Delhi High Court
Union Of India vs Videocon Industries Ltd. on 5 March, 2012
Author: Reva Khetrapal
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS) 3314/2011
UNION OF INDIA ..... Plaintiff
Through: Mr. A.S. Chandiok, ASG with
Mr. R. Sasiprabhu, Mr. Ritesh
Kumar, Ms. Bindu K. Nair,
Mr. Somiran Sharma,
Mr. Sumit and Ms. Shweta,
Advocates
versus
VIDEOCON INDUSTRIES LTD ..... Defendant
Through: Mr. Amit Sibal, Mr. Prashant
Kalra, Mr. Rohan Dheman and
Mr. Harsh Kaushik, Advocates
% Date of Decision : March 05, 2012
CORAM:
HON'BLE MS. JUSTICE REVA KHETRAPAL
JUDGMENT
: REVA KHETRAPAL, J.
IA No.21069/2011 (under Order XXXIX Rules 1 and 2 read with
Section 151 CPC)
1. By way of present application, an anti-suit injunction is sought
by the Plaintiff restraining the Defendant from pursuing Claim
No.2009, Folio 1382 filed in the High Court of Justice, Queen‟s
Bench Division, Commercial Court, London. The aforesaid
application is filed in a suit for declaration and perpetual injunction
instituted by the Plaintiff to restrain the above named Defendant from
pursuing the aforesaid claim in London in relation to the issue and
matter already finally determined by the Hon‟ble Supreme Court of
India by its judgment and order dated 11.05.2011 between the parties.
2. The chronological factual matrix leading to the institution of
the suit in which the present application is instituted is delineated as
follows.
3. The Union of India, the Plaintiff herein, as the owner of natural
resources including petroleum in the territorial waters of India,
through the Ministry of Petroleum and Natural Gas, entered into a
Production Sharing Contract (hereinafter referred to as "PSC") on
October 28, 1994 at New Delhi. The said PSC was executed between
the Union of India on the one hand and a consortium of four
companies consisting of Oil and Natural Gas Corporation Limited
(ONGC), Videocon Petroleum Limited, Command Petroleum (India)
Private Limited and Ravva Oil (Singapore) Private Limited in terms
of which the consortium was granted an exploration licence and
mining lease to explore and produce hydro-carbon resources owned
by the plaintiff underlying a Contract Area called „Ravva Oil and Gas
Field‟ in the Offshore of Andhra Coast owned by the Plaintiff. These
companies, including ONGC, are collectively referred to as "the
Contractor" in the PSC. Subsequently, Cairn Energy U.K. was
substituted in place of Command Petroleum (India) Private Limited
and the name of Videocon Petroleum Limited was changed to
Petrocon India Limited, which merged with the Defendant herein, i.e.,
Videocon Industries Limited.
4. The aforesaid PSC was entered into for and on behalf of the
President of India with the desire that the petroleum resources in the
Contract Area be exploited with the utmost expedition in the overall
interest of India. As per Article 35.2 of the PSC, it was stipulated that
the contract shall not be amended, modified, varied or supplemented
in any respect except by an instrument in writing signed by all the
parties, which shall state the date upon which the amendment or
modification shall become effective.
5. The PSC dated 28.10.1994 also contained a stipulation in
Article 33.1 that the contract shall be governed and interpreted in
accordance with the Laws of India subject to Article 34.12, which,
inter alia, provided that the seat of arbitration shall be Kuala Lumpur
and the Arbitration Agreement as contained in Article 34 shall be
governed by the Laws of England.
6. In the year 2000, disputes arose between the Plaintiff and the
Defendant pertaining to the correctness of certain cost recoveries and
profit, which along with a few other disputes was referred to an
Arbitral Tribunal as contemplated in Article 34 of the PSC. The
arbitration case relevant for the present purposes was registered on
19.08.2003 as Case No.3 of 2003 before the Tribunal at Kuala
Lumpur, Malaysia and was fixed for hearing. However, before the
hearing could take place, Malaysia was hit by the outbreak of the
epidemic „SARS‟. Accordingly, after consultation and keeping in
mind the convenience of all concerned and to ensure that proceedings
were not delayed, the Tribunal held sittings at Amsterdam in the first
instance and on 15.11.2003 the parties agreed to shift the seat of
arbitration to London. This was done, according to the plaintiff,
without affecting the contractual and jurisdictional venue of Kuala
Lumpur and without amendment of the arbitration agreement as
contemplated in the PSC. Therefore, the jurisdictional seat of the
arbitration remained and continues to remain in Kuala Lumpur.
7. The Arbitral Tribunal passed a partial award dated 31.03.2005
in the above Arbitration Case No.3/2003. The Plaintiff on 10.05.2005
challenged this partial award before the Malaysian High Court at
Kuala Lumpur by filing a petition for setting aside the award. In
those proceedings, the Defendant herein on 20.05.2006 questioned the
jurisdiction of the Malaysian High Court on the ground that seat had
shifted to London.
8. Since further proceedings in the matter were to take place for
the passing of the final award and the epidemic in Kuala Lumpur was
over, the Plaintiff requested the Arbitral Tribunal to hold its further
sittings at Kuala Lumpur, the jurisdictional seat of arbitration. This
was opposed by the Defendant/Videocon. The Arbitral Tribunal by
an order dated 20th April, 2006 decided that further sittings be held at
London from 30th June, 2006 to 2nd July, 2006.
9. Aggrieved by the order dated 20.04.2006 of the Hon‟ble
Tribunal, the Plaintiff on 30.05.2006 filed OMP No.255 of 2006
under Section 9 of the Arbitration and Conciliation Act, 1996, in this
Court seeking a declaration that the seat of arbitration is Kuala
Lumpur. The Defendant raised objection to the maintainability of the
petition on the ground of jurisdiction. The aforesaid objection was
decided by a learned Single Judge of this Court by order dated
30.04.2008 in favour of the Plaintiff, rejecting the objection of the
Defendant and proceeding to fix dates for hearing on the merits of
OMP No.255 of 2006.
10. On 08.07.2008, the Defendant filed a Special Leave Petition,
being SLP(C) No.16371/2008 before the Hon‟ble Supreme Court of
India impugning the judgment dated 30.04.2008, which was
subsequently converted to a Civil Appeal No.4269 of 2011.
11. On 05.08.2009, while the Special Leave Petition before the
Supreme Court of India was pending, the High Court of Malaysia
dismissed the Plaintiff‟s challenge to the Partial Award on the ground
that the seat of arbitration had been shifted to London. The Plaintiff
filed a Notice of Appeal in Malaysia on 12.08.2009 and subsequently
a Memorandum of Appeal was filed on 14.12.2010.
12. On 09.10.2009, the Defendant brought the decision of the
Malaysian Court on the record of the Special Leave Petition pending
before the Supreme Court. On 13.10.2009, while the matter was
pending before the Supreme Court, the Defendant filed a Claim
Petition No.2009, Folio 1382 before the High Court of Justice,
Queen‟s Bench Division, Commercial Court, London. However, the
Defendant did not disclose the above filing to the Supreme Court or
to the Plaintiff, and, according to the Plaintiff, deliberately suppressed
the same despite an order passed by the London Court on 20.10.2009
to serve the Plaintiff herein as soon as possible. On 11.11.2009, the
judgment in Civil Appeal No.4269 of 2011 was reserved by the
Supreme Court.
13. On 21st April, 2010, the Plaintiff was served with notice in the
Claim Petition No.2009, Folio 1382 pending in the London Court.
Thereafter, on 10th August, 2010, the Plaintiff moved the Supreme
Court by filing IA No.4/2010 in Civil Appeal No.4269/2011 pleading,
inter alia, that the Supreme Court was seized of the matter including
the question as to whether the seat of arbitration continued to be
at Kuala lumpur or the same had shifted to London.
Simultaneously, on 12th August, 2010, an application was filed by the
Plaintiff before the London Court stating that the juridical seat was
not London and in any case the issue of juridical seat was being
contested in proceedings elsewhere, i.e., in the Supreme Court of
India. In the light of these facts, it was prayed that the London Court
did not have the jurisdiction to hear the claim of juridical seat. On the
same day, i.e., on 12.08.2010, the Plaintiff‟s solicitors also wrote to
the Defendant‟s solicitors clearly stating:-
"For the avoidance of doubt, this letter and
our client‟s application are not a submission
to the jurisdiction of the Courts of England
and Wales."
14. On 06.09.2010, the Plaintiff‟s application IA No.4/2010 came
up for hearing before the Supreme Court and after considering the
matter, the Supreme Court by a consent order of the same date, i.e.,
06.09.2010 disposed of the said application by recording that "subject
to completion of pleadings in the proceedings pending in the Courts
in England as well as in Malaysia, neither the petitioner nor the
respondent will proceed/take any pro-active steps for hearing in the
proceedings/applications pending in the Court in England as well as
in the Court in Malaysia, till the disposal of the present SLP".
15. On 11.05.2011, the Supreme Court delivered its judgment in
Civil Appeal No.4269/2011, wherein it was held that "mere change
in the physical venue of hearing from Kuala Lumpur to
Amsterdam and London did not amount to change in the
juridical seat of arbitration" and negated the contention of the
defendant that the seat of arbitration had shifted to London. It was
further held by the Supreme Court that in view of the specific
exclusion of Part I of the Arbitration and Conciliation Act, 1996, the
Delhi High Court did not have the jurisdiction to entertain OMP
No.255/2006 and the said petition was liable to be dismissed.
Consequently, on 30.05.2011, OMP No.255/2006 was formally
dismissed by the High Court in view of the judgment of the Supreme
Court rendered on 11.05.2011.
16. Subsequent to the decision of the Supreme Court, the Plaintiff
on 02.06.2011 requested the Defendant to withdraw the proceedings
bearing Claim No.2009, Folio 1382 dated 13.10.2009 before the
Queen‟s Bench Division, Commercial Court, London. By way of a
reply the plaintiff through its solicitors at London received a letter
dated 08.06.2011 from the Defendant‟s solicitors addressed to the
Commercial Court Listing Office, the Royal Courts of Justice,
London, seeking to recommence the proceedings before the London
Commercial Court. The Plaintiff through its solicitors replied to the
said letter on 14.06.2011 stating that the Supreme Court of India had
considered and finally decided that the juridical seat of arbitration (as
opposed to the physical shift of sittings to London) remained at Kuala
Lumpur. However, on 22.06.2011, the Defendant‟s solicitors wrote
to the solicitors of the Plaintiff at London reiterating their position
that the decision of the Supreme Court of India had not rendered the
proceedings before the London Court unnecessary stating: "Any legal
issue arising from the judgment of the Indian Supreme Court are
matters for the English Court to determine at the
hearing............"
17. The Plaintiff‟s solicitors responded to the above letter of the
defendant by letter dated 29.06.2011 stating that the Hon‟ble Supreme
Court of India had finally and conclusively decided the relevant issue
to the effect that the juridical seat of the arbitration was not changed
to London but remained in Kuala Lumpur and the defendant was
estopped from relitigating the point of juridical seat of arbitration
before the English Courts. The plaintiff, however, consented to the
hearing without prejudice to the issue of res judicata. The
solicitors of the Defendant replied to the aforesaid letter on
01.07.2011, stating that they disagreed with the Plaintiff‟s position
that the decision of the Hon‟ble Supreme Court of India had "finally
and conclusively" decided the relevant issue pending before the
English Court.
18. Thereafter, on 29.08.2011, the witness statement of Ms. Pallavi
Shroff was filed on behalf of the Defendant and on 14.10.2011,
witness statements of Ms. Promila Jaspal and Ms. Simran Dhir were
filed on behalf of the Plaintiff. The Plaintiff under the rules of
practice in London also participated in the Case Management
Conference held on 04.11.2011 without prejudice to its rights and
contentions and without admitting, in any manner, that the London
Court had jurisdiction to adjudicate on the question in issue. On
14.11.2011, pursuant to the Case Management Conference, the
London Court issued orders fixing the dates for hearing and prior
thereto dates for evidence by way of witness statements and expert
evidence to be filed by both the parties on the status and effect in
Indian law of the judgment of the Supreme Court of India dated 11 th
May, 2011 and in particular whether the decision of the Supreme
Court of India as to the seat of the first and third arbitrations are res
judicata or are otherwise binding on the parties.
19. Aggrieved therefrom, on 22.12.2011 the present suit has been
preferred by the Plaintiff seeking declaration and perpetual injunction
to restrain the Defendant from pursuing the aforesaid claim in London
predicated on its stand that the matter had already been finally
adjudicated upon by the judgment of the Supreme Court rendered on
11.05.2011.
20. In the aforesaid factual backdrop, the learned Additional
Solicitor General Mr. A.S. Chandiok made detailed submissions in
support of his prayer for the grant of an injunction order, which, for
the sake of convenience, are summarized below.
PLAINTIFF‟S CONTENTIONS
21. The learned Additional Solicitor General contended that the
attempt on the part of the defendant to re-litigate the issue of
juridical seat of arbitration before the English Court after having
it settled/decided by the Supreme Court of India is in breach of
the Production Sharing Contract (PSC) dated October 28, 1994 in
particular, Article 33.2 of the PSC and barred by res judicata/issue
estoppel. At the outset, he referred to the relevant clauses of the PSC,
which, for the sake of facility of reference, are extracted below:-
"33.1 Indian Law to Govern
Subject to the provisions of Article 34.12, this
Contract shall be governed and interpreted in
accordance with the laws of India.
33.2 Laws of India Not to be Contravened
Subject to Article 17.1 nothing in this Contract
shall entitle the Contractor to exercise the
rights, privileges and powers conferred upon it
by this Contract in a manner which will
contravene the laws of India.
34.3 Unresolved Disputes
Subject to the provisions of this contract, the
Parties agree that any matter, unresolved
dispute, difference or claim which cannot be
agreed or settled amicably within twenty one
(21) days may be submitted to a sole expert
(where Article 34.2 applies) or otherwise to an
arbitral tribunal for final decision as
hereinafter provided.
34.12 Venue and Law of Arbitration
Agreement
The venue of sole expert, conciliation or
arbitration proceedings pursuant to this Article,
unless the Parties otherwise agree, shall be
Kuala Lumpur, Malaysia, and shall be
conducted in the English language. Insofar as
practicable, the Parties shall continue to
implement the terms of this Contract
notwithstanding the initiation of arbitral
proceedings and any pending claim or dispute.
Notwithstanding the provisions of Article 33.1,
the arbitration agreement contained in this
Article 34 shall be governed by the laws of
England.
35.2 Amendment
This Contract shall not be amended, modified,
varied or supplemented in any respect except
by an instrument in writing signed by all the
Parties, which shall state the date upon which
the amendment or modification shall become
effective."
22. Learned Additional Solicitor General contended that as per
Article 34.12 of the PSC, the seat of arbitration is Kuala Lumpur, and
a bare glance at the relevant Articles of the PSC extracted
hereinabove would suffice to show that Article 34.12 is an overriding
provision qua Article 33.1 whereunder Indian Law is stated to be the
governing law; however, Article 34.12 does not override Article 33.2
of the PSC, which provides that the Contractor shall not exercise the
rights, privileges and powers conferred upon it by the contract in a
manner which will contravene the laws of India. He further
contended that the admitted position is that nothing which is
inconsistent to Indian Laws can be claimed by any of the parties
and this is evident from the written statement filed by the defendant,
and in particular from Clause (xiii) of paragraph 16 of the written
statement, wherein it is stated:-
"..............The Defendant in filing the English
Court Proceedings is not in any manner
claiming anything inconsistent in Indian Law as
alleged...."
