonlybytheregisteredbrokerortrader.Theissuewaswhetherthiscouldbesaidtocontainanarbitrationagreementinwritingifnotsignedbybothparties.

Contractnotesareframedunderaspecial lawinviewofRegulation3.5ofNationalStockExchange,framedundertheSecuritiesContracts(Regulation)Act,1956,whichclearlyprovidesfor themanner inwhichcontractnotesaretobeexecutedandstatethattheywillbesubjecttotherules,byelawsandregulationsoftheNSE.Thelawgoverningtheexecutionofsuchcontractnotesitselfprovidesforamodeofexecutionofsuchnotesandthatisbythesignatureofaregisteredstockbroker.Thelegislativecompetencetoenactaprovisionprescribingaspecificmodeofexecutionofcontractisnotquestioned.Thus,onaharmoniousconstructionoftheprovisionsoftheArbitrationActandtheregulationsframedundertheSecuritiesContracts(Regulation)Act,1956,bothenactedby the Parliament, it is held that the contract note executed under regulation 3.5 signed by only the broker and containing astipulation that the contract would be subject to rules and bye laws , which in turn provide for arbitration can constitute a validarbitrationagreementeventhoughitissignedbyatrademember.

Section 7(4) - Arbitration agreement to be in writing2001(4)RAJ12(Cal)PTTirtamasComexindoVs.DelhiInternationalLtd.

The question that arose in this casewaswhether a faxmessage confirming the agreement can in law amount to an arbitrationagreement.Thecourtalsodiscussedtheunderlyingrequirementsofanarbitrationagreement.

Itwasheld thatanarbitrationagreementshallbe inwritingandmaybemadebyexchangeof letters, telexmessages and othermeansoftelecommunicationswhichshallprovidetherecordofsuchagreement.Inthiscase,therespondentcouldnotsatisfythecourt on any evidence that the fax message had been sent and received by the other party and the court was compelled toconcludethatthefaxmessagecontainingthearbitrationclausewasinfactnotsentbytherespondent.

Thecourt,however,statedthattherecannotbeanyinflexibleorstrictformulaastohowanagreementwouldlegallybeconstruedaspertheprovisionsofSection7.theagreementmaybemadebyseveralmeansincludingfaxmessagesinwriting,but itshouldbeconfirmedbyanyothermodeoftelecommunications.

Section 7(5) - Reference to an arbitration clause in acontract

1999(2)RAJ314(Bom)PremlaxmiandCoVsTrafalgarHouseConstructionIndiaLtd.

Thefactssurrounding thecase is that therewasa reference inacontract toadocumentcontaininganarbitrationclauseand thequestionwhetheritcanbetreatedaspartofthecontractwasansweredinthepositive.Itwasheldthatthereferenceinacontracttoadocumentcontaininganarbitrationclauseconstitutesanarbitrationagreementif thecontract is inwritingandthereferenceissuchastomakethatarbitrationclauseapartofthecontract.

Section 8 - Power to refer parties to arbitration wherethere is an arbitration agreement

2001(4)RAJ574(Mad)WankannerJainSocialWelfareSocietyVs.JugalKishoreSapani

Therespondenthadfiledasuitforinteriminjunction.Thepetitioner,afterreceivingthenotice,enteredappearanceandfiledcounterandarguedthematter.ThereafterthepetitionermovedanapplicationunderSection8.

Thecourtheld that filing of the counter by thepetitionerwas clearly the first statement on the substance of the dispute and anapplication,aftersubmittingthefirststatementonthesubstanceofthedispute,wasnotmaintainable.Itwasfurtherheldthatfiling



of the counter by the petitioner points to the petitioner subjecting itself to the jurisdiction of the Civil Court and accordingly,dismissaloftheapplicationunderSection8isinaccordancewithlaw.

2002(2)RAJ313(Del)TransWorldFinance&RealEstateCoPvtLtdVs.UnionofIndia

Thiscaseconsideredtheeffectandscopeofadisputearisingoutofaninvalidleasedeed.Thecounselforthepetitionerurgedthatlease deedwas unstamped and unregistered and therefore the arbitration agreement contained therein did not constitute a validarbitrationagreement.

Thecourtheld that itwas awell established proposition of law that even if the said agreement entered into between the partiescouldnotbetreatedasavalid leaseagreement for lackofregistration, itcouldcertainlybe looked into for thecollateralpurpose.Existenceofanarbitrationagreementorotherwiseisonesuchpurposeforwhichsuchanagreementcanbelookedintoandreliedupon.

