Naval Gent Maritime Ltd. vs Shivnath Rai Harnarain (I) Ltd.
2000 Latest Caselaw 301 Del

JUDGMENT

Vikramajit Sen, J.

1. By this order I propose to dispose off the present application filed on behalf of Respondent under Order VII rule 11 read with Section 151 of the Code of Civil Procedure. This application has been filed in OMP 200/99 which has been preferred under Section 9 of the, Arbitration and conciliation Act, 1996 (hereinafter referred to as the Act). On being satisfied that the circumstances of the case so warrant, I had restrained the Respondent from selling, alienating or creating any third party interests in properly bearing No. B-16, Bhagwan Dass Nagar. New Delhi. On receiving notice of the Petition, this application has been filed in which the substantial challenge is centered on the maintainability of the Petition itself. As the first order dated 16.7.1999 will indicate, it is not in controversy that when the Petition was filed, the disputes were already being adjudicated in London before Mr. Clive Aston, Arbitrator, pursuant to orders of the High Court of Justice at London. On the strength of a decision of this Court rendered in Dominant Offset Pvt. Ltd. v. Adamovske Strojimy A.S., I had granted the injunction even though proceedings were pending outside India, though undisputedly in accordance with the arbitration clause between the parties.

2. Dr. A.M. Singhvi, learned Senior counsel appearing on behalf of Respondent, has submitted that this Court ought not to have exercised jurisdiction under Section 9 of the Act since the venue of Arbitration was England and English Law was applicable. He further emphasised that this was all the more significant since it was the Petitioner herein who had invoked and initiated arbitration proceedings in England. It was contended that Section 9 of the Act, is contained in Part I of the Act and would, therefore, apply only to domestic arbitrations, and did not vest extra-territorial powers with the Court and had essentially a domestic flavour and applicability. It was his submission that the Court must await the passing of the Award in London and only thereupon, under Section 48(3), of Part II of the Act, could orders for providing security or the like, be considered. Reliance was placed on James Miller & Partners Ltd. v. Whit-worth Street Estates (Manchester) Ltd., 1970 Appeal Case 583, Bank Mellul v. Helliniki Techniki S.A., 1984 QB 291, Naviera Amazonica Peruana S.A. v. Compania International De Seguros Del Peru, 1988(1) Lloyd's Law Reports 116 and Black Clawson International Ltd. v. Papierwerke Waldhof Aschaffenburg A.G., 1981(2) Lloyds' Law Reports 446 in order to substantiate his argument that these orders should appropriately be passed by Courts in London, which was the venue of the Arbitration. I do not intend to specifically deal with the foreign judgments cited at the Bar for the reason that a number of decisions have already been rendered by Single Benches of this Court on the subject.

3. In Unicon Gmbh Rahn Plastmaschinen & Anr., a learned Single Judge of this Court had held Section 9 of the Act not to be available to the Petitioner since the parties to the Agreement were foreigners and the place of Arbitration was outside India and the applicable law was also not Indian. Forum shopping is to be strongly deprecated, as has, in essence, been done by J.E. Goel, J. However this precedent is not an authority for the proposition advanced by the learned counsel for the Defendant since uncontrovertedly, in the present case, the Respondent is an Indian Company, and its assets appear to be located entirely in India. I am otherwise in respectful agreement with the ratio established in this case.

4. In Suzuki Motor Corporation v. Union of India & Anr., 1997(2) Arb.L.R 477 C.M. Nayar, J. had entertained a Petition under Section 9 of the Arbitration Act even though the seat of arbitration was outside India i.e. International Court of Arbitration. It is noteworthy that although eminent Senior Counsel had appeared and argued the case, it was assumed by all of them, that this Section could be invoked.

5. In Dominant Offset Pvt. Ltd. case (supra) Dr. M.K. Sharma, J. held that the sweep of Section 2 of the Act did not exclude the application of Part I to international arbitrations. Dr. A.M. Singhvi, learned Senior counsel for the Respondent, was quick to point out that my learned Brother was concerned with Section 11 and not with Sec-lion 9 of the Act. That would make no appreciable difference. Both Sections 9 and 11 are contained in the same Part I and hence if Section 11 is found to be applicable Section 9 would also fall in line. It is also apposite to mention that the learned Judge had arrived at this conclusion independent of any consideration of the inherent powers available to the Court as also to the argument that if jurisdiction is to be excluded it must be as a consequence of explicit terms and cannot be lightly inferred. In M. V. Elisabeth and Ors. v. Harwan Investment and Trading, 1993 Supp.(2) SCC 433 the Apex Court had observed that "access to Court for redressal of a grievance, being an important right of every person, it is essential that the jurisdiction of the courts is construed harmoniously and consistently with its vital function in that respect, so that absence of legislation will not jeopardise that right". Even if there is some doubt as to the applicability of Section 9 to foreign arbitrations, Courts must lean towards an interpretation which is permissive rather than restrictive. If jurisdiction of Indian Courts was intended to be ousted this could have been achieved by employment of the words "only" in Section 2(2). Conspicuously, this is not so. Furthermore, Section 11 has been held to empower a court in India to refer parties to even a 'foreign arbitration'. If that be so, Section 42. assumes great significance, as it requires the parties to approach only that particular Indian Court for "all subsequent applications arising out of that agreement and the arbitration proceedings shall be made in that Court and no other Court". Thus if the parties are referred by an Indian Court to arbitration venued in London, they would still have to return to the Indian Court. This situation itself belies the argument that Part I envisages only domestic arbitrations.