23. He submitted that re-litigating the same issue, i.e., issue of
juridical seat of arbitration by the Defendant is against Indian Laws
and consequently the Defendant is in breach of Article 33.2 of the
PSC as alleged in the plaint. The Defendant cannot be permitted to
indulge in forum shopping and to re-agitate the same issue before
the English Court when the Supreme Court of India has already
decided on the issue. This is opposed to the public policy of India
embodied in the doctrine of res judicata and principles analogous
thereto, intended to eliminate multiplicity of proceedings and
potentially conflicting decisions and to preserve the integrity of the
proceedings before the Supreme Court of India, which in the instant
case culminated in the final judgment and order dated 11.05.2011 in
the appeal filed by the defendant being Civil Appeal No.4269/2011.
24. Reference was also made by him in this regard to the decision
of the Supreme Court in the case of Venture Global Engineering vs.
Satyam Computer Services Ltd. and Anr., (2008) 4 SCC 190. In the
said case, the appellant, a company incorporated in USA entered into
a Joint Venture Agreement with the Respondent, a company
registered in India, to constitute a company named Satyam Venture
Engineering Services, registered in India. A Shareholders Agreement
(SHA) was also entered into between the parties. The SHA, which
was governed by Michigan Law, provided for arbitration of disputes
at the London Court of International Arbitration (LCIA). The SHA in
Section 11.05 clause (c) further provided that:-
"Notwithstanding anything to the contrary in
this agreement, the shareholders shall at all
times act in accordance with the Companies
Act and other applicable Acts/Rules being in
force, in India at any time."
The Supreme Court after considering the aforesaid provisions
in the SHA opined:- (SCC, at page 211, paragraph 44)
".....................Notwithstanding that the
proper law or the governing law of the contract
is the law of the State of Michigan, their
shareholders shall at all times act in
accordance with the Companies Act and other
applicable Acts/Rules being in force in India at
any time. Necessarily, enforcement has to be in
India, as declared by this very section which
overrides every other section in the
Shareholders Agreement. Respondent No.1,
therefore, totally violated the agreement
between the parties by seeking enforcement of
the transfer of the shares in the Indian
company by approaching the District Courts
in the United States."
25. The learned Additional Solicitor General further contended that
Order XXXIX Rule 2 of the CPC specifically empowers the Court to
grant injunction restraining the defendant from committing a breach
of contract or other injury of any kind. Thus, in the case of Pioneer
Publicity Corporation vs. Delhi Transport Corporation & Anr., 103
(2003) DLT 442, a learned Single Judge of this Court with reference
to the scope and ambit of Order XXXIX Rule 2 CPC opined: (DLT,
at page 449, para 8)
"Keeping in view the provisions of Order
XXXIX Rule 2 it is no longer possible to
contend that the Court does not possess power
to prohibit or prevent the breach of contract. If
this is possible in the realm of private
contracts, it is an obligation in the realm of
pubic enterprises............"
26. The learned Additional Solicitor General next contended that
the proceedings re-initiated by the defendant before the English
Court is barred by res judicata/issue estoppel. The plaintiff had
on 30.05.2006 moved a petition under Section 9 of the Arbitration
and Conciliation Act, 1996 being OMP No.225 of 2006 before a
learned Single Judge of this Court, inter alia, making the following
prayers:-
"(a) direct the parties and the Arbitral Tribunal
consisting of Hon'ble Mr. Justice B.N.
Kirpal, Hon'ble Mr. Justice G.T. Nanavati
and Hon'ble Mr. Justice J.K Mehra to
continue hearing at Kuala Lumpur, the
contractual and jurisdictional venue of
arbitration as contemplated in Article 34
of the PSC;
(b) declare that the contractual venue, i.e.,
Kuala Lumpur was and is contractual and
jurisdictional seat of arbitration;
(c) stay of the further proceedings of the
arbitration as informed vide letter dated
20th April, 2006 by the Tribunal."
27. A preliminary objection was raised to the maintainability of the
said petition by the respondent (defendant herein) to the effect that the
jurisdictional seat of arbitration had shifted to London and the
petitioner was estopped from contending that the seat of arbitration
continued to be at Kuala Lumpur. By his order dated 30 th April,
2008, the learned Single Judge held that it had the jurisdiction to
decide upon the petition. Aggrieved therefrom, the defendant
approached the Supreme Court by way of SLP (C) No.16371/2008
(which was later converted to Civil Appeal No.4269 of 2011). In the
said SLP, the defendant herein again raised the issue of juridical seat
and even filed detailed written submissions before the Supreme Court
on the issue of „juridical seat of arbitration‟. The judgment was
delivered by the Supreme Court on May 11, 2011, wherein it was
held that change in „the venue of hearing‟ to Amsterdam or London
did not amount to change in the „juridical seat of arbitration‟; and the
contention of the defendant that the juridical seat had been shifted to
London was negated. As a matter of fact, the Supreme Court gave a
categorical finding that Kuala Lumpur would remain the seat of
arbitration (paras 12, 13 and 14 of the judgment of the Supreme
Court).
28. The learned Additional Solicitor General contended that in
view of the above the issue of juridical seat is no longer res integra
after the judgment of the Supreme Court. The defendant cannot
under the garb of the claim made by it in the London Court seek to set
aside a binding judgment and finding of fact on the aforesaid issue
decided by the Apex Court. The law laid down by the Supreme Court
besides being binding between the parties, being a judgment in
personam is in fact the law of the land, unless set aside in review.
Admittedly, no review petition has been filed by the defendant and
the judgment, therefore, acts as an estoppel against the defendant.
29. Reference was made by the learned Additional Solicitor
General to a large number of precedents in support of his aforesaid
contention, including the following:-
(i) Satish Nambiar vs. Union of India & Anr., 150 (2008) DLT
312 (DB), wherein a Division Bench of this Court held as under:-
(DLT, at page 318, para 13)
"......................The principles of res judicata
applicable to writ proceedings prevent parties
to a judicial determination from agitating the
same question over again. That is true even
when the earlier determination may be
erroneous. A party aggrieved of any such
decision can no doubt challenge the same in
appeal, but cannot institute fresh proceedings
on the same cause of action nor can a party
agitate any such issue as it constituted an
essential element of the decision earlier
rendered..................."
(ii) Ishwar Dutt vs. Land Acquisition Collector and Anr., (2005) 7
SCC 190, in which it was held as follows:- (SCC, at page 198, paras
18-19)
"18. .................. The principle of res judicata
is specie of the principle of estoppel. When a
proceeding based on a particular cause of
action has attained finality, the principle of res
judicata shall fully apply.
19. Reference in this regard may be made to
Wade and Forsyth on Administrative Law, 9th
Edn., p. 243, wherein it is stated:
"One special variety of estoppel is res
judicata. This results from the rule,
which prevents the parties to a judicial
determination from litigating the same
question over again, even though the
determination is demonstrably wrong.
Except in proceedings by way of appeal,
the parties bound by the judgment are
estopped from questioning it. As
between one another, they may neither
pursue the same cause of action again,
nor may they again litigate any issue
which was an essential element in the
decision. These two aspects are
sometimes distinguished as „cause of
action estoppel‟ and „issue estoppel‟."
(iii) Swamy Atmananda and Ors. vs. Sri Ramakrishna
Tapovanam and Ors., (2005) 10 SCC 51, wherein it was observed as
follows:- (SCC, at page 61, para 26)
"26. The object and purport of principle of res
judicata as contended in Section 11 of the Code
of Civil Procedure is to uphold the rule of
conclusiveness of judgment, as to the points
decided earlier of fact, or of law, or of fact and
law, in every subsequent suit between the same
parties. Once the matter which was the subject-
matter of lis stood determined by a competent
court, no party thereafter can be permitted to
reopen it in a subsequent litigation. Such a rule
was brought into the statute book with a view to
bring the litigation to an end so that the other
side may not be put to harassment."
(iv) M. Nagabhushana vs. State of Karnataka and Others, (2011)
3 SCC 408, wherein the principles of res judicata were delineated as
under:- (SCC, at pages 415-416, paras 12 and 13)
"12. The principles of res judicata are of
universal application as they are based on two
age-old principles, namely, interest reipublicae
ut sit finis litium which means that it is in the
interest of the State that there should be an end
to litigation and the other principle is nemo
debet bis vexari, si constat curiae quod sit pro
una et eademn causa meaning thereby that no
one ought to be vexed twice in a litigation if it
appears to the Court that it is for one and the
same cause. This doctrine of res judicata is
common to all civilized system of jurisprudence
to the extent that a judgment after a proper trial
by a Court of competent jurisdiction should be
regarded as final and conclusive determination
of the questions litigated and should for ever set
the controversy at rest.
13. That principle of finality of litigation is
based on high principle of public policy. In the
absence of such a principle great oppression
might result under the colour and pretence of
law in as much as there will be no end of
litigation and a rich and malicious litigant will
succeed in infinitely vexing his opponent by
repetitive suits and actions. This may compel
the weaker party to relinquish his right. The
doctrine of res judicata has been evolved to
prevent such an anarchy. That is why it is
perceived that the plea of res judicata is not a
technical doctrine but a fundamental principle
which sustains the rule of law in ensuring
finality in litigation. This principle seeks to
promote honesty and a fair administration of
justice and to prevent abuse in the matter of
accessing Court for agitating on issues which
have become final between the parties."
(v) Hope Plantations Ltd. vs. Taluk Land Board, Peermade and
Anr., (1999) 5 SCC 590, wherein the following apposite observations
are set out:- (SCC, at page 607, para 26)
"26. It is settled law that principles of
estoppel and res judicata are based on public
policy and justice. Doctrine of res judicata is
often treated as a branch of the law of estoppel
though these two doctrines differ in some
essential particulars. Rule of res judicata
prevents the parties to a judicial determination
from litigating the same question over again
even though the determination may even be
demonstratedly wrong. When the proceedings
have attained finality, parties are bound by the
judgment and are estopped from questioning
it. They cannot litigate again on the same
cause of action nor can they litigate any issue
which was necessary for decision in the earlier
litigation. These two aspects are "cause of
action estoppel" and "issue estoppel". These
two terms are of common law origin. Again,
once an issue has been finally determined,
parties cannot subsequently in the same suit
advance arguments or adduce further evidence
directed to showing that the issue was wrongly
determined. Their only remedy is to approach
the higher forum if available.................."
(vi) D.S.V. Silo-Und Verwaltungs - Gesellschaft M.B.H. vs.
Owners of the Sennar and 13 Other Ships, (1985) 1 W.L.R. 490
(House of Lords), wherein the buyers of Sudanese groundnut
expellers brought an action for damages in a Dutch Court, which was
dismissed by the Dutch Court holding that it had no jurisdiction to
entertain the claim by virtue of the exclusive jurisdiction clause. The
buyers then brought an action in the Admiralty Court in England,
which held that the buyers‟ claim did not fall within the exclusive
jurisdiction clause in the Bill of Lading and that the plaintiffs were
not estopped by the decision of the Dutch Court of Appeal from so
asserting. The Court of Appeal allowed an appeal by the defendants
holding that the plaintiffs were so estopped. On appeal by the
plaintiffs the House of Lords dismissed the appeal. The law, in the
words of Lord Brandon of Oakbrook, was as follows:-
"....a decision on the merits is a decision which
establishes certain facts as proved or not in
dispute; states what are the relevant principles
of law applicable to such facts; and expresses a
conclusion with regard to the effect of applying
those principles to the factual situation
concerned. If the expression "on the merits" is
interpreted in this way, as I am clearly of
opinion that it should be, there can be no doubt
whatever that the decision of the Dutch Court
of Appeal in the present case was a decision on
the merits for the purposes of the application of
the doctrine of issue estoppel."
(vii) Makhija Construction & Engg. (P) Ltd. vs. Indore
Development Authority and ors, (2005) 6 SCC 304, wherein a fine
distinction between the principle of precedent and the principle of res
judicata is drawn in the following words:-
"They refer to the principle of precedent which
is distinct from the principle of res judicata. A
precedent operates to bind in similar situations
in a distinct case. Res judicata operates to bind
parties to proceedings for no other reason, but
that there should be an end to litigation."
(viii) S. Nagaraj (dead) by LRs and Ors. vs. B.R. Vasudeva Murthy
& Ors., (2010) 3 SCC 353, wherein the Supreme Court again
reiterated the distinction between the doctrine of res judicata and the
doctrine of precedent and held that the principle of per incurium and
other principles related to the doctrine of precedent have no relevance
to the doctrine of res judicata whereunder whether a decision is
correct or erroneous has no bearing upon the question whether it
operates or does not operate as res judicata. The following apposite
observations were made in the said case:-
"The High Court has failed to appreciate that
the principle of per incurium has relevance to
the doctrine of precedents but has no
application to the doctrine of res judicata. To
quote Rankin, C.J. of the Calcutta High Court
in Tarini Charan Bhattacharjee v. Kedar Nath
Haldar AIR 1928 Cal 777: (AIR p.781)
"(1) The question whether decision is
correct or erroneous has no bearing
upon the question whether it operates or
does not operate as res judicata. The
doctrine is that in certain circumstances
the Court shall not try a suit or issue but
shall deal with the matter on the footing
that it is a matter no longer open to
contest by reason of a previous decision.
In these circumstances it must
necessarily be wrong for a court to try
the suit or issue, come to its own
conclusion thereon, consider whether the
previous decision is right and give effect
to it or not according as it conceives the
previous decision to be right or wrong.
To say, as a result of such disorderly
procedure, that the previous decision
was wrong and that it was wrong on a
point of law, or on a pure point of law,
and that therefore it may be disregarded,
is an indefensible form of reasoning. For
this purpose, it is not true that a point of
law is always open to a party."
(ix) K.K. Modi vs. K.N. Modi and Ors., (1998) 3 SCC 573, wherein
the Court has termed re-litigation as one of the examples of an abuse
of the process of the Court as follows:- (SCC, at page 592, para 44)
"44. One of the examples cited as an abuse of
the process of the court is relitigation. It is an
abuse of the process of the court and contrary
to justice and public policy for a party to re-
litigate the same issue which has already been
tried and decided earlier against him. The re-
agitation may or may not be barred as res
judicata. But if the same issue is sought to be
reagitated, it also amounts to an abuse of the
process of the court. A proceeding being filed
for a collateral purpose, or a spurious claim
being made in litigation may also in a given set
of facts amount to an abuse of the process of
the court. Frivolous or vexatious proceedings
may also amount to an abuse of the process of
court especially where the proceedings are
absolutely groundless. The court then has the
power to stop such proceedings summarily and
prevent the time of the public and the court
from being wasted....................."
30. On the basis of the aforesaid decisions, the learned Additional
Solicitor General contended that the principles of Section 11 of the
Code of Civil Procedure would squarely apply in the present case.
Therefore, a second round of litigation is barred by the principles of
res judicata and the public policy of India, and by seeking to re-
initiate the proceedings before the London Court, the defendant is
not only trying to breach the PSC between the parties, but is
following a course of conduct which is vexatious and oppressive,
besides being in breach of Article 33 of the PSC whereunder the
parties had agreed that the laws of India were not to be
contravened.