Section 8 - Determination of existence of arbitrationagreement

2003(2)RAJ483(Del)AKJajuVsAvniKumar

Therewere2agreementsofwhichthe2ndonedidnotcontainanarbitrationagreementbutwasallegedtobeincontinuationofthefirstagreement.Theplaintiffarguedthatthe2ndagreementwasexecutedinsupersessionofthefirstoneandthusnoreferenceofdisputecouldbemadetoanarbitraltribunal.

The court held that the handwritten endorsement at the top of the agreement implied that the samewas in continuation to theearlieragreementandwastobetreatedaspartandparceloftheearlieragreement.The2ndagreementwasnecessitatedtomodifycertaintermsandconditionsinthefirstagreementandnottooverrideit.

Section 8 & 11 - Application before District Judge notmaintainable

2003(4)RAJ336(Kar)NEPCMICONLtdVsPerfectEngineering(Mysore)Works

ThepartyhadmadeanapplicationunderSection8foradirectiontoappointanarbitrationintermsofthearbitrationclause,beforethePrincipalDistrictJudge.Theissuethatarosewaswhetherthecourtcanentertainsuchaprayeranditwasheldno.

The court stated that it is of utmost importance to note that under the scheme of the 1996 Act, an application simplicitor forreferringthemattertoanarbitratorisentertainableonlybytheconcernedChiefJusticeoftheHighCourtoranypersonorinstitutiondesignated by him, as has been specifically contemplated underSection 11. In the court's opinion, the lower court had erred inassumingjurisdictionunderSection8forentertainingtheapplication.

Section8Enteringintoarbitrationagreementafterdisputehasarisen

2000AIR(SC)1886P.AnandGajapathiRajuVs.PVGRaju

Intheinstantcase,during thependencyof theappealbeforeSupremeCourt,all thepartiesentered intoanarbitrationagreementand agreed to refer their dispute to a retired Supreme Court Judge as sole arbitrator. The agreement was in the form of anapplicationandhadbeensignedbyalltheparties.

Itwasheldthattheagreementneednotalreadybeinexistencethephrase'whichisthesubjectofanarbitrationagreement'doesnotnecessarilyrequirethattheagreementmustalreadybe inexistencebeforetheaction isbrought in theCourt thephrasealsoconnotesanarbitrationagreementbeingbroughtintoexistencewhiletheactionispending.

Thecourtfurtherstatedthatthearbitrationagreementsatisfiedtherequirementsofsection7andthat the languageofsection8 isperemptory.Itisthereforeobligatoryforthecourttoreferthepartiestoarbitrationintermsoftheiragreement.Anapplicationundersection8merelybrings to thecourt'snotice that thesubjectmatter of theactionbefore it is the subjectmatter of an arbitrationagreement.

Section 8, 9, 2(e) - Injunction petition cannot be decidedafter reference to arbitrator

2003(1)RAJ91JagdishRaj&BrothersVsJagdishRaj

Thepetitionershadfiledasuitfordeclarationprayingforreliefofpermanentinjunctionandinthesaidsuit theyfiledanapplicationfor ad interim injunction under Order 39 CPC. In the said suit, the respondentsmoved an application for referring the matter indisputetoarbitrationastherewasanarbitrationagreementbetweentheparties.

It was held that it is obligatory for the court to refer thematter to the arbitrator in terms of the arbitration agreement. Once anapplication ismadeby theoppositeparty inacivilsuit for referring thematter toarbitration in termsof thearbitrationagreement,thenthecourthastoreferthemattertothearbitratorandthecourtisrequiredtodonothingfurtherie.ThecourtthereaftercannotdecidetheapplicationunderOrder39CPC.UnderthenewAct,anarbitratortowhomthematter is referred,canpassappropriateinterimorderstopreserveproperty.

Section 8 - Limitation for application2002(3)RAJ624(Del)SunilKumarVsAAKAR

This case considered the issue of limitation for petition for appointment of arbitrator. The right to invoke the arbitration clauseaccrued to thepetitioner in1996who filed this instantpetition in2000. Inviewof thegiven factsandcircumstances, itwas heldthattherighttofiletheapplicationaroseonthedatewhenthepetitionerintimatedtotheresoindentthathewasnolongerinterestedinthepartnershipandsoughtdissolutionandnotfromthedateofthenoticegiven3yearslater.Thereforethepetitionisbarredbytimeanddismissed.