6. The following paragraph of the judgment in the Dominant Offset case (supra) encapsulates its reasons and is reproduced below:

"The aforesaid argument of the learned counsel appears to be attractive at the first glance of the provisions. However, on a closer look of the provisions of the Act relied upon by the counsel for the parties, the said impression does not appear to be correct. Reasons for the same arc not far to seek. On a reference to the proviso to Sub-section (2) of Section 1, it is crystal clear that Part I shall apply lo a case of international commercial arbitration in the case of State of Jammu & Kashmir. Therefore, the provisions in Part I applies to a case of International Commercial Arbitration relating lo the Stale of Jammu & Kashmir. Again, when one refers to Sub-section (5) of Section 2 which stales that subject to the provisions of Sub-section (4) and save in so far as is otherwise provided by any law for the time being in force, this Part (meaning thereby Part I) shall apply to all arbitrations and to all proceedings relating thereto. Sub-section (12)(a) of Section 11 also provides that when the .matter referred in Sub-sections (4),(5),(6),(7),(8) and (10) arise in an international commercial arbitration, the reference to 'Chief Justice' would be construed as a reference to 'the Chief Justice of India. A conjoint reading of all the aforementioned provisions clearly indicate that Sub-section (2) of Section 2 is an inclusive definition and that it does not exclude the applicability of Part I to those arbitrations which are not being held in India. The aforesaid interpretation gets support from the provisions of Sub-section (5) of Section 2 which provides that Part I shall apply to all arbitrations and to all proceedings relating thereto which would also, in ray considered opinion, include an international commercial arbitration. So far Section 8 and Section 11 arc concerned, in my considered opinion, they operate in two different fields as Section 8 is the power vested on a judicial authority to make a reference to the disputes arising between the parties to an arbitrator whereas Section 11 empowers a Court to appoint an arbitrator when there is a difference between the parties regarding appointment of an arbitrator.

7. In Marriot International v. Ansal Hotels Ltd. and Olex Focus Pvt. Ltd. & Anr. v. Skodaexport Company Ltd. & Anr., 2000 1 AD (Delhi) 527, Dalveer Bhandari, J. specifically dealt with 9 of the Act. After noticing the plethora of precedents on the ambit of the inherent powers of the Court, with specific reference to the role of the Court in granting injunctions in arbitration matters, my Learned Brother also con-eluded that Section 9,of the Act could be pressed into action even though the disputes between the parties were not the subject matter of a domestic arbitration. His views are available in the following paragraphs of the detailed judgment:

"60. I have considered the rival contentions advanced by the learned counsel for the parties. I have also considered the cases which have cited at the bar. A careful reading and scrutiny of the provisions of 1996 Act leads to the clear conclusion that Sub-section (2) of Section 2 is an inclusive definition and it does no! exclude the applicability of Part 1 to this arbitration which is not being held in India. The other clauses of Section 2 clarify the position beyond any doubt that this Court in an appropriate case can grant interim relief or interim injunction".

"61. A close reading of relevant provisions of the Act of 1996 leads to the conclusion that the courts have been vested with the jurisdiction and powers to grant interim relief. The powers of the Court are also essential in order to strengthen and establish the efficacy and effectiveness of the arbitration proceedings".

8. Three learned Single Judges of this Court have separately concluded, by disparate dialectic, that the powers of the Court to grant injunctions under Section 9 would also extend to international arbitrations. As I have already observed, the judgement of J.B. Goel, J. does not run counter to these views. In the present case the Respondent and its assets are undoubtedly located in India. Dr. Singhvi's argument, no doubt attractive, that the proper forum to obtain interim relief in the present case would be through English Courts, is not sufficiently compelling for me to hold differently to three learned Single Judges of this Court. On a holistic reading of the Arbitration and Conciliation Act, 1996, there is no justification to read it in compartments, and to subscribe to the view that the provisions of Part 1 apply only to domestic arbitrations. To hold so would be tantamount to defeating a uniform and universal siring of precedents which underscore the pivotal role of Courts in the administration of arbitration. So long as the territorial jurisdiction of the Court is present, relief should not be declined on technicalities which are not representative of any equities in favour of the Respondents. Since the properties of the Respondent are within the jurisdiction of this Court, the umbilical cord of territorially is clearly visible. The Petitioner could no doubt have, initiated proceedings in England and perhaps obtained similar orders from these Courts also. Although challenges to the jurisdiction of those Courts may have been much more difficult to assert, it would be worthwhile to keep in perspective the decision in The Channel Tunnel Group v. Balfour Beauty Construction Limited and Ors 1993(1) All ER 664 where it was held that the English Courts possessed inherent powers to grant injunctive relief even where the seat of Arbitration was not in England. This view has now obtained statutory sanction in terms of the English Arbitration Act. This is the ubiquitous view internationally. I see no reason to adopt a pedantic approach and thereby render the legal regime in India dissimilar to that prevailing in other, parts of the world. The globe is now becoming a village, and persons will have increasing to choose between several available Courts. Earlier these may be not have been available due to constraints of communication; So long as the choice is not capricious, merited relief should not denied. It is palpably obvious that the present court was chosen because the relief, if granted, would be most efficacious and timely. The application is rejected with costs adjudged at Rs. 5000/-.