31. Relying upon the decision of the Court of Appeal (Civil
Division) rendered in Munib Masri vs. Consolidated Contractors
International Company SAL, Consolidated Contractors (Oil & Gas)
Company SAL [2008] EWCA Civ 625, the learned Additional
Solicitor General, further contended that re-litigation in a foreign
jurisdiction of matters which are already res judicata between the
parties by reason of a prior judgment can be a sufficient ground for
grant of anti-suit injunction. The following apposite observations are
set out:
"82. I do not accept the judgment debtors'
argument that there is a principle (whether it is
expressed as a condition for the exercise of the
jurisdiction, or as an aspect of comity, or as an
element in exercise of the discretion) that the
English court will not restrain re-litigation
abroad of a claim which has already been the
subject matter of an English judgment adverse
to the person seeking to re-litigate abroad. It
has been established since at least 1837 that
the fact that the respondent is seeking to re-
litigate in foreign jurisdiction matters which
are already re judicata between himself and
the applicant by the reason of an English
judgment can be a sufficient ground for the
grant of an anti-suit injunction."
32. Next, adverting to the binding nature of the findings rendered
by the Supreme Court, the learned Additional Solicitor General
contended that a five-Judge Bench of the Supreme Court in the case
of Rupa Ashok Hurra vs. Ashok Hurra and Anr., (2002) 4 SCC 388
has placed matters beyond the pale of controversy by laying down in
no uncertain terms that a judgment rendered by the highest court
of the land is sacrosanct and is a precedent for itself and for all
Courts/Tribunals and authorities in India. The relevant part of the
judgment reads as under:- (SCC, at pages 406-407, 412 and 417)
"24. There is no gainsaying that the Supreme
Court is the Court of last resort - the final
Court on questions both of fact and of law
including constitutional law. The law declared
by this Court is the law of the land; it is
precedent for itself and for all the
courts/tribunals and authorities in India. In a
judgment there will be declaration of law and
its application to the facts of the case to render
a decision on the dispute between the parties to
the lis. It is necessary to bear in mind that the
principles in regard to the highest Court
departing from its binding precedent are
different from the grounds on which a final
judgment between the parties, can be
reconsidered........................"
"25. In Hoystead vs. Commissioner of
Taxation, Lord Shaw observed: (All ER p.62 B-
C)
"Parties are not permitted to begin fresh
litigation because of new views they may
entertain of the law of the case, or new
versions which they present as to what
should be a proper apprehension by the
Court of the legal result...... If this were
permitted litigation would have no end,
except when legal ingenuity is
exhausted."
"40. ...................In a State like India,
governed by rule of law, certainty of law
declared and the final decision rendered on
merits in a lis between the parties by the
highest court in the country is of paramount
importance. The principle of finality is insisted
upon not on the ground that a judgment given
by the apex Court is impeccable but on the
maxim interest reipublicae ut sit finis litium."
"57. ....................There cannot possibly be
any manner of doubt that the matter once dealt
with by this Court attains a state of finality
and no further grievance can be had in regard
thereto. The founding fathers of the
Constitution decidedly provided that the
decision of this Court was final, conclusive and
binding - final and conclusive inter partes and
binding on all. But the makers have also
conferred a power of review of the judgment of
this Court and the perusal of the provisions of
Articles 137 and 145 makes it abundantly
clear."
33. The learned Additional Solicitor General further contended
relying upon the decision of a three-Judge Bench of the Supreme
Court in Kunhayammed and Ors. vs. State of Kerala and Anr.,
(2000) 6 SCC 359, that the nature and scope of the power of the
Supreme Court under Articles 136 and 141 is such that even when a
petition for leave to appeal is dismissed by a speaking or reasoned
order, Article 141 of the Constitution would be attracted and if there
is a law declared by the Supreme Court, the said law would be
binding on all Courts and Tribunals in India and certainly the parties
thereto. The relevant extract of the judgment is reproduced
hereunder:- (SCC, at pages 377-378, para 27)
"27. ................................If the order of
dismissal be supported by reasons then also the
doctrine of merger would not be attracted
because the jurisdiction exercised was not an
appellate jurisdiction but merely a
discretionary jurisdiction refusing to grant
leave to appeal. We have already dealt with this
aspect earlier. Still the reasons stated by the
Court would attract applicability of Article 141
of the Constitution if there is a law declared by
the Supreme Court which obviously would be
binding on all the courts and tribunals in India
and certainly the parties thereto. The
statement contained in the order other than on
points of law would be binding on the parties
and the court or tribunal, whose order was
under challenge on the principle of judicial
discipline, this Court being the apex court of
the country. No court or tribunal or parties
would have the liberty of taking or canvassing
any view contrary to the one expressed by this
Court........................."
34. The learned Additional Solicitor General highlighted that the
present case stands on a higher footing, in that leave to appeal has
been granted in the instant case, and the appeal disposed of by a
detailed order passed by the Supreme Court dealing with every aspect
of the matter. Therefore, the judgment of the Supreme Court in the
instant case is final, binding and conclusive between the parties and
the only remedy available to the defendant is to file a review petition
under Article 137 of the Constitution. The judgment of the Supreme
Court even if it is contended to be erroneous or alleged to be passed
without jurisdiction, the same can be corrected by the Supreme Court
itself and cannot be dealt with collaterally by any other Court.
35. Elaborating on the aforesaid, he referred to the Constitution
Bench decision of the Supreme Court in the case of A.R. Antulay vs.
R.S. Nayak and Anr., (1988) 2 SCC 602, wherein the Court with
great lucidity and with utmost precision laid down:- (SCC, at page
651, para 40)
"40. The question of validity, however, is
important in that the want of jurisdiction can
be established solely by a superior court and
that, in practice, no decision can be
impeached collaterally by any inferior court.
But the superior court can always correct its
own error..........."
36. Referring to a recent decision delineating the wide powers of
the Supreme Court of India under Article 136 of Constitution of India
rendered in the matter of A. Subash Babu vs. State of Andhra
Pradesh and Anr., (2011) 7 SCC 616, learned ASG contended that
by virtue of the special jurisdiction vested in the Supreme Court by
Article 136, the argument of the defendant that the Supreme Court did
not have the jurisdiction to rule on the juridical seat of arbitration
loses all tenability. The following extract from the judgment deserves
to be noted:- (SCC, at page 638, para 65)
"65. As held in Ramakant Rai v. Madan Rai
following Arunachalam v. P.S.R.
Sadhanantham and P.S.R. Sadhanantham v.
Arunachalam, the appellate power vested in
the Supreme Court under Article 136 is not to
be confused with the ordinary appellate power
exercised by appellate Courts and appellate
tribunals under specific statutes. It is plenary
power exercisable outside the purview of
ordinary law to meet the demand of justice.
Article 136 is a special jurisdiction. It is
residuary power. It is extraordinary in its
amplitude. The limits of Supreme Court when
it chases injustice, is the sky itself."
37. In the context of the wide amplitude of the powers of the
Supreme Court as a superior Court of record constituted by the
Constitution, he also placed reliance upon the judgment of the
Supreme Court rendered in the case of Delhi Judicial Service
Association, Tis Hazari Court, Delhi vs. State of Gujarat and Ors.,
(1991) 4 SCC 406, wherein it was observed by the Supreme Court as
under:- (SCC, at page 453, para 38)
"...............It is true that courts constituted
under a law enacted by the Parliament or the
State Legislature have limited jurisdiction and
they cannot assume jurisdiction in a matter, not
expressly assigned to them, but that is not so in
the case of a superior court of record
constituted by the Constitution. Such a court
does not have a limited jurisdiction instead it
has power to determine its own jurisdiction.
No matter is beyond the jurisdiction of a
superior court of record unless it is expressly
shown to be so, under the provisions of the
Constitution. In the absence of any express
provision in the Constitution the Apex court
being a court of record has jurisdiction in
every matter and if there be any doubt, the
Court has power to determine its jurisdiction.
If such determination is made by High Court,
the same would be subject to appeal to this
Court, but if the jurisdiction is determined by
this Court it would be final."
38. He also relied upon the case of Ravi S. Naik vs. Union of India
and Ors., 1994 Supp (2) SCC 641 to urge that even in the case of a
High Court which is a superior Court of record, it is for the Court to
consider whether any matter falls within its jurisdiction or not. The
relevant portion of the judgment is extracted hereinbelow:- (Supp
SCC, at page 662, para 40)
"It is settled law that an order, even though
interim in nature, is binding till it is set aside by
a competent could and it cannot be ignored on
the ground that the Court which passed the
order had no jurisdiction to pass the same.
Moreover the stay order was passed by the
High Court which is a Superior Court of
Record and "in the case of a superior Court of
Record, it is for the court to consider whether
any matter falls within its jurisdiction or not.
Unlike a court of limited jurisdiction, the
superior Court is entitled to determine for
itself questions about its own jurisdiction."
39. The learned Additional Solicitor General on the basis of the
aforesaid decisions contended that firstly, no matter or issue is beyond
the jurisdiction of the Supreme Court which is the highest Court of
the land and secondly, even if there is any doubt as to the jurisdiction
of the Supreme Court, the Supreme Court alone can decide upon the
same. Therefore, the judgment of the Supreme Court is binding on
the parties unless and until the Supreme Court itself holds that it did
not have jurisdiction.
40. Without prejudice to his aforesaid contentions, learned ASG
submitted that as per the amended provisions of Explanation VIII of
Section 11 of the Code of Civil Procedure, an issue decided by even a
Court of limited or special jurisdiction is binding between the parties
[See Sulochana Amma vs. Narayanan Nair, (1994) 2 SCC 14]. For
the facility of reference, the aforesaid provision is reproduced
hereunder:-
"Explanation VIII.- An issue heard and finally
decided by a Court of limited jurisdiction,
competent to decide such issue, shall operate as
res judicata in a subsequent suit,
notwithstanding that such Court of limited
jurisdiction was not competent to try such
subsequent suit or the suit in which such issue
has been subsequently raised."
41. Learned Additional Solicitor General next contended that in
any case, it is fundamental law that parties cannot vest a Court with
jurisdiction it does not otherwise have. Thus, the London Court
which does not have jurisdiction to go into the issue of „juridical seat‟
cannot assume jurisdiction. In contrast, the plaintiff at all times
possessed the right at common law to institute a suit before this Court
and the said right cannot be extinguished on some mistaken notion
that only London Courts can decide the issue raised in the present
suit. The case of Oil and Natural Gas Commission vs. Western
Company of North America, (1987) 1 SCC 496 is a case in point. In
the said case, the appellant ONGC entered into a drilling contract
with the respondent Western Company of USA. The contract
provided for reference to arbitration in case of any dispute arising out
of the contract. The arbitration proceedings were to be governed by
the Indian Arbitration Act, 1940 read with the relevant rules. A
dispute having arisen between the parties, the matter was referred to
arbitration. The agreed venue under the contract was in London. An
award rendered by the umpire in London was sought to be enforced
by the American company in New York. The appellant ONGC filed
arbitration petition before the Bombay High Court under Sections 30
and 33 for setting aside the award, seeking ex parte interim order
restraining the American company from enforcing the award in New
York. The Supreme Court after considering the rival contentions of
the parties opined that to oblige the Indian company to contest
proceedings before the American Court would be oppressive to the
Indian company given the situation which had been created by the
American company of seeking enforcement of the award in New
York while a petition to set aside the award was instituted and
pending in the Indian Court at the time of the institution of the action
in the US Court. This was enough to entitle the Indian company to a
restraint order. It held:- (SCC, at page 510, para 15)
"15. We are of the opinion that the appellant,
ONGC, should not be obliged to face such a
situation as would arise in the light of the
aforesaid discussion in the facts and
circumstances of the present case. To drive the
appellant in a tight corner and oblige it to be
placed in such an inextricable situation as
would arise if the Western Company is
permitted to go ahead with the proceedings in
the American Court would be oppressive to the
ONGC. It would be neither just nor fair on the
part of the Indian Court to deny relief to the
ONGC when it is likely to be placed in such an
awkward situation if the relief is refused. It
would be difficult to conceive of a more
appropriate case for granting such relief. The
reasons which have been just now articulated
are good and sufficient for granting the relief
and accordingly it appears unnecessary to
examine the meaning and content of the
relevant articles of the New York Convention
for the purposes of the present appeal."
42. Significantly, in the aforesaid case, the High Court which at the
first instance granted interim restraint order to the ONGC
subsequently vacated the interim order granted by it earlier inter alia
on the ground that it was open to the ONGC to contend before the US
Court that the petition for setting aside the award which was sought to
be enforced in the US Court was already pending in the Indian Court.
Disagreeing with the aforesaid view of the High Court, the Supreme
Court observed:- (SCC, at pages503-504, para 7)
"7. The High Court has examined the
question as to whether the action instituted by
the Western Company against ONGC was
maintainable in the context of the New York
Convention in the light of the relevant Articles
of the Convention and has come to the
conclusion that an action to enforce the award
in question as a foreign award in the US Court
was quite in order. The view is expressed that
the mere fact that a petition to set aside the
award had already been instituted in the Indian
Court and was pending in the Indian Court at
the time of the institution of the action in the US
Court was a matter of no consequence, for the
purposes of consideration of the question as to
whether or not Western Company should be
restrained from proceeding further with the
action in the US Court. Now, there cannot be
any doubt that the Western Company can
institute an action in the US Court for the
enforcement of the award in question
notwithstanding the fact that the application for
setting aside the award had already been
instituted and was already pending before the
Indian Court. So also there would not be any
doubt or dispute about the proposition that the
ONGC can approach the US Court for seeking
a stay of the proceedings initiated by the
Western Company for procuring a judgment in
terms of the award in question. But merely on
this ground the relief claimed by ONGC
cannot be refused. To say that the Court in
America has the jurisdiction to entertain the
action and to say that the American Court can
be approached for staying the action is
tantamount to virtually cold-shouldering the
substantial questions raised by ONGC and
seeking an escapist over-simplification of the
matter. The points urged by the ONGC are of
considerable importance and deserve to be
accorded serious consideration."
43. Learned ASG argued that the jurisdiction exercised by the
Indian Supreme Court was well within its competence in view of the
fact that the parties are Indian, domiciled in India, properties and
assets under the contract which has been executed in Delhi are within
the territory of India and the performance of the contract is also in
Indian territory and the same is governed by the laws of India with an
overriding stipulation that: "nothing in this Contract shall entitle the
Contractor to exercise the rights, privileges and powers conferred
upon it by this Contract in a manner which will contravene the laws
of India." The Indian Supreme Court is thus the natural forum i.e the
forum with which the parties and the contract has the most real and
substantial connection. Thus, Indian Courts have not only personal
jurisdiction but also subject matter and territorial jurisdiction. When
the award is to be enforced either against the assets or the person of
the award debtor, only the Indian Court can enforce the same.
Therefore, its determination on the seat issue, which was squarely
raised and which was required to be determined for the purpose of
deciding the applicability of or otherwise of Part I of the Act, was
within the competence of the Apex Court of India. It has been held
by the Hon‟ble Supreme Court of India in the matter of Man Roland
Druckimachinen Ag vs. Multicolur Offset Ltd and Anr., (2004) 7
SCC 447 as under:-
"Undoubtedly, when the parties have agreed on
a particular forum, the courts will enforce such
agreement. This is not because of a lack or
ouster of its own jurisdiction by reason of
consensual conferment of jurisdiction on
another court, but because the court will not be
party to a breach of an agreement...."
44. The Supreme Court was required to enter a finding as to where
is the juridical seat of arbitration and what is the curial law governing
the arbitration to rule upon the applicability or otherwise of Part I of
the 1996 Act. Sub-section (2) of Section 2 of the 1996 Act requires
the Court to decide where is the juridical seat of arbitration. That is
what the Supreme Court has done and the relief was granted to the
defendant on that basis alone. The defendant cannot and should not
be permitted to pick and choose from a judgment it has won. On this
basis alone, it was argued, there was no merit in the contention of the
defendant that the Indian Supreme Court did not possess the
competence to decide the seat issue.