Thecourt further elucidated that the right to invoke thearbitration clauseaccrues toaparty themoment differences or disputesariseandarebrought toeachother'snotice.Nopartycanbeallowed to sleepoveror continue for yearsas in the present casewhere the petitioner hadwaited for 3 years to invoke the clause. It is not the date onwhich the notice is sent for invoking thearbitrationclausewhichisrelevantbutthemomentdifferencesariseandarebroughttoeachother'snotice.



Section 8(1) - Formal application necessary2001(1)RAJ406(Del)SunairHotelsLtdVsUnionofIndia

Theissuewaswhetheraformalapplicationwasnecessaryundersection8(1)anditwasheldintheaffirmative.

The court held that section 8(1) specifically speaks about the party applying to the Judicial Authority for referring the parties toarbitration. Section 8(2) states that the application will not be entertained unless it is accompanied by the original arbitrationagreementoradulycertifiedcopythereof.InviewoftheclearprovisionsofSection8,itcannotbesaidthataformalapplication isnotrequired.

Considering the whole scheme of the Act, the option available to the party to subject himself to the jurisdiction of the JudicialAuthoritywithout resorting toarbitration, thestipulationof timewhen theapplication for referenceshouldbe filedand the specificconditionthattheapplicationshouldbeaccompaniedbytheoriginalarbitrationagreementoradulycertifiedcopythereof, there isnodoubtthattheapplicationundersection8(1)isaformalapplication.

Section 8(1) - Meaning of judicial authority2002(3)RAJ310(Del)ManagementCommitteeofMontfortSrSecSchoolVsVijayKumar

The issue that came up for consideration was whether the Delhi School Tribunal set up under section 8(3) of the Delhi SchoolEducationActwasa'judicialauthority'withinthemeaningofsection8(1).

Itwasheldthatassuch,whenanauthorityotherthanacourtintheordinarysense,isindischargeofthedutieswhichareexpectedtobeactedoutfairlyandhonestlyortheauthorityexercisessomeofthepowersakintothepowersofacivilcourt,itmaynotbeacourt in itsstrictestsensebut itwouldessentially fallwithin thedefinitionofa judicialauthority. It isboundby law toact on thefactsandcircumstancesasdeterminedupontheenquiry inwhichapersonwhoistobeaffectedisgivenfullopportunitytoplacehiscase.

Section 8(2) - Xerox copy of original arbitration agreement isacceptable

1998(2)RAJ141(Cal)ITCClassicFinanceLtdVs.GrapcoMining&Co.

Theissuecameupasthepresentapplicationhadannexedwithit,Xeroxcopiesoftheleaseagreementwhichalsoformedpartoftheplaint filed in the suit. The said leaseagreementswere relieduponbyboth thepartiesand itwasnot disputed that the saidXerox copieswere indeed true copies of the original documents. It was held that theXerox copies of the said lease agreementcontainingthearbitrationclausewereinsufficientcompliancewithSection8(2)oftheAct.

Section 8(3) - Reference of dispute to arbitrator duringpendency of civil suit

2000(3)RAJ511(P&H)PunjabStateCooperativeSupplyandMarketingFederationLtdVs.ShivRiceandGeneralMills

ThequestionthatarosebeforethecourtwasaboutthepermissibilityofreferenceofdisputestoanarbitratorduringthependencyofasuitintheCivilCourt.

Itwasheld that thecourts cannot restrain thearbitrator fromproceeding in arbitrationor restrain thedefendants fromproceedingwitharbitrationbeforethearbitrator.

Theplearegardingjurisdictionofthearbitratorcouldberaisedbeforethearbitratorandifthearbitratordidnotagreetothepleaandanawardwaspassedagainst theplaintiff, thentheplaintiffwascompetent tochallengethesameu/s34of the1996Actand theCourtwas competent to set aside the award if it dealt with a dispute not contemplated by or not fallingwithin the terms of thearbitrationclause.

Section8(3)contemplatesasituationwherethemattermaybependingbeforetheCourtandstillthearbitrationmaybecommencedorcontinuedandanarbitralawardmade.Theaggrievedpartymaychallengetheawardu/s34ofthe1996Act.

Section 9 & 17 - Life of an Interim Order2005(1)RAJ225(Raj)AirConditioningCorporationLtd,CalcuttaVs.RajasthanAgricultureUniversity,Bikaner

According to the facts,adisputearosebetween thepartieswhichwasreferred toarbitration in1999.While the proceedingsweregoingon,thepetitionerfiledanapplicationu/s17forinterimmeasureswhichwasallowedbythearbitratorin2002.TheRespondentappealedbeforetheDistrictJudgeBikaneru/s37and theorderwassetaside.Aggrievedby thisdecision, thepetitioner filed therevisionpetitionwhichwasallowed.