45. Learned ASG next contended that without prejudice to his
contentions with regard to the width and amplitude of the powers of
the Supreme Court and that it was not open to the defendant to
contend that the High Court of Justice, Queen‟s Bench Division,
Commercial Court, London is the Court which can render a finding
on the juridical seat of arbitration, it was open to the parties to
invoke the jurisdiction of the Supreme Court to render a finding
on the juridical seat of arbitration. It was so laid down in the case
of A.P. State Financial Corporation vs. M/s. Gar Re-Rolling Mills
and Anr., (1994) 2 SCC 647, wherein while dealing with the right
vested in the Corporation under Section 29 of the State Financial
Corporations Act, 1951, the Supreme Court opined that the right
vested in the Corporation under the aforesaid Section is besides the
right already possessed at common law to institute a suit or the right
available to it under Section 31 of the Act. The following pertinent
observations were made by it:- (SCC, at page 660, para 15)
"15. The Doctrine of Election clearly suggests
that when two remedies are available for the
same relief, the party to whom the said
remedies are available has the option to elect
either of them but that doctrine would not apply
to cases where the ambit and scope of the two
remedies is essentially different. To hold
otherwise may lead to injustice and inconsistent
results."
46. Learned Additional Solicitor General pointedly drew the
attention of this Court to the conduct of the defendant throughout,
highlighting that the defendant at every given point of time has
suppressed material facts from the Court including the Supreme Court
and its malicious conduct was evident from the following:-
(i) The defendant did not disclose before the Hon‟ble
Supreme Court that it had filed proceedings before the
London Court on the same subject matter.
(ii) Despite a clear order dated 20.10.2009 from the London
Court for service of the plaintiff, the defendant did not
get the service effected on the plaintiff till April, 2010,
i.e., after the Supreme Court had reserved judgment in
the case.
(iii) In the written statement filed on behalf of the defendant
on 09.01.2012 before the Malaysian High Court, the
defendant did not disclose:-
a. The Supreme Court proceedings.
b. The London proceedings.
c. The proceedings relating to the present suit.
47. To sum up, the learned Additional Solicitor General contended
that the mere initiation of a proceeding in breach of the principle of
res judicata is abuse of the process which makes the foreign
proceedings vexatious and oppressive. It is this re-commencement of
proceedings by the defendant in the English Court which is sought to
be injuncted by filing the present suit. If the contention of the
defendant is accepted that only the foreign court before whom the
proceedings are pending can decide the said issue, then in that case
the entire concept and purpose of anti-suit injunction would be lost
and defeated. In the present case, there is a judgment in favour of the
plaintiff from the highest court, i.e., the Supreme Court of India, and,
therefore, the proceedings initiated before the London Court are
highly oppressive and vexatious. The contention of the defendant
based on comity of courts is also misplaced for the reason that the
Hon‟ble Supreme Court by its order dated 06.09.2010 had earlier
directed the parties not to proceed with the London proceedings. At
that time, no such contention of comity of courts was raised and,
therefore, this argument is only an after-thought and without any
basis. Even otherwise, the reliance placed by the defendant on the
principle of comity of courts loses sight of the fact that the grant of an
injunction is not towards any foreign court but only against the parties
who are amenable to the jurisdiction of this Court.
48. In view of the aforesaid, the learned Additional Solicitor
General submitted that the plaintiff has made out a prima facie case in
its favour justifying the grant of an injunction against the defendant.
The balance of convenience is also tilted in favour of the plaintiff and
irreparable injury is likely to be caused to the plaintiff if the plaintiff
is forced to join the London proceedings, in which event the entire
suit will be rendered infructuous whereas, on the other hand,
proceedings can be re-commenced before the London Court if
ultimately the present suit is dismissed by this Court.
DEFENDANT‟S CONTENTIONS
49. Responding to the arguments advanced by the learned
Additional Solicitor General, Mr. Amit Sibal, the learned counsel for
the defendant contended that the issue before this Court is not
whether the observations in paragraphs 12 and 13 of the Supreme
Court judgment operate as res judicata so as to bar the English claim.
The issue before this Court is whether:-
(a) The English Court deciding whether the defendant‟s
English claim is barred by res judicata pursuant to
the plaintiff‟s application is so abusive, oppressive
and vexatious as to defeat the ends of justice and to
perpetuate injustice; and/or
(b) The principle of Comity of Nations does not come in
the way of barring this Court from exercising its
jurisdiction to decide whether the English claim is
barred by res judicata pursuant to the plaintiff‟s
application.
It is submitted that only if the answer to both the above is in the
affirmative, can an anti-suit injunction be granted. It is further
submitted that the plaintiff has failed to make out a prima facie
case on either of the abovementioned conditions and hence no
relief ought to be granted to the plaintiff.
50. For substantiating the aforesaid contention, the learned counsel
for the defendant referred to the tests laid down by the Supreme Court
in the case of Modi Entertainment Network and Anr. vs. W.S.G.
Cricket Pvt. Ltd. (2003) 4 SCC 341 in the following terms:- (SCC, at
page 360, paragraph 24)
"24. From the above discussion the following
principles emerge:
(1) In exercising discretion to grant an anti-
suit injunction the court must be satisfied
of the following aspects:-
(a) the defendant, against whom
injunction is sought, is amenable to
the personal jurisdiction of the
court;
(b) if the injunction is declined, the
ends of justice will be defeated and
injustice will be perpetuated; and
(c) the principle of comity - respect
for the court in which the
commencement or continuance of
action/ proceeding is sought to be
restrained - must be borne in
mind."
(2) In a case where more forums than one
are available, the Court in exercise of its
discretion to grant anti-suit injunction
will examine as to which is the
appropriate forum (Forum conveniens)
having regard to the convenience of the
parties and may grant anti-suit
injunction in regard to proceedings
which are oppressive or vexations or in
a forum non-conveniens;
(3) Where jurisdiction of a court is invoked
on the basis of jurisdiction clause in a
contract, the recitals therein in regard to
exclusive or non-exclusive jurisdiction of
the court of choice of the parties are not
determinative but are relevant factors
and when a question arises as to the
nature of jurisdiction agreed to between
the parties the court has to decide the
same on a true interpretation of the
contract on the facts and in the
circumstances of each case;
(4) A court of natural jurisdiction will not
normally grant anti-suit injunction
against a defendant before it where
parties have agreed to submit to the
exclusive jurisdiction of a court
including a foreign court, a forum of
their choice in regard to the
commencement or continuance of
proceedings in the court of choice, save
in an exceptional case for good and
sufficient reasons, with a view to prevent
injustice in circumstances such as which
permit a contracting party to be relieved
of the burden of the contract; or since
the date of the contract the
circumstances or subsequent events have
made it impossible for the party seeking
injunction to prosecute the case in the
court of choice because the essence of
the jurisdiction of the court does not
exist or because of a vis major or force
majeure and the like;
(5) Where parties have agreed, under a non-
exclusive jurisdiction clause, to
approach a neutral foreign forum and be
governed by the law applicable to it for
the resolution of their disputes arising
under the contract, ordinarily no anti-
suit injunction will be granted in regard
to proceedings in such a forum
conveniens and favoured forum as it
shall be presumed that the parties have
thought over their convenience and all
other relevant factors before submitting
to non-exclusive jurisdiction of the court
of their choice which cannot be treated
just an alternative forum;
(6) A party to the contract containing
jurisdiction clause cannot normally be
prevented from approaching the court of
choice of the parties as it would amount
to aiding breach of the contract; yet
when one of the parties to the
jurisdiction clause approaches the court
of choice in which exclusive or non-
exclusive jurisdiction is created, the
proceedings in that court cannot per se
be treated as vexatious or oppressive nor
can the court be said to be forum non-
conveniens; and
(7) The burden of establishing that the
forum of the choice is a forum non-
conveniens or the proceedings therein
are oppressive or vexatious would be on
the party so contending to aver and
prove the same.
51. Reliance was also placed by the learned counsel for the
defendant on a decision rendered by the High Court of Justice,
Queen‟s Bench Division, Admiralty Court in Seismic Shipping Inc.,
Westerngeco Ltd. vs. Total E&P UK Plc, The Western Regent
(2005) EWHC 460 (Admlty) [as upheld by the Court of Appeal], and
in particular on the following dictum laid down in the said case:-
"...............the function of an anti suit
injunction is to prevent unconscionable conduct
and not, in effect, to ensure recognition of an
English judgment in a friendly foreign
jurisdiction."
52. In support of his contention that the tests for the grant of an
anti-suit injunction as laid down in the aforesaid two decisions
have not been met in the instant case, the learned counsel for the
defendant vehemently contended that the proceedings before the
English Court cannot be termed as abusive, oppressive and/or
vexatious. He emphasized that the purpose of anti-suit injunctions is
to prevent abusive proceedings and not to ensure enforcement of
judgments in a "foreign friendly jurisdiction".
53. The next plank of the contentions of the learned counsel for the
defendant is that even otherwise, the English Court is the
appropriate Court to decide whether or not the defendant‟s claim
in England is barred by res judicata. He contended that the bar of
res judicata is a procedural bar that can only be raised as a defence to
a claim in the forum where the claim is filed. Thus, the issue of
whether or not a subsequent proceeding is barred by res judicata
needs to be determined by the Court where the subsequent proceeding
has been filed, in this case the English Court. To buttress his said
contention, he referred to the four conditions required under Indian
Law for the application of principle of res judicata as summarized by
the Supreme Court in the case of Syed Mohd. Salie Labbai (Dead) by
LRs and Ors. vs. Mohd. Hanifa (Dead) by LRs and Ors. (1976) 4
SCC 780, which, he stated, were similar to the conditions applicable
under the English Law. The said conditions are as set out below:-
(SCC, at page 790, para 7)
"(1) that the litigating parties must be the
same;
(2) that the subject-matter of the suit also must
be identical;
(3) that the matter must be finally decided
between the parties; and
(4) that the suit must be decided by a court of
competent jurisdiction."
54. Relying upon the aforesaid principles laid down in Syed Mohd.
Salie Labbai (supra), Mr. Sibal urged that Section 11 of the Code of
Civil procedure, 1908 stipulates that no Court shall try any suit or
issue which has been decided in a former suit between the same
parties. Therefore, the bar operates in the forum where the issue
alleged to have been decided is being re-agitated and res judicata
does not arise in the abstract or prior to the subsequent suit. Thus,
there is no occasion for this Court to decide whether the claim before
the English Court is barred by res judicata.
55. Alternatively, he contended on behalf of the defendant that the
Court of the country whose law governs the arbitration
agreement has the exclusive jurisdiction to decide all disputes
relating to the arbitration clause. Differently put, the contention is
that where Part I of the Act has been excluded, the only role to be
played by the Indian Courts is under Part II of the Act at the stage of
enforcement of the Foreign Award, if and only if the successful party
chooses to enforce the award in India under Part II of the Act. Any
and all other proceedings must be filed in the Courts of the country
whose laws apply to arbitration agreement. Since the issue of „seat of
arbitration‟ is contained in the arbitration clause, only the English
Courts have jurisdiction to decide the said issue. Referring to the
judgment of the Supreme Court in National Thermal Power
Corporation vs. Singer Company and Ors. (1992) 3 SCC 551, the
learned counsel for the defendant contended that the law in this
context was lucidly laid down in paragraph 26 of the said judgment as
follows:- (SCC, at page 564, para 26)
"Whereas, as stated above, the proper law of
arbitration (i.e., the substantive law governing
arbitration) determines the validity, effect and
interpretation of the arbitration agreement, the
arbitration proceedings are conducted, in the
absence of any agreement to the contrary, in
accordance with the law of the country in which
the arbitration is held. On the other hand, if the
parties have specifically chosen the law
governing the conduct and procedure of
arbitration, the arbitration proceedings will be
conducted in accordance with that law so long
as it is not contrary to the public policy or the
mandatory requirements of the law of the
country in which the arbitration is held. If no
such choice has been made by the parties,
expressly or by necessary implication, the
procedural aspect of the conduct of arbitration
(as distinguished from the substantive
agreement to arbitrate) will be determined by
the law of the place or seat of arbitration.
Where, however, the parties have, as in the
instant case, stipulated that the arbitration
between them will be conducted in accordance
with the ICC Rules, those rules, being in many
respects self-contained or self-regulating and
constituting a contractual code of procedure,
will govern the conduct of the arbitration,
except insofar as they conflict with the
mandatory requirements of the proper law of
arbitration, or of the procedural law of the seat
of arbitration. [See the observation of Kerr, LJ.
in Bank Mellat v. Helliniki Techniki SA
(1983) 3 All E.R. 428 (CA). See also Craig,
Park and Paulsson, International Chamber of
Commerce Arbitration, 2nd edn. (1990)]. To
such an extent the appropriate courts of the
seat of arbitration, which in the present case
are the competent English courts, will have
jurisdiction in respect of procedural matters
concerning the conduct of arbitration. But the
overriding principle is that the courts of the
country whose substantive laws govern the
arbitration agreement are the competent courts
in respect of all matters arising under the
arbitration agreement, and the jurisdiction
exercised by the courts of the seat of arbitration
is merely concurrent and not exclusive and
strictly limited to matters of procedure. All
other matters in respect of the arbitration
agreement fall within the exclusive competence
of the courts of the country whose laws govern
the arbitration agreement. [See Mustil & Boyd,
Commercial Arbitration, 2nd edn.; Allen
Redfern and Martin Hunter, Law & Practice of
International Commercial Arbitration, 1986;
Russel on Arbitration, 20th edn. (1982);
Cheshire & North's Private International Law,
11th edn. (1987)].
56. A recent judgment of the Supreme Court rendered in the case
of Yograj Infrastructure Ltd. vs. Ssang Yong Engineering and
Construction Co. Ltd., 2011 (9) SCALE 567 was also referred to by
Mr. Sibal to fortify his contention that once the parties had
specifically agreed that the arbitration proceedings would be
conducted in accordance with the English Law, it was no longer open
to the plaintiff to contend that Indian Courts have jurisdiction to
entertain the plaintiff‟s defence of res judicata. In the case of Yograj
Infrastructure (supra), an appeal under Section 37(2)(b) of the
Arbitration and Conciliation Act, 1996 for setting aside the interim
order passed by the learned arbitrator was filed before the District
Judge, Narsinghpur on behalf of the appellant. The learned District
Judge dismissed the appeal accepting the submissions advanced on
behalf of the respondent that the said appeal was not maintainable
since the seat of the arbitration proceedings was in Singapore and the
said proceedings were governed by the laws of Singapore. The Civil
Revision filed against the order of District Judge was also dismissed
by the High Court, against which a Special Leave Petition was filed.
The Supreme Court noting that there was no ambiguity that the curial
law with regard to the arbitration proceedings was the SIAC Rules
and the seat of arbitration was Singapore, held that the question which
arose was whether in such a case the provisions of Section 2(2) of the
Arbitration and Conciliation Act, 1996, which indicate that Part I of
the Act would apply where the place of arbitration is in India, would
be a bar to the invocation of the provisions of Sections 34 and 37 of
the Act, as far as the arbitral proceedings in the case before the
Supreme Court were concerned. After considering the judgment in
Bhatia International vs. Bulk Trading S.A., (2002) 4 SCC 105 and
noting that the decision therein had been subsequently applied in the
case of Venture Global Engg. (supra) and Citation Infowares Ltd.
vs. Equinox Corporation, (2009) 7 SCC 220, the Court held that once
the parties had specifically agreed that the arbitration proceedings
would be conducted in Singapore in accordance with the SIAC Rules,
which includes Rule 32 whereunder the International Arbitration Act
is made applicable, the decision in Bhatia International (supra) and
the subsequent decisions on the same lines would no longer apply, the
parties having willfully agreed to be governed by the SIAC Rules.
57. The third contention of the learned counsel for the defendant is
predicated on the principle of Comity of Nations as recognized by the
Indian Courts, including the Supreme Court of India. The principle
of Comity of Nations, Mr. Sibal urges, precludes the grant of anti-
suit injunctions barring the rarest of rare cases. Such injunctions,
in particular, cannot be granted where a party has already challenged
a foreign Court‟s jurisdiction until such party has failed in such
challenge. This principle, Mr. Sibal contends, has been recognized by
a Division Bench of this Court in the case of Horlicks Ltd. and Anr.
vs. Heinz India (Pvt.) Ltd., 2010 (42) PTC 156 (Del.) (DB) where a
judgment of the Canadian Supreme Court was quoted with approval
as follows:- (PTC, at pages 192-193)
"In this respect the anti-suit injunction is
unique in that the applicant does not have to
establish that the assumption of jurisdiction by
the foreign court will amount to an actionable
wrong. Moreover, although the application is
heard summarily and based on affidavit
evidence, the order results in a permanent
injunction which ordinarily is granted only
after trial. In order to resort to this special
remedy consonant with the principles of comity,
it is preferable that the decision of the foreign
court not be pre-empted until a proceeding has
been launched in that court and the applicant
for an injunction in the domestic court has
sought from the foreign court a stay or other
termination of the foreign proceedings and
failed."
58. It was emphasized that the English Court is respecting the
principle of Comity, as the English Court has not proceeded with
hearing the defendant‟s claim on merits. Instead, the English Court is
only completing the pleadings so that the plaintiff‟s application
contesting the jurisdiction of the English Court can be heard on the
dates fixed, i.e., on 5th and 6th March, 2012. In such circumstances, in
the event the English proceedings are injuncted by this Court prior to
the English Court even examining its own jurisdiction, it would
amount to an irreparable affront to the Comity of Nations, which has
been recorded as one of the guiding principles to be kept in mind by
Courts in deciding whether or not to grant anti-suit injunctions. In
any event, keeping in mind the principles laid down by the Supreme
Court of India in Modi Entertainment Network (supra), this Court
would have to apply a much higher standard of proof in considering
whether the English proceedings in London are so abusive as to
defeat the ends of justice and to perpetuate injustice.
59. The fourth contention of the learned counsel for the defendant
is two pronged. The first prong is that in the event anti-suit
injunction is not granted by this Court, there would be no loss of
legitimate juridical advantage to the plaintiff, who would be then
required to further pursue its application before the English Court.
The second prong is that if, on the other hand, an anti-suit
injunction is granted by this Court, the arbitration proceedings
would end in a stalemate.
60. Dealing first with the first limb of his argument that there
would be no loss of legitimate juridical advantage to the plaintiff in
case anti-suit injunction is not granted by this Court, Mr. Sibal urged
the following points:-
(i) The plaintiff has been actively pursuing its application
before the English Court challenging the jurisdiction of
the English Court since June, 2011 and the expenditure
already incurred by the plaintiff in the pursuit of its
application before the English Court would also be
wasted if the English proceedings are injuncted. It is the
plaintiff‟s own case that the pleas raised by the plaintiff
before this Court and the English Court are identical.
There is no reason to pre-suppose that the plaintiff will
not be given a full and complete hearing of its
application before the English Court.
(ii) The principles of res judicata in India and England are
substantially the same. In fact, the jurisprudence on the
issue of res judicata as cited by the Supreme Court of
India from time to time is largely quoted from an English
authority, viz., Dicey, Morris & Collins on the Conflict
of Laws, 14th Edn., Vol.I, Page 579 at para 14-027. The
relevant extract for the facility of reference is reproduced
hereunder:-
"Clause (2) of the Rule. A foreign
judgment may be relied on in English
proceedings otherwise than for the
purpose of its enforcement. A claimant
who has brought proceedings abroad
and lost may seek to bring a similar
claim in England; or in proceedings on a
different claim an issue may be raised
which has been decided abroad. In such
cases a foreign judgment entitled to
recognition may give rise to res judicata,
i.e., to a cause of action estoppel, which
prevents a party to proceedings from
asserting or denying, as against the other
party, the existence of a cause of action,
the nonexistence or existence of which
has been determined by the foreign court,
or to an issue estoppel, which will
prevent a matter of fact or law
necessarily decided by a foreign court
from being re-litigated in England."
(iii) Since the year 1953, there has been a reciprocity
between India and England in enforcing judgments
which continues till today. In India, foreign judgments
are being enforced under Section 44-A of the Code of
Civil Procedure, 1908 provided the judgment is made in
a reciprocating territory. United Kingdom and Northern
Ireland have been notified as reciprocating territories by
the plaintiff/Union of India vide Notification No.SRO
399 dated 01.03.1953. Likewise, the United Kingdom
recognizes judgments from reciprocating territories as
per the Foreign Judgments (Reciprocal Enforcement)
Act, 1933 (Section 8). Pursuant to this Act, India was
notified as a reciprocating territory in 1953, which was
amended in 1958 by way of Reciprocal Enforcement of
Judgments (India) Order, 1958 (Sections 3 and 4).
(iv) In view of the above, the proceedings pending before the
English Courts are not oppressive or vexatious in any
manner whatsoever. It is also not understood how the
plaintiff contends that it will suffer irreparable injury
when there has been no change in circumstances or
trigger between May 11, 2011 when the judgment of the
Supreme Court was rendered and the filing of the instant
suit.
(v) The plaintiff itself having invoked the jurisdiction of the
English Court to decide the issue of res judicata, during
the pendency of the plaintiff‟s application before the
English Court there is no cause of action for filing the
present suit. In this regard, the correspondence
exchanged between the parties as also the record of the
English Court amply demonstrates that the plaintiff has
not only invoked the jurisdiction of the English Court but
is actively pursuing its application before the English
Court and cannot now be heard to say that it was
compelled to submit to the jurisdiction of the English
Court to decide the issue of res judicata.
61. On the second limb of his argument that if an anti-suit
injunction was to be granted, the arbitration would be left in
stalemate, Mr. Sibal submitted that:
(i) The Malaysian Court by its judgment dated 05.08.2009
has refused to exercise jurisdiction, inter alia, on the
ground that the seat of the arbitration was permanently
shifted to London.
(ii) The Supreme Court has held that Indian Courts do not
have the jurisdiction to decide whether the seat is
London or Kuala Lumpur.
(iii) The defendant has always maintained that only the
English Courts have jurisdiction to decide the issue of
the seat of arbitration. On this conspectus, if this Court
were to hold that the English Courts cannot decide the
issue of seat, the arbitration would remain in a stalemate
indefinitely. For this reason alone, the interpretation of
the Supreme Court judgment as submitted by the
plaintiff ought not to be accepted.
62. The fifth contention put forth by the learned counsel for the
defendant is that the defendant is eventually likely to succeed in
showing that the observations made in paras 12 and 13 of the
Supreme Court judgment would not operate as res judicata and,
therefore, the defendant‟s plea that the English claim is not barred
is not unconscionable. A four-fold argument is raised in support of
this contention:-
(A) Observations by the Supreme Court on the seat of
arbitration were not necessary for the decision of the
case before the Supreme Court which related to whether
or not the Indian Courts had no jurisdiction, and were
thus in the nature of obiter.
(B) Observations of the Supreme Court in paras 12 and 13 of
its judgment are in relation to the Indian Arbitration Act,
1996, which stands excluded in the latter part of the
judgment of the Supreme Court.
(C) Even as per Indian Law, the observations in paras 12 and
13 of the Supreme Court would not operate as res
judicata.
(D) The fact that OMP No.255/2006 stood dismissed and the
appeal was allowed indicates that the Supreme Court
never considered the question of juridical seat of
arbitration.
63. Elaborating the aforesaid, the learned counsel for the defendant
contended that OMP No.255 of 2006 was filed by the plaintiff, inter
alia, seeking a declaration that the seat of arbitration remained at
Kuala Lumpur. The High Court by its order dated 30 th April, 2008
did not decide the issue of seat of arbitration nor entered into the
merits of the case of the plaintiff. The High Court only held that it
had jurisdiction to hear OMP No.255 of 2006. It was against this
order that an appeal was preferred by the defendant to the Supreme
Court. The thrust of the submissions before the Supreme Court was
that the Indian Courts have no jurisdiction, since Part I of the Act has
been excluded in view of the fact that the seat of arbitration is outside
India and the law governing the arbitration agreement was chosen by
the parties to be English law. Thus the issue regarding seat of
arbitration was not before the Supreme Court and the Supreme
Court was not called upon to decide which foreign court has
jurisdiction to decide the seat of arbitration. In fact, the Supreme
Court in para 2 of its judgment identified the question which arose for
consideration before the Supreme Court as follows:-
"2. Whether the Delhi High Court could
entertain the petition filed by the Respondents
under Section 9 of the Arbitration and
Conciliation Act, 1996 (for short, "the Act")
for grant of a declaration that Kuala Lumpur
(Malaysia) is contractual and juridical seat of
arbitration and for issue of a direction to the
arbitral tribunal to continue the hearing at
Kuala Lumpur in terms of clause 34 of
Production Sharing Contract (PSC) is the
question which arises for consideration in this
appeal."
64. Mr. Sibal urged that the Supreme Court judgment is the best
indicator of what was argued by the respective counsel and the
reliance placed by Mr. Chandiok, the learned ASG on the written
submissions of the defendant to contend that the defendant had
invoked the jurisdiction of the Supreme Court to rule on whether the
seat of arbitration is Kuala Lumpur or London is misconceived. The
then learned Solicitor General Mr. Gopal Subramaiam had made
arguments on the merits of which is the seat of arbitration (See para
10 of the Supreme Court judgment). It is for this reason alone that
the written submissions of the defendant clearly state that the
submissions on the issue of seat of arbitration are being made without
prejudice to the defendant‟s contention that the issue whether the seat
is London or Kuala Lumpur is not relevant for the determination of
the SLP and are only being made to respond to the submissions of the
plaintiff in this regard. Thus, it cannot be said that the defendant
invited a decision from the Supreme Court on the issue of the seat
of arbitration. The defendant in fact has consistently contended that
the English Courts are the Courts competent to decide the issue of
seat. Without prejudice to this contention, even if it is said that the
defendant invited a decision on the seat of arbitration, the Hon‟ble
Supreme Court subsequently held that Indian Courts would not have
jurisdiction to decide the issue.
65. According to Mr. Sibal a close reading of paras 15 to 19 of the
judgment of the Supreme Court which resulted in the dismissal of
OMP No.255 of 2006 in para 20, shows that the conclusion of the
Supreme Court was based on the fact that the seat of arbitration was
outside India and the law of the Arbitration Agreement was English
Law. This is also clear from the fact that the Supreme Court relied
upon para 21 of Bhatia International (supra) which refers to the seat
of arbitration being outside India as the relevant criteria to determine
exclusion of Part I of the Act. Significantly also, he states, the
Supreme Court did not dispose of the OMP No.255 of 2006 but
dismissed the same in its entirety as not maintainable on the ground
of lack of jurisdiction. This conclusion arrived at by the Supreme
Court was based on the seat of arbitration being outside India and the
arbitration agreement between the plaintiff and the defendant being
governed by English law and no part of the reasoning depended on
whether the seat of arbitration was at London or Kuala Lumpur. Mr.
Sibal also pointed out that the plaintiff, in the review petition filed by
it before the Supreme Court, accepts that the issue as to whether the
observations in paras 12 and 13 of the judgment are binding or not
was an arguable one. In fact, it is expressly stated by the plaintiff as
follows:-
"Because law as declared by this Hon'ble
Court is binding under Article 141 of the
Constitution of India, however, in the present
case the order dismissing the petition under
Section 9 of the Arbitration and Conciliation
Act could lead to arguments about the binding
nature of law declared by this Hon'ble Court."
66. Next, adverting to his contention that the observations in paras
12 and 13 of the Supreme Court judgment are in relation to the Indian
Arbitration Act, 1996 which stands excluded, Mr. Sibal, the learned
counsel for the defendant, contended that what the Supreme Court in
fact observed was that while the English Arbitration Act, 1996
allowed parties to alter the seat of arbitration, the Indian Act did not,
as was evident from the following observations in paragraph 13:-
"A reading of the above reproduced provision
shows that under the English law the seat of
arbitration means juridical seat of arbitration,
which can be designated by the parties to the
arbitration agreement or by any arbitral or
other institution or person empowered by the
parties to do so or by the arbitral tribunal, if so
authorised by the parties. In contrast, there is
no provision in the Act under which the arbitral
tribunal could change the juridical seat of
arbitration which, as per the agreement of the
parties, was Kuala Lumpur."
67. Without prejudice to the aforesaid, Mr. Sibal contended that
even if the Supreme Court had made observations with regard to
the seat of arbitration, the same would not operate as res judicata
in view of the fact that the Supreme Court ultimately held that
this Court had no jurisdiction to entertain OMP No.255 of 2006
filed by the plaintiff and pursuant to the Supreme Court judgment,
this Court was pleased to dismiss the said OMP. In support of his
contention that the observations in paras 12 and 13 of the Supreme
Court judgment would not operate as res judicata even as per Indian
Law, reference was made by Mr. Sibal to the decision rendered by the
Supreme Court in Pawan Kumar Gupta vs. Rochiram Nagdeo,
(1999) 4 SCC 243, wherein it was observed as under:- (SCC, at page
250, para 19)
"19. Thus the sound legal position is this: if dismissal
of the prior suit was on a ground affecting the
maintainability of the suit any finding in the judgment
adverse to the defendant would not operate as res
judicata in a subsequent suit."
68. On the basis of the aforesaid observations made in the case of
Pawan Kumar Gupta (supra), it was argued that the observations
made by the Supreme Court in paras 12 and 13 of its judgment are of
no consequence in view of the decision contained in para 20 by which
the OMP pending before the High Court was dismissed as not
maintainable for want of jurisdiction.
69. Referring to the reliance placed by the plaintiff on Explanation
(viii) of Section 11 CPC and the judgment of the Supreme Court
reported in Sulochana Amma (supra), Mr. Sibal, the learned counsel
for the defendant, submitted that the defendant has no quarrel with the
submission of the plaintiff that even if there be a proceeding in a
forum of limited jurisdiction or special jurisdiction, the final decision
on the merits of an issue in that proceeding will be res judicata in a
subsequent proceeding between the same parties, even if the said
forum does not have jurisdiction to entertain the subsequent
proceeding. This proposition, however, has no bearing on the present
case since indubitably the Supreme Court is not a Court of limited or
special jurisdiction.
70. Referring to the consent order dated 06.09.2010 passed in IA
No.4/2010, Mr. Sibal argued that it was open to the Supreme Court to
decide that Indian Courts had jurisdiction to decide the seat and
remand the matter back to the High Court for a decision on which is
the seat of arbitration. It was for this reason that the defendant gave
its consent and for no other. The contention of the learned ASG that
the order on 06.09.2010 pursuant to IA No.4/2010 constitutes an
agreement by the parties that the Supreme Court will decide the issue
of „seat of arbitration‟ is, therefore, wholly fallacious.