The petitioner, in 2004, had filed another application u/s 151CPC stating that since the arbitrator had passed the final award in2003,whichwaspublishedin2004,therespondentshouldbedirectedtopayaccordingtothetermsoftheaward.

Itwasheldthatthereisnodisputethatifanyfinalorderispassedintheproceedingsbeforeanyforum,thelifeoftheinterimordercomes toanendwith thepassingof the final order in thatproceeding. In thepresent case, thearbitratorhad passed an interimaward in2002,whichwassetasideby theDistrictJudge.However,with thepassingof theaward in2003, the lifeof the interimorderdt.2002passedawayandtherefore,thisrevisionpetitionhasbecomeinfructuous.

ItwasfurtherheldthatthisCourtcannotgivenanydirectionsforexecutionoftermsofthefinalawardbecauseitwillbethedomainoftheExecutingCourtbeforewhomtheexecutionpetitionforexecutingtheawardisfiled.

Section 9 - ScopeAIR1999(SC)565SundaramFinanceLtdVsNEPCIndiaLtd

ThiscasediscussedthesimilaritybetweenSection9ofthe1996ActandArticle9ofUNCITRALModelLawwhichstatesthat"Itisnotincompatiblewithanarbitrationagreement foraparty to request,beforeorduringarbitralproceedings, fromacourtan interimmeasureofprotectionandforacourttograntsuchmeasure"



Article9seekstoclarifythatmerelybecauseapartytoanarbitrationagreementrequeststhecourtforaninterimmeasure"beforeor during arbitration proceedings", such recourse would not be regarded as being incompatible with an arbitration agreement.Arbitrationmaycommenceandcontinuenotwithstandingapartyhavingapproachedthecourtforinterimprotection.

Theexpression"beforeorduringarbitrationproceedings"usedinSection9seemstohavebeeninsertedwithaviewtogive it thesamemeaningasthosewordsinArticle9ofUNCITRALModelLaw.

Section 9 & 45 - Application u/s 9 does not constitute waiveror abandonment of arbitration clause

2001(3)RAJ433(Del)BhartiTeleventuresLtdVsDSSEnterprises

Intheinstantcase,DSSfiledaninjunctionsuitrestrainingCGLfromsellingortransferringitssharesinSkycell.

Itwasheldthatalthough theprovisionsofSection9cannotberesorted to for interimmeasureswhere thepartieshavechosenaforeignforumforarbitration,thefactremainsthatsuchastepcannotconstituteawaiverorabandonmentofthearbitrationclause.

InSundaramFinanceLtdVsNEPCLtd [1999(1)RAJ365], it hasbeenheld thatwhenapartyappliesu/s9, it is implicit that itaccepts that there is a final and binding arbitration agreement in existence. When such an application is filled before thecommencementofarbitrationproceedings,therehastobemanifestintentiononthepartoftheapplicanttotakerecoursetoarbitralproceedings.Thus,themerefilingofapplicationu/s9byanyofthepartiesdoesnotoperatewaiverorestoppel frominvokingthearbitralproceedings.

Similarly, the suit filed byDSS does not operate as awaiver as it was a suit for injunction restrainingCGL from transferring orselling its shares in Skycell andwas not covered by Section 62 of the Indian Contract Act not was it a suit with regard to theprovisionsoftheJointVentureAgreement.ItrelatestotheArticlesofAssociationofthecompany.

Section 9, 2(1)(e), 42 - Determination of proper court forapplication u/s 9

2003(4)RAJ661(All)PayalEnterprisesVsUnionOfIndia

An application u/s 11 for appointment of arbitrator was pending before the Chief Justice. The question that arose was whetherapplicationu/s9wastobefiledbeforetheChiefJusticeinviewofSection42oftheAct.

Held,itistruethatSection42,whichdefinesjurisdiction,saysthatwherewithrespecttoanarbitrationagreement,anyapplicationunder thisparthasbeenmade inacourt, thatcourtaloneshallhave jurisdictionover thearbitralproceedingsand all subsequentapplicationsarisingoutofthatagreementandthearbitralproceedingsshallbemadeinthatcourtonly.Theword'court'asdefinedinSection2(1)(e)meanstheprincipalcivilcourtoforiginaljurisdictionortheHighCourtexercisingoriginalciviljurisdiction.