71. It was also contended that even otherwise any decision of a
Court passed without jurisdiction is a nullity and such a decision
would not give rise to the bar of res judicata. [Sri
Athmanathaswami Devasthanam vs. K. Gopalaswami Ayyangar,
(1964) 3 SCR 763 at para 14; Hasham Abbas Sayyad vs. Usman
Abbas Sayyad and Others, (2007) 2 SCC 355 at para 22;
Muthavalli of Sha Madhari Diwan Wakf, S.J. Syed Zakrudeen and
Anr. vs. Syed Zindasha and Ors., (2009) 12 SCC 280 at para 19;
Syed Mohd. Salie Labbai (Dead) by L.R.s and Ors. vs. Mohd.
Hanifa (Dead) by L.R.s and Ors., (1976) 4 SCC 780 at para 7.]
72. It was also contended that since an appeal is a continuation of
the original proceeding, the Supreme Court could not have and in
fact did not decide an issue which this Court did not have the
jurisdiction to decide. Emphasis was laid on the following
observations made by the Supreme Court in the case of Rachakonda
Narayana vs. Ponthala Parvathamma & Anr., (2001) 8 SCC 173:
(SCC, at page 178, para 10)
"........................An appeal is a continuation
of the suit. When an appellate Court hears an
appeal, the whole matter is at large. The
appellate Court can go into any question
relating to rights of the parties which a trial
Court was entitled to dispose of provided the
plaintiff possesses that right on the date of
filing of the suit."
73. Rebutting the contentions of the learned Additional Solicitor
General, Mr. Sibal urged that in the instant case it was not open to
the plaintiff to rely either upon „issue estoppel‟ or upon „cause of
action estoppel‟. The defendant had succeeded on the issue
submitted to the Supreme Court that this Court did not have
jurisdiction to entertain OMP No.255 of 2006. Therefore, it was not
open to the plaintiff to plead issue estoppel against the defendant and
in fact issue estoppel was wholly inapplicable to the present case,
more so, in view of the fact that the Supreme Court did not apply the
observations made by it in paras 12 and 13 to arrive at its conclusion
at paras 19 and 20. Insofar as cause of action estoppel is concerned,
he contended that the same was rightly not even pleaded by the
plaintiff.
74. Mr. Sibal urged that it is trite that parties by consent, waiver
or acquiescence cannot confer jurisdiction upon a Court which it
does not possess. A decision made by such a Court is non est. It
was so held in Harshad Chiman Lal Modi vs. DLF Universal Ltd.
and Anr., (2005) 7 SCC 791, wherein the Supreme Court while
classifying the jurisdiction of a Court into three categories, viz., (i)
territorial or local jurisdiction; (ii) pecuniary jurisdiction; and (iii)
jurisdiction over the subject-matter, opined that jurisdiction as to
subject-matter is totally distinct and stands on a different footing,
observing: (SCC, at pages 803-804, paras 30 and 32)
"30. ...............Where a court has no
jurisdiction over the subject-matter of the suit
by reason of any limitation imposed by statute,
charter or commission, it cannot take up the
cause or matter. An order passed by a court
having no jurisdiction is a nullity.
31. ...........................................
32. In Bahrein Petroleum Co., this Court
also held that neither consent nor waiver nor
acquiescence can confer jurisdiction upon a
court, otherwise incompetent to try the suit. It is
well-settled and needs no authority that "where
a court takes upon itself to exercise a
jurisdiction it does not possess, its decision
amounts to nothing." A decree passed by a
court having no jurisdiction is non est and its
invalidity can be set up whenever it is sought to
be enforced as a foundation for a right, even at
the stage of execution or in collateral
proceedings. A decree passed by a court
without jurisdiction is a coram non judice."
75. The sixth contention of the learned counsel for the defendant is
that the present suit is oppressive, abusive, vexatious and malafide
as it is the worst imaginable case of forum shopping by the
plaintiff. In this context, it is submitted that the plaintiff at its own
instance is blatantly forum shopping before three separate
jurisdictions, viz., before the English Court, before the Court at
Malaysia and before this Court. And as a matter of fact, the plaintiff
has all along been forum shopping since the passing of the Partial
Award on 31.03.2005 by challenging the Partial Award in different
fora and has also been forum shopping on the seat of arbitration. It
has been categorically admitted by the plaintiff that the pleas raised
by the plaintiff before this Court and before the English Court are
identical. This form of blatant forum shopping, Mr. Sibal contends,
has invited the disapproval of this Court in the judgment rendered by
a Division Bench of this Court in the case of Essel Sports Pvt. Ltd.
vs. BCCI and Ors., 178 (2011) DLT 465 (DB) in the following
words: (DLT, at page 488, para 27)
"27. Having concurred with the learned Single
Judge that the UK action is a two or multiple
forum lis, we shall venture forward to assess
whether the UK action is oppressive or
vexatious. Mr. Salve's contention in this regard
has already been noted by us above. We agree
that in a commercial dispute, the compulsion to
defend an action in a foreign jurisdiction may
not invariably lead to the conclusion that the
foreign proceedings are oppressive; however,
having to defend the same allegations by the
same party in two different jurisdiction is
unquestionably oppressive."
76. Mr. Sibal next contended that the plaintiff is not entitled to
seek any relief by invoking the equitable jurisdiction of this Court
in view of the blatant concealment and mis-statements made by the
plaintiff before this Court including suppression of documents having
significance to the lis between the parties, such as application for
clarification filed by the plaintiff; plaintiff‟s Notice of Motion and
Memorandum of Appeal filed before the Court of Appeal, Malaysia;
Written Submissions filed by the defendant before the Supreme
Court; plaintiff‟s application dated 12th August, 2010 filed in the
English Court along with affidavit of Mr. David Richard Brynmor
Thomas; affidavits of Ms. Pomila Jaspal, Mr. Partha Sarathi Das and
Ms. Simran Dhir; Case Management Information Sheet of the
plaintiff before the English Court; correspondence between the
plaintiff‟s English counsel and the defendant‟s English counsel
including letters dated 3rd November, 2011, 7th November, 2011, 12th
December, 2011 and 15th December, 2011; order dated 14th
November, 2011 which was a consent order passed by the English
Court fixing the time schedule for the exchange of expert evidence
and the order dated 15th December, 2011 which was also a consent
order passed by the English Court extending the time line to 6 th
January, 2012 for the plaintiff to file its expert evidence.
77. Besides the aforesaid suppression of material documents by the
plaintiff, Mr. Sibal contended that it is malafide and abusive for the
plaintiff to contend that the Supreme Court has conclusively
decided the issue of seat of arbitration despite the fact that the
Special Leave petition was allowed in favour of the defendant and
OMP No.255 of 2006 was dismissed. He contended that the
malafide conduct of the plaintiff was clearly evidenced by the fact
that the plaintiff during the pendency of the present suit filed an
amendment to its Memorandum of Appeal filed in Malaysia
contending that the issue of seat of arbitration is res judicata in view
of the Supreme Court judgment, while there is not a whisper in the
affidavit of the Indian Counsel filed in Malaysia about the actions of
the plaintiff either before the English Court or about the present suit
that has been initiated by the plaintiff against the defendant. Then
again, the malafide conduct of the plaintiff is clearly visible from the
fact that the plaintiff, on one hand, on 12.12.2011 sought an extension
of time from the English Court for filing its expert evidence on the
specific ground of inability to identify such an expert; whereas, on the
other hand, on 13.12.2011 the present suit and application were
verified and affirmed by the plaintiff‟s authorised representative. The
defendant‟s English counsel acting under a bonafide belief and
completely unaware of the filing of the instant suit wrote to the
plaintiff‟s English counsel on 14.12.2011 agreeing to the plaintiff‟s
request for extension of time and the same was recorded in the
consent order dated 15.12.2011. Before this Court, at the hearing on
03.01.2012, the counsel for the plaintiff sought time to file a rejoinder
to the reply filed by the defendant on the ground that although the
rejoinder had been prepared, the same was awaiting comments from
the Union of India. When the said rejoinder was served upon the
counsel for the defendant on 04.01.2012, the defendant‟s counsel
found to his utter shock and surprise that the said rejoinder had been
verified and affirmed by the deponent therein on 02.01.2012.
78. On the aspect of irreparable injury and balance of convenience,
it was contended on behalf of the defendant that the plaintiff cannot
be heard to say that it would suffer irreparable injury or that the
balance of convenience is in its favour to justify an injunction to
prevent hearing of its own application. In contrast, unless and until
the plaintiff‟s application is heard and disposed of by the English
Court, the defendant‟s claim will not be adjudicated. Dates before the
English Court have been fixed with the plaintiff‟s consent and with
great difficulty. There is no reason for the plaintiff to contend that it
would suffer irreparable injury if the hearing takes place on the dates
fixed. In contrast, the defendant would suffer irreparable injury in the
event the dates granted by the English Court were to be lost as the
proceedings would be further delayed indefinitely. Moreover, till
date, all steps in the English proceedings have been taken with the
consent of the plaintiff. Even today, until the order of 23.12.2011,
there has not been a single letter by the plaintiff to the English Court
protesting against the jurisdiction of the English Court to determine
its own jurisdiction, including the issue of res judicata.
79. Mr. Sibal, the learned counsel for the defendant, also contended
that the judgments cited on behalf of the plaintiff have no application
to the facts of the present case as is clear from the following:-
(i) The decision in Venture Global Engineering (supra) is
distinguishable on the ground that the law of the arbitration
agreement had not been specified in the said case whereas in
the present Arbitration Agreement, English Law has been
specified as the governing law.
(ii) The decision in Pioneer Publicity Corporation (supra) dealt
with the validity of termination of a contract by DTC without
any justification. The facts of this case are entirely
disconnected and irrelevant to the issue in the present case.
(iii) The judgments relating to res judicata, viz., Satish Nambiar
(supra), Ishwar Dutt (supra), Swamy Atmananda (supra), M.
Nagabhushana (supra), Hope Plantation Ltd. (supra),
Makhija Construction and Engineering Private Limited
(supra) and S. Nagaraj (supra) have no application because
the appropriate Court to decide whether the claim filed in the
English Court is barred by res judicata is the English Court.
The judgment in Swamy Atmananda (supra), which lays down
that "if a Court lacks inherent jurisdiction, its judgment would
be a nullity and thus principles of res judicata which is in the
domain of procedure will have no application", supports the
defendant‟s case that the observations in paras 12 and 13 of the
Supreme Court judgment do not bar the English claim on
grounds of res judicata.
(iv) The judgment in K.K. Modi (supra), which lays down that it is
an abuse of the process of the Court and contrary to justice and
public policy for a party to re-litigate the same issue which has
already been tried and decided earlier against him, has no
application. In the present case, the issue of „seat of
arbitration‟ has not been tried and decided against the
defendant in the judgment of the Supreme Court.
(v) In Munib Masri‟s case (supra), the Judgment Debtor having
suffered a judgment on merits in England, intentionally filed
parallel proceedings in other countries, including in Yemen in
an attempt to obtain a decision in conflict with the English
judgment. The Decree Holder did not have the protection of
reciprocal arrangements for enforcing the English judgment
and thus the Judgment Debtor sought to take illegitimate
advantage of this fact. The Court of Appeal in the Munib
Masri‟s case (supra) in fact declined to grant anti-suit
injunction in respect of countries which were parties to the
Lugano Convention.
(vi) The decision in Rupa Ashok Hurra (supra) is irrelevant as the
said case relates to the powers of the Supreme Court under
Article 142 of the Constitution of India and no reliance has
been placed on Article 142 on behalf of the Union of India in
the present suit.
(vii) The judgment in Kunhayammed (supra), on which the plaintiff
relies, in paragraph 13 contains an exposition of the scope of
Article 136 which is not relevant to the present case, where the
matter was heard as a Civil Appeal after granting leave to
appeal under Article 136.
(viii) The judgment in Oil and Natural Gas Commission (supra)
relating to stay of foreign proceedings supports the case of the
defendant rather than the plaintiff. The arbitration clause in
ONGC was governed by Indian Law specifically the
Arbitration Act, 1940 and, therefore, the Court held that the
appropriate Courts to decide any dispute relating to the
arbitration clause were Indian Courts, and the filing of an
action for confirming the award in a US Court was contrary to
the contract and hence abusive. In the present case, the
arbitration clause is governed by English Law and on the
reasoning of ONGC, the present plaint which seeks to restrain
approach to the English Court to resolve disputes relating to the
arbitration clause is abusive.
(ix) The decision in A.P. State Financial Corporation (supra)
relating to the „Doctrine of Election‟ does not help the plaintiff
in view of the fact that the plaintiff had earlier elected to pursue
the remedy in the English Court and cannot be permitted to
pursue the same remedy in parallel proceedings before this
Court in the present suit.
FINDINGS
80. Before I venture to render my findings on the rival contentions
of the parties, a few glaring facts and the inferences to be drawn
therefrom deserve to be highlighted:-
(i) In the present case, the defendant has admitted that the
Supreme Court has decided the issue of „juridical seat of
arbitration‟ but the contention of the defendant is that the said
decision would not be binding because it is merely by way of
obiter. This is clear from the following extract from paragraph
15 of the written statement:-
"..................Therefore, in the respectful
submission of the Defendant, as the
observations on seat of arbitration were not
necessary to arrive at a final decision of
exclusion of Part-I of the Arbitration and
Conciliation Act, 1996, the aforesaid judgment
of the Hon‟ble Supreme Court of India on the
aspect of seat of arbitration, is by way of
obiter."
(ii) The defendant in paragraph 7 of its written statement filed in
the present suit has stated:-
"................ as of today, the Plaintiff is also
bound by the said decision of High Court of
Malaya at Kuala Lumpur. Accordingly,
granting any interim reliefs as prayed for by the
Plaintiff qua the English Court proceedings
would not curtail the likelihood of conflicting
judgment as suggested by the Plaintiff. For the
reasons that the conflict if any is already in
existence between the judgment dated 5th
August, 2009 of the High Court of Malaya at
Kuala Lumpur and the judgment dated
11.05.2011 of the Hon'ble Supreme Court
which, in the contention of the Plaintiff
operates as res judicata on the issue of seat of
arbitration................."
(iii) In the Special Leave Petition filed by the defendant before the
Supreme Court, the defendant explicitly submitted that the
learned Single Judge who decided OMP No.255/2006 had
committed an error in law in that he had failed to appreciate
that it was incumbent upon him to have first determined the
seat of arbitration before determining the question as to
whether this Court had jurisdiction (the seat of arbitration
having shifted to London). The following extracts from the
grounds taken in the Special Leave Petition filed by the
defendant before the Supreme Court may be referred to in this
context:-
GROUND E(iii)
"That assuming that the Arbitration Agreement
was silent on the choice of curial law, it is not
the law governing the contract that will govern
the arbitration proceedings, but it is the law of
the seat of the arbitration that will govern the
conduct of the arbitration proceedings."
GROUND N
"..............Moreover, the learned Single Judge
has been unable to appreciate that in
determining jurisdiction, the first issue to be
determined is where the seat of the arbitration
lies. Upon such determination, it is mandatory
for the courts of that country to exercise
jurisdiction over the Arbitration Agreement and
the proceedings.............."
GROUND X
"FOR THAT the learned Single Judge has
recorded submissions of the Petitioner but
failed to deal with such submissions or has
erroneously rejected the same. In this regard,
it is submitted as follows:
i. That the Respondents willfully
suppressed the material fact that the
Arbitral Tribunal had shifted the seat of
the arbitration with consent of both
parties vide order dated 15.11.2003. The
said order was neither pleaded nor
annexed with O.M.P. No.255 of 2006 and
accordingly, the Respondent No.1 had
willfully suppressed the said document
on which ground O.M.P. No.255 of 2006
was liable to be dismissed. It is
submitted that though the
aforementioned submission as well as the
response of the Respondent No.1 to the
same has been recorded, the learned
Single Judge has not made any finding
on whether there had been willful
suppression by the Respondent No.1.
The gravity of such an omission cannot
be over stated as the Petitioner had
submitted that such suppression rendered
O.M.P. No.255 of 2006 liable to be
dismissed on that ground alone.
ii. That Respondent No.1 was estopped
from contending that the seat of the
arbitration continues to be at Kuala
Lumpur as the Respondent No.1 had
consented to the shift of the seat of
arbitration to London and had
participated in all arbitration
proceedings at London till 31.03.2005.
No hearings were ever held at Kuala
Lumpur. These aspects were not dealt
with in the Order."
GROUND AA
"FOR THAT the learned Single Judge has
erroneously recorded in paragraph 2.6 of the
impugned Order that as Kuala Lumpur was
reportedly struck by the epidemic SARS, the
arbitral tribunal shifted the venue of
arbitration from Kuala Lumpur to Amsterdam
and later to London. It is respectfully
submitted that the shift from Kuala Lumpur to
Amsterdam was not on the same footing as the
shift to London. The correct position as has
been submitted is as follows:
i. The first arbitration hearing was fixed to
be held at Kuala Lumpur but due to
outbreak of the SARS epidemic in South
East Asia, the venue was changed to
Amsterdam vide Order dated 24.04.2003.
The seat of the arbitration continued to
remain at Kuala Lumpur, however, for
convenience, the next hearing was to take
place at Amsterdam.
ii. The next date of hearing at Amsterdam
was fixed as 30.06.2003 vide Order
dated 13.05.2003. This was the first
hearing of the arbitration and thus, no
hearing ever took place at Kuala Lumpur
and this remains the position even today.
iii. Thereafter, vide Order dated 04.08.2003,
the next hearing was fixed for London.
iv. Vide Order dated 15.11.2003, it was
recorded that by consent of parties, the
seat of the arbitration was shifted to
London.
It is submitted that the errors stated above go
to the root of the impugned Order as the
manner in which the facts with regard to the
shift of the seat of the arbitration to London
have been recorded clearly reflects that the
Learned Single Judge has been unable to
appreciate the consequences of the Order
dated 15.11.2003 of the Arbitral Tribunal. It
is further submitted that if the sitting at London
was merely for convenience, then the Order of
04.08.2003 was sufficient. There was no need
for a separate order recording consent of the
parties to shift the arbitral seat to London
which was in accordance with Article 34.12 of
the PSC and Section 3 of the English Act.
These relevant facts have been completely
ignored and omitted by the Learned Single
Judge which is self evident from the manner in
which facts have been recorded."
GROUND FF
"...............The petitioner had challenged the
maintainability of the petition on the following
grounds:-
i. That Section 5 of the Act does not
contemplate judicial intervention of the
nature as prayed for.
ii. The Respondent No.1 has suppressed
material facts from this Court.
iii. That reliefs prayed for were beyond the
scope of Section 9 of the Act.
iv. The reliefs sought were permanent in
nature which was beyond the scope of
Section 9 of the Act.
v. That the Respondent No.1 is estopped
from contending that the seat of the
arbitration continues to be at Kuala
Lumpur.
It is submitted that the learned Single Judge has
demonstrated complete non-application of mind
by failing to consider the submissions of the
Petitioner, which were not limited only to
jurisdiction, as stated above. It is submitted
that this non-application of mind goes to the
root of the decision and renders the impugned
Order liable to be set aside on this ground
alone............"
(iv) It was while the Special Leave Petition was pending in the
Supreme Court that the defendant in October, 2009 moved the
High Court of Justice, Queen‟s Bench Division, Commercial
Court, London seeking a declaration that „The seat of the first
and third arbitration is in London‟. The order dated
20.10.2009 of the London Court directed the defendant to serve
Union of India as soon as possible and practicable. However,
the service of notice in the said Claim Petition No.2009, Folio
No.1382 was got effected by the defendant on the plaintiff
about six months later in the month of April, 2010.
(v) The plaintiff thereupon on 10th August, 2010 moved the
Supreme Court by way of IA No.4/2010 in the pending appeal
and almost simultaneously, i.e., on 12th August, 2010 filed an
application before the London Court stating that the issue of
juridical seat is being contested in proceedings elsewhere, i.e.,
in the Supreme Court of India. It was specifically stated
therein as under:-
"I understand that the Government of India
will separately be taking up this issue with the
Supreme Court in India."
(vi) Simultaneously, the plaintiff‟s solicitors also wrote to the
defendant‟s solicitors vide letter dated 12th August, 2010
clearly stating:-
"For the avoidance of doubt, this letter and
our client‟s application are not a submission
to the jurisdiction of the Courts of England
and Wales."
(vii) On 11.05.2011, the judgment of the Supreme Court was
pronounced and soon thereafter, i.e., on 02.06.2011, a letter
was written on behalf of the plaintiff requesting the defendant
to withdraw the proceedings initiated before the London Court
in view of the Supreme Court judgment.
(viii) On 8th June, 2011, a draft letter addressed to the Commercial
Court Listing Office, The Royal Courts of Justice was sent by
the defendant with a copy to the plaintiff‟s solicitors seeking to
re-commence the proceedings before the English Court, to
which the plaintiff replied by letter dated 14.06.2011 asking the
defendant‟s solicitors to indicate the basis on which the
defendant proposed to continue their proceedings before
the London Court after the final judgment of the Supreme
Court that the juridical seat of the arbitration (as opposed
to the physical change to London) remained Kuala
Lumpur.
(ix) In reply to the letter dated 14.06.2011, the defendant‟s
solicitors by letter dated 22.06.2011 specifically wrote to state
that any legal issue arising from the judgment of the Indian
Supreme Court were matters for the English Court to
determine. Since this letter is significant, the relevant portion
is reproduced hereunder for the sake of ready reference:-
"Accordingly, we do not see any reason for the
present proceedings to be held in abeyance.
Alternatively, if you are suggesting that the
decision of the Supreme Court is simply
another matter to which the Court should have
regard, then we agree that a copy of the
decision should be included in the hearing
bundle................."
"Under instructions, we further inform you that
our client will proceed to serve the Court with a
communication for the stay of the proceedings
to be lifted in the event that your client
continues to insist that the present proceedings
have become unnecessary. Any legal issue
arising from the judgment of the Indian
Supreme Court are matters for the English
Court to determine................."
(x) The order dated 14.11.2011 passed by the English Court clearly
recorded as under:-
"For the avoidance of any doubt, neither this
Order nor anything done pursuant to or in
accordance with it shall constitute or give rise
to any submission by the Defendant to the
jurisdiction of the English Court or prejudice
in any way the Defendant‟s challenge to that
jurisdiction."
(xi) Significantly, the draft order circulated in the first instance by
the defendant‟s counsel did not include the above clause which
was put in the English Court‟s order at the specific request of
the plaintiff‟s solicitor.
81. From the aforesaid conspectus of facts, in my considered
opinion, it is amply clear that the consistent stand of the plaintiff has
been that the English Court does not have jurisdiction to go into the
issue of „juridical seat of arbitration‟ and cannot assume jurisdiction
which it does not otherwise possess. It is also borne out from the
record that all the proceedings on behalf of the plaintiff (defendant
before the London Court) were without prejudice to its
aforementioned stand and there is no question of the plaintiff‟s
submission to the English Court for seeking adjudication on the issue
of res judicata as suggested by the defendant. This is also borne out
by the letter dated 29.06.2011 written by the plaintiff‟s solicitors to
the defendant, wherein it is clearly stated as under:-
"On that basis and without prejudice to the res
judicata point, we consent to a hearing being
listed for a mutually convenient date............"
82. Merely because the plaintiff participated in the Case
Management Conference and filed witness statements would not, in
my view, preclude the plaintiff from filing the present suit. More so,
when the English Court itself recorded: "For the avoidance of any
doubt, neither this Order nor anything done pursuant to or in
accordance with it shall constitute or give rise to any submission
by the Defendant to the jurisdiction of the English Court or
prejudice in any way the Defendant‟s challenge to that
jurisdiction". In such circumstances, for the defendant to contend
that the plaintiff voluntarily submitted to the jurisdiction of the
English Court would be against the record of the English Court.
83. The Special Leave Petition filed by the defendant before the
Supreme Court also bears out the contention of the plaintiff that the
defendant invoked the jurisdiction of the Supreme Court to rule on
the juridical seat of arbitration, which issue it claimed went to the root
of the matter. That there was a tacit understanding that with the
consent of the parties the Supreme Court would rule on the juridical
seat of arbitration is also borne out by the order dated 06.09.2010
passed by the Hon‟ble Supreme Court on the plaintiff‟s application,
being IA No.4/2010, which reads as under:-
"Learned senior counsel appearing on behalf of
the parties agreed that subject to completion of
pleadings in the proceedings pending in both
the courts in England as well as in Malaysia,
neither the petitioner nor the respondent will
proceed/take any proactive steps for hearing in
the proceedings/applications pending in the
Court in England as well as in the Court in
Malaysia, till the disposal of the present SLP.
In view of the aforesaid submission, I.A. No.4 is
disposed of recording the same."
84. Thus, while on the one hand the plaintiff submitted to the
jurisdiction of the English Court without prejudice to its contention
that by reason of the judgment of the Supreme Court the issue of
juridical seat of arbitration was no longer open for examination, the
defendant invoked the jurisdiction of the Supreme Court of India to
decide upon the issue of the juridical seat of arbitration, which it
stated went to the root of the matter. Faced with a finding from the
Supreme Court that London was not the agreed juridical seat of
arbitration, the defendant took a somersault and adopted the stand that
any legal issue arising from the judgment of the Indian Supreme
Court was a matter for the English Court to determine. It is worth
mentioning, at the risk of repetition, that although the defendant in
October, 2009 had moved the High Court of Justice, Queen‟s Bench
Division, Commercial Court, London seeking a declaration that "The
seat of the First and Third Arbitrations is in London", apparently
it deliberately chose not to serve notice of the said Claim Petition
upon the plaintiff until April, 2010, despite the order of the London
Court to serve the Union of India as soon as practicable. This is
clearly reflective of the fact that the defendant had sought the
aforesaid declaration from the English Court only by way of abundant
precaution. It was on 11.11.2009 that submissions were made by the
parties before the Hon‟ble Supreme Court on the issue of juridical
seat and the judgment was reserved by the Supreme Court and it was
not until 21st April, 2010 that the plaintiff was served with notice of
the filing of the Claim Petition No.2009, Folio No.1382 pending in
the London Court.
85. Even thereafter, it is noteworthy that the defendant consented
to the Supreme Court ruling on the issue of juridical seat of
arbitration as is evident from the order dated 06.09.2010, whereby the
defendant consented not to take any proactive steps for the hearing of
its claim petition pending in the Court in England till the disposal of
the SLP. However, finding that the decision in the SLP rendered on
11.05.2011 was in favour of the plaintiff, the defendant immediately
re-commenced proceedings at London and adopted the stand that it
disagreed with the plaintiff‟s position that the decision of the
Supreme Court of India had "finally and conclusively" decided the
issue pending before the English Court. The very fact that the
defendant consented before the Supreme Court not to pursue its
Claim Petition in London for declaration of the seat of arbitration, in
my view, speaks volumes of the hope and expectation entertained by
the defendant that the Supreme Court would eventually rule that the
juridical seat of arbitration had shifted from Kuala Lumpur to London
in view of the order of the Arbitral Tribunal dated 15th November,
2003. The said hope and expectation having been dashed, the
defendant adopted the stance that the legal issues determined by the
Indian Supreme Court were matters for the English Court to
determine.
86. A look at the judgment of the Supreme Court would suffice to
show that the issue of seat of arbitration stood adjudicated by the
judgment of the Supreme Court and the Supreme Court intended the
said adjudication to be final and binding between the parties. Further,
the said issue was addressed before the Supreme Court by both the
parties and decided upon by the Supreme Court as the first question
raised before it. In para 9 of its judgment, the Supreme Court noted
that Shri Nariman had argued that after having expressly consented to
the shifting of the seat of arbitration from Kuala Lumpur to
Amsterdam in the first instance and effectively taken part in the
proceedings held at London till 31.03.2005, the respondent No.1
(Union of India) was estopped from claiming that the seat of
arbitration continued to be at Kuala Lumpur. In para 10 of its
judgment, the Supreme Court noted the counter argument of the
learned Solicitor General as follows:-
"10. Shri Gopal Subramaniam, learned
Solicitor General submitted that as per the
arbitration agreement which is binding on all
the parties to the contract, a conscious decision
was taken by them that Kuala Lumpur will be
the seat of any intended arbitration, Indian law
as the law of contract and English law as the
law of arbitration and the mere fact that the
arbitration was held outside Kuala Lumpur due
to the outbreak of epidemic SARS, the venue of
arbitration cannot be said to have been
changed from Kuala Lumpur to London.
Learned Solicitor General emphasised that
once Kuala Lumpur was decided as the venue
of arbitration by written agreement, the same
could not have been changed except by
amending the written agreement as provided in
Clause 35.2 of the PSC. He then argued that
the arbitral tribunal was not entitled to
determine the seat of arbitration and the record
of proceedings held on 15.11.2003 at London
cannot be construed as an agreement between
the parties for change in the juridical seat of
arbitration. He further argued that the PSC was
between the Government of India and ONGC
Ltd., Videocon Petroleum Ltd., Command
Petroleum (India) Pvt. Ltd. and Ravva Oil
(Singapore) Pvt. Ltd. and, therefore, the venue
of arbitration cannot be treated to have been
changed merely on the basis of the so called
agreement between the appellant and the
respondents. Learned Solicitor General
submitted that any change in the PSC requires
the concurrence by all the parties to the
contract and the consent, if any, given by two of
the parties cannot have the effect of changing
the same. He then argued that every written
agreement on behalf of respondent No. 1 is
required to be expressed in the name of the
President and in the absence of any written
agreement having been reached between the
parties to the PSC to amend the same, the
consent given for shifting the physical seat of
arbitration to London did not result in change
of juridical seat of the arbitration which
continues to be Kuala Lumpur................."
In paragraph 12 of its judgment, the Supreme Court
significantly observed:-
"We shall first consider the question whether
Kuala Lumpur was the designated seat or
juridical seat of arbitration and the same had
been shifted to London."
The Supreme Court then went on to observe as follows:-
"In terms of Clause 34.12 of the PSC entered
into by 5 parties, the seat of arbitration was
Kuala Lumpur, Malaysia. However, due to
outbreak of epidemic SARS, the arbitral
tribunal decided to hold its sittings first at
Amsterdam and then at London and the parties
did not object to this. In the proceedings held
on 14th and 15th October, 2003 at London, the
arbitral tribunal recorded the consent of the
parties for shifting the juridical seat of
arbitration to London. Whether this amounted
to shifting of the physical or juridical seat of
arbitration from Kuala Lumpur to London?