It issettledview that theChiefJusticeactingu/s11of theActdoesnotact judiciallyand therefore is not a court as defined inSection2(1)(e).Thereforetheapplicationu/s9isnotmaintainablebeforetheChiefJusticeanditwillliebeforetheCourtasdefinedinSection2(1)(e).,ie.Theprincipalcivilcourtoforiginaljurisdictionie.TheDistrictJudge

Section 9, 48(3) - Interim injunction during pendency ofproceedings in foreign country

2000(4)RAJ512(Del)NavalGentMaritimeLtdVsShivnathRaiHarnarain

According to the facts, theRespondent is an Indian companywhose assets are entirely located in India. The proceedings wereinitiatedinEngland.TheissuewaswhetherinteriminjunctioncouldbegrantedinIndia.

Itwasheldthatsolongastheterritorialjurisdictionofthecourtispresent,reliefshouldnotbedeclinedontechnicalitieswhicharenot representative of any equities in favour of the Respondents. Since the Respondent's properties are located in India, theumbilicalcordofterritorialityisclearlyvisible.

Inthecase'TheChannelTunnelGroupVsBalfourBeattyConstructionLtd&Ors[1993(1)AllER64], itwasheldthattheEnglishcourtspossessedinherentpowerstogrant interimreliefevenwheretheseatofarbitrationwasnot inEngland.ThisviewhasnowobtainedstatutorysanctionintermsoftheEnglishArbitrationAct.Thisistheubiquitousviewinternationally.Thereisnoreasontoadoptapedanticapproach,therebyrenderingthelegalregimeinIndiadissimilartothatprevailinginotherpartsoftheworld.

Theglobeisnowbecomingavillageandpersonswillhaveincreasingpowertochoosebetweenseveralavailablecourts,solongasthechoiceisnotcapricious,reliefshouldnotbedenied.

Section 9, 2(2), 17 - No order permissible by court wherearbitration held outside India

2001(1)RAJ93(Del)MarriottInternationalIncVsAnsalHotelsLtd

ThepartieshadagreedtohavetheirdisputesreferredtothearbitrationoftheKualaLumpurRegionalCentreforArbitration(KLRCA)inaccordancewith their rules.UnderRule 1, the disputeswere to be settled in accordancewith theUNCITRALArbitration rulessubjecttomodificationassetforthintheKLRCARules.However,theKLRCARulesmadeadeparturefromtheUNCITRALModelLawsandhadmadenoprovisionslikeourArticle9inPartIIoftheAct.

Thecounselforoneofthepartiesarguedthat incasetheprovisionsoftheIndiaActdidnotapply,theCourthad inherentpowersu/s151CPCtopassaninterimorder.

TheCourtagreeingonotherwise,held that incase thisCourt, inviewofS.2(2),doesnothaveany jurisdiction topassan interimorder contemplated by S.9, then the Court cannot exercise inherent powers and thereby confer upon itself a jurisdiction notconferredbylaw.Toexerciseanyinherentpower,theCourtmusthavejurisdictionovertheproceedingsoverit.

However,aparty isnot left remedylessnasmuchas itcanapproach theArbitralTribunal forpassingappropriateorders to takeinterimmeasuresas itmaydeemnecessary in respectof thesubjectmatterof thedispute.TheTribunalmaypasssuch interimmeasureintheformofaninterimaward,whichmaybeenforcedasanarbitralaward.

Section 9 - Power of the Court to grant interim measures



2004(1)Arb.LR396(SC)NationalAluminumCoLtdVs.GeraldMetalsSA

Apendingdisputebetweenthepartieswasbeingsettledthrougharbitration,duringwhichGeraldMetalsSA(Gerald)movedthetrialcourtundersection9(d)ofthe1996ActandobtainedaninterimorderfromthetrialcourtinfaceofoppositionbyNationalAluminumCompanyLimited(NALCO)

AppealwasfiledbyNALCOagainsttheaboveorder.TheCourtrejectedtheappealbutmadesomemodificationstotheorderofthetrialcourt.NALCOappealedtoSupremeCourt(SC)andSCpreferrednottogointoquestionsoffactandlawraisedintheappealand decided the matter on grounds of equity and balance of convenience because the matter was yet to be decided by thearbitrators.ItwasobservedthatifGeraldisnotpermittedtoliftthegoodsinquestionitislikelytobeputtogreathardshipandontheotherhandifNALCOisnotpermittedtocollectthefairpriceofitsgoodsitwillbedeprivedofthemonetaryvalueofthegoods.SCalsodeclaredthattheorderwasnotanyopiniononthelegalargumentsraisednoronthefactualissuesexcepttotheextentoftheinterimarrangementmade.