The decision of this would depend on a
holistic consideration of the relevant clauses
of the PSC. Though, it may appear repetitive,
we deem it necessary to mention that as per
the terms of agreement, the seat of arbitration
was Kuala Lumpur. If the parties wanted to
amend Clause 34.12, they could have done so
only by written instrument which was required
to be signed by all of them. Admittedly, neither
there was any agreement between the parties to
the PSC to shift the juridical seat of arbitration
from Kuala Lumpur to London nor any written
instrument was signed by them for amending
clause 34.12. Therefore, the mere fact that the
parties to the particular arbitration had agreed
for shifting of the seat of arbitration to
London cannot be interpreted as anything
except physical change of the venue of
arbitration from Kuala Lumpur to
London..............."
87. Thereafter, the Supreme Court proceeded to examine the
provisions of the English Arbitration Act in juxtaposition to the
provisions of the Arbitration and Conciliation Act, 1996. In
paragraph 13, it held that under the English law the seat of arbitration
means juridical seat of arbitration, which can be designated by the
parties to the arbitration agreement or by any arbitral or other
institution or person empowered by the parties to do so or by the
arbitral tribunal, if so authorised by the parties. In contrast, it was
held, there is no provision in the Act (Arbitration and
Conciliation Act, 1996) under which the Arbitral Tribunal could
change the juridical seat of arbitration which, as per the
agreement of the parties, was Kuala Lumpur.
It concluded:-
"Therefore, mere change in the physical
venue of the hearing from Kuala Lumpur to
Amsterdam and London did not amount to
change in the juridical seat of arbitration."
88. In the very next paragraph, i.e., paragraph 14, the Supreme
Court referred to the following passage from Redfern v. Hunter:-
"The preceding discussion has been on the
basis that there is only one "place" of
arbitration. This will be the place chosen by or
on behalf of the parties; and it will be
designated in the arbitration agreement or the
terms of reference or the minutes of
proceedings or in some other way as the place
or "seat" of the arbitration. This does not mean,
however, that the arbitral tribunal must hold all
its meetings or hearings at the place
of arbitration. International commercial
arbitration often involves people of many
different nationalities, from many different
countries. In these circumstances, it is by no
means unusual for an arbitral tribunal to hold
meetings - or even hearings - in a place other
than the designated place of arbitration, either
for its own convenience or for the convenience
of the parties or their witnesses....
It may be more convenient for an arbitral
tribunal sitting in one country to conduct a
hearing in another country - for instance, for
the purpose of taking evidence.... In such
circumstances, each move of the arbitral
tribunal does not of itself mean that the seat of
the arbitration changes. The seat of the
arbitration remains the place initially agreed
by or on behalf of the parties."
89. From paragraph 15 onwards, the Supreme Court considered the
next issue as to "whether the Delhi High Court could entertain the
petition filed by the respondents under Section 9 of the Act" and held
that the three-judge Bench in Bhatia International (supra) and the
two-judge Bench in Venture Global Engineering (supra) would not
apply on account of the fact that in the present case the parties had
expressly agreed to exclude the provisions of Part I of the Act by
providing that the Arbitration Agreement contained in Article 34 shall
be governed by the laws of England notwithstanding Article 33.1. As
a corollary, it was held, the Delhi High Court did not have jurisdiction
to entertain the petition filed by the respondents under Section 9 of
the Act.
90. Thus, in effect, what the Supreme Court held in the former part
of its judgment was that the governing law of the arbitration would be
Indian Law, as is clear from its finding that the Production Sharing
Contract would be governed by Indian Law and it could not be varied
to amend Clause 34.12 of the contract, which provided for the
juridical seat to be at Kuala Lumpur, except by written instrument
to be signed by all the parties. In the latter part of its judgment, it
held that the Arbitration Agreement contained in Article 34 would be
governed by the laws of England, thereby excluding the applicability
of Part I of the Arbitration and Conciliation Act, 1996 and the
jurisdiction of the Indian Courts to rule upon matters relating to the
conduct of arbitration proceedings. It also clarified that regardless of
the venue of arbitral sittings, the arbitral seat would remain at Kuala
Lumpur; that the English Law was different in this regard from Indian
Law inasmuch as under the English Law the parties to the arbitration,
the arbitral tribunal or any other person or institution vested with the
power to do so could change the seat of arbitration. In contrast, a
provision made in a contract governed by Indian Law for the juridical
seat of arbitration could not be changed under the Arbitration and
Conciliation Act, 1996, except by amendment of the contract itself.
In Indian Law, there was no provision parallel to Section 3 of the
English Arbitration Act.
91. It is thus clear that the Supreme Court in its aforesaid judgment
clarified beyond an iota of doubt the governing law of the contract,
the curial law and the distinction between the seat of arbitration and
the venue of arbitration with a view to ensure that the arbitral
proceedings were not stultified, delayed or abandoned. This the
Court did at the behest and with the consent of the parties as is
evident from the whole tone and tenor of the judgment. To render
such a judgment susceptible to examination by a Court of foreign
jurisdiction with the attendant risk of its overturning the judgment
would, in my opinion, be against all settled principles of legal
jurisprudence relating to international commercial arbitration,
including principles governing the comity of nations, and would
render otiose the judgment of the highest Court of this land. To be
noted at this juncture that the English Court has required the parties to
tender "expert evidence" on the Supreme Court judgment, which
concept itself is repugnant to Indian Law under which the sky is the
limit of the powers of the Supreme Court and any law laid down by it
is final and conclusive.
92. The plaintiff has instituted the present suit predicated on the
doctrine of res judicata, which has been clearly enunciated and
reiterated by the Supreme Court, time and again, and is based on the
twin principles (i) that there should be an end to litigation, and (ii)
that no person should be vexed twice for the same cause. Both the
said principles, in my view, will be wholly negated if the defendant is
permitted to drag the Union of India to the English Court for the re-
determination of the question of issue of the juridical seat and it is
this re-commencement of the proceedings which is sought to be
injuncted by filing the present suit.
93. The plaintiff contends, and I think rightly so, that re-agitation
of the question of seat of arbitration authoritatively pronounced upon
by the Supreme Court would constitute abuse of the process of law
and undoubtedly render the foreign proceedings vexatious and
oppressive due to the attendant consequences. One consequence as
noted above is that the English Court may come to the conclusion that
the principle of res judicata has no application. It would then be open
to the English Court to re-examine the issue of juridical seat and quite
obviously come to a conclusion contrary to that arrived at by the
Supreme Court of India. This would undoubtedly result in a
stalemate of the arbitration proceedings with the plaintiff insisting
that the juridical seat of arbitration remains in Kuala Lumpur and the
defendant proceeding with the matter in the English Court. Such a
situation would lead to a virtual impassé in the arbitral proceedings
and possibly an abrupt end to the arbitration, thereby placing the
whole claim of the Union of India in jeopardy.
94. It is important to note at this juncture, at the risk of repetition,
that the Hon‟ble Supreme Court observed that under the Production
Sharing Contract between the parties, the Indian Law has been given
primacy and it has been specifically laid down in Article 33.2 that
nothing in the contract shall entitle the defendant/contractor to
exercise the rights, privileges and powers conferred upon it by this
contract in a manner which will contravene the laws of India. It was
also noted by the Supreme Court that Article 33.1 also emphasizes
that the contract shall be governed and interpreted in accordance with
the laws of India, and that Article 34.12 which pertains to the law
governing the Arbitration Agreement and the seat of arbitration is an
overriding provision qua Article 33.1; however, the said Article 34.12
does not override Article 33.2. Thus, the contract clearly lays down
that contravention of the laws of India is wholly impermissible. Res
judicata which encompasses within its fold the principle of issue
estoppel is an intrinsic part of the laws of India and its public policy.
Conversely, the underlying object behind the doctrine of res judicata
and issue estoppel is the public policy of India. Due regard to the
laws of India and its public policy must, therefore, in my view, be
held to be of paramount importance.
95. The defendant‟s reliance on the judgment of National Thermal
Power Corporation (supra) is also misplaced as the governing law in
the present case is Indian Law under Article 33 and by virtue of
Article 34.12, Article 33.2 which provides that the Laws of India shall
not be contravened is the overriding provision. The defendant in its
written statement itself admits that it is not in any manner claiming
anything inconsistent with Indian Law. In any event, the present suit
is based on breach of contract and vexatious and oppressive
proceedings. The plaintiff in the present suit is not seeking
adjudication with respect to the seat of arbitration or the applicability
of law. That part stands adjudicated by the judgment of the Supreme
Court.
96. Significantly, the Supreme Court in the case of Laxman
Prasad vs. Prodigy Electronics Ltd., (2008) 1 SCC 618 after
considering the National Thermal Power Corporation judgment held
as under:- (SCC, at page 625, para 30)
"30. We find considerable force in the
submission of the learned counsel for the
respondent Company. In our view, "cause of
action" and "applicability of law" are two
distinct, different and independent things and
one cannot be confused with the other."
97. Further, as regards the contention of the defendant that an order
of anti-suit injunction ought not to be granted as it would transgress
the norms of judicial comity, indubitably the settled position in law is
that an anti-suit injunction should be granted only if there is an
impending risk of conflicting judgments and, if and only if the
proceedings in the Court of foreign jurisdiction would perpetuate
injustice. This Court is not oblivious to the fact that while granting
anti-suit injunction it must tread cautiously having regard to all the
facts and circumstances of the case, but this Court is also mindful of
the fact that an anti-suit injunction operates against the party
concerned and not against the court of foreign jurisdiction.
Moreover, this Court cannot turn a blind eye to the vexation and
oppression which would be caused to the plaintiff by compelling it to
re-litigate on an issue upon which the Supreme Court has given its
final and conclusive determination. To compel it to do so would
constitute the worst imaginable case of abuse of the process of the
Court, besides giving a complete go-by to the principle of res judicata
and issue estoppel which govern the public policy of India.
98. Reference may be made to the decision of Supreme Court
rendered in M/s. V.O. Tractoroexport, Moscow vs. M/s. Tarapore
and Company and Anr. 1969 (3) SCC 562, wherein it was observed
as follows:
"The rule as stated in Halsbury's Laws of
England, Vol. 21, at page 407, is that with
regard to foreign proceedings, the court will
restrain a person within its jurisdiction from
instituting or prosecuting suits in a foreign
court whenever the circumstances of the case
make such an interposition necessary or,
proper. This jurisdiction will be exercised
whenever there is vexation or oppression. In
England, Courts have been very cautious and
have largely refrained from granting stay of
proceedings in foreign Courts (Cheshire's
Private Industrial Law, 7th Ed. pages 108-110).
The injunction is, however, issued against a
party and not a foreign court."
99. Then again, while there can be no quibble with the proposition
that the principle of Comity of Nations must always remain in the
forefront of the judicial mind while ruling upon a matter relating to
international commercial arbitration and England being a
reciprocating territory, the English Courts must be given due
deference, it cannot also be lost sight of that issue estoppel will
operate in a case where the highest court of this country has rendered
its findings on a particular issue. To render the said findings open to
re-examination and a re-look by a Court of foreign jurisdiction, even
if it be a friendly foreign court, with the obvious intent from the side
of the defendant to have the said findings reversed by the foreign
court would be against all principles of Comity of Nations. In my
view, the Supreme Court of India having rendered a decision on an
issue, the Comity of Nations requires that due regard be given to the
said decision and it must be held that the said decision ought not to be
rendered susceptible to being declared non est by a Court of foreign
jurisdiction. This would be undermining the significance of the
judgment rendered by the highest Court of the country and the
authoritative nature thereof, and that too at the behest of the defendant
for its own limited ends.
100. A distinction deserves to be noted at this juncture between res
judicata and precedent in view of the defendant‟s plea that though the
Supreme Court has decided the issue of juridical seat of arbitration,
the said decision would not be binding because it was merely by way
of obiter. Placing the principle of res judicata on a higher pedestal
than precedent, the Supreme Court in Makhija Construction and
Engineering Private Limited (supra) held that a precedent operates
to bind in similar situations in a distinct case, whereas res judicata
operates to bind parties to proceedings for no other reason but that
there should be an end to litigation. Further, in the case of S. Nagaraj
(supra), the Supreme Court pertinently noted that the question
whether the decision is correct or erroneous has no bearing upon the
question whether it operates or does not operate as res judicata. The
Court also noted that the High Court had failed to appreciate that the
principle of per incurium has relevance to the doctrine of precedent
but has no application to the doctrine of res judicata. Thus, quite
clearly the principles relating to precedent, per incurium, obiter
and the like have no application to the doctrine of res judicata,
which is governed by cause of action estoppel and issue estoppel in
order to ensure the attainment of finality, which is the ultimate object
of all civilized systems of jurisprudence, for, otherwise legal
ingenuity would ensure the unending and vexatious pursuit of a claim
even if it is wholly spurious. Litigation would then become
equivalent to an open and festering wound, rendering every decision
open to being impeached collaterally, turning judicial discipline into a
dead letter.
101. Further, the reliance placed by the learned counsel for the
defendant on the case of Pawan Kumar Gupta (supra) is also wholly
misplaced. The observation of the Supreme Court in the said case
that "if dismissal of the prior suit was on a ground affecting the
maintainability of the suit any finding in the judgment adverse to the
defendant would not operate as res judicata in a subsequent suit"
cannot be read in isolation and the judgment must be read in its
entirety. In the very same judgment the Supreme Court held that
there was "no hurdle in law for the defendant to file an appeal
against the judgment and decree in that first suit as he still disputed
the decisions on such contested issues." Admittedly, the defendant in
the present case did not file any review against the judgment dated
11.05.2011 of the Supreme Court. The second and important point of
distinction is that in the said case the Court was not dealing with an
order passed by the Supreme Court.
102. The defendant‟s reliance on the judgment in Sri
Athmanathaswami Devasthanam (supra) is also inapt for the same
reason, namely, in view of the all-encompassing jurisdiction of the
Supreme Court to decide any issue raised before it. Likewise, the
reliance placed by the defendant upon the judgments of Hasham
Abbas Sayyad (supra) and Muthavalli of Sha Madhari Diwan Wakf
(supra) is misplaced, as in the present case the order was passed by
the Supreme Court itself and it cannot be said that the Supreme Court
lacked jurisdiction. In any case, the question whether the judgment of
the Supreme Court is without jurisdiction can only be gone into by
the Supreme Court itself and cannot be raised in collateral
proceedings. Reliance on the judgment of Rachakonda Narayana
(supra) is also of no avail to the defendant as in the said case it was
laid down that the appellate court can go into any question relating to
the rights of parties which a trial court was entitled to dispose of, an
appeal being a continuation of a suit. To be noted that the said
decision is not on the issue of res judicata and the aforesaid
observations were made by the Supreme Court in the context of
powers of appellate courts and not with reference to its own powers.
103. The judgment in Syed Mohd. Salie Labbai (supra) relied upon
by the defendant is in fact in favour of the plaintiff. It categorically
lays down that before a plea of res judicata can be given effect to, the
following conditions must be fulfilled:-
"(1) that the litigating parties must be the
same;
(2) that the subject-matter of the suit also
must be identical;
(3) that the matter must be finally decided
between the parties; and
(4) that the suit must be decided by a court of
competent jurisdiction."
All the above four conditions necessary for the applicability of
res judicata stand satisfied in the present case.
104. The observation in Essel Sports Pvt. Ltd. (supra) relied upon
by the defendant to the effect that "having to defend the same
allegations by the same party in two different jurisdiction is
unquestionably oppressive" also entirely supports the case of the
plaintiff rather than the case of the defendant.
105. The defendant has cited Seismic Shipping