2004(1)Arb.L.R.141(SC)AshokTradersandAnr..Vs.GurumukhDasSalujaandOrs

The issuebefore theSupremeCourtwaswhether the right conferredbySection9of the1996Actarose from contract. In brief,therewasadisputeamongapartnershipengagedinliquortrade.WhenoneofthepartnersfiledasuititwasheldnotmaintainableunderSection69(3)ofIndianPartnershipAct,1963ashisnamedidnotappearintheregisteroffirmsasapartner.Therewasanarbitration clause in the partnership deed and an applicationwas filed under section 9 of the 1996 Act whichwas contested onvarious grounds, the plea of nonmaintainability prevailed with the Additional District Judge. However the High Court held thatapplicabilityofsection69(3)ofIndianPartnershipAct,1963isnotattractedtoanapplicationundersection9of1996Act.

When thematter finallycameupbeforeSupremeCourt itwasheld thatunder1996Act thearbitrationclause is independent andseparablefromthepartnershipdeed.Theonlyqualification is thataperson invokingsection9shouldbea 'party' toanarbitrationagreement,asthereliefbeingsoughtundersection9of1996Actisneitherinasuitnorarightarisingfromthecontract.Thecourtundersection9isonlyformulatinginterimmeasuressoastoprotecttheright,underadjudicationbeforetheArbitralTribunal,frombeingfrustrated.Itwasheldthatsection69ofthePartnershipActhasnobearingontherightofapartytoanarbitrationclausetofileanapplicationunderSection9ofthe1996Act.

Section 5, 9 - Judicial intervention, Power of the Court togrant interim measures

2004(3)R.A.J.430(Bom)

Ispat Industries Ltd Vs m.v. Thor Orchid decided on 4.3.2004Thiscase,apartfromotherissues,discussesthescopeofjudicialinterventionunderS.5aswellastheremedyavailableunderS.9forgrantofinterimreliefbythecourt.

Tobrieflysumupthecase,theplaintiffwasanIndiancompanydealinginironoreandthedefendantwastheforeignflagvesselofThailand,ownedandcontrolledbyThorOrchidsShippingCoLtd. InDecember2003, theplaintiffentered intoaCharterpartywiththedefendant for carriageof ironore.Subsequently,adisputearoseand theplaintiff claimed that thematterbe referred to LMAArbitrationinEngland,however,approachedthiscourtforinterimreliefsincethevesselwaswithintheadmiraltyjurisdictionofthiscourtwhenthesuitwasinstituted.

The plaintiff prayed for and was granted the relief that the defendant vessel be arrested , detained and sold and the proceedsthereofbeappliedtosatisfytheplaintiff'sclaims.Theplaintifffelt that InternationalcommercialarbitrationwouldcomeunderS.45andthereforeS.5ofPartIoftheActwouldnotapplyandoustthiscourt'sjurisdiction.

Thedefendantapplied for andobtained vacationof theorder, afterwhich it applied for dismissal of the suit, contending that thepresentsuit for relief isnotmaintainablesince thecharterpartywasentered into inMumbaiand thearbitrationwas internationalcommercialarbitration,theonlyremedythatcouldbeavailedwasunderS.9oftheAct(InterimmeasuresbyCourt).

In reviewing thecase, theSupremeCourt'sdecision inBhatia InternationalVsBulkTradingSA&Anr: JT 2002 (3) SC 150wasconsideredwhereitwasheldthatmerelybecauseS.9isfoundinPartIandsubsection(2)statesthatthispartshallapplywherethe place of arbitration is India, S.9's applicability is not excluded where the place of arbitration is outside India. However, thequestionwhethertheremedyofinstitutingacaseisoustedmerelybecausetheremedyunderS.9isavailablewasnotdiscussedinthiscase.

On theotherhand, thedivisionbenchheld thatwhere remedyunder s.9wasavailable,S.5ousts the jurisdictionof the court toentertainthesuit.ItwasfinallyheldthatsincethecharterpartywasenteredintoinBombay,thiscourtwillhavethejurisdictiontograntreliefunderS.9andbyvirtueofS.5,asuitforthesamereliefclaimedbytheplaintiffinanotherapplicationwouldgetousted.Accordinglythedefendant'smotionwasgranted.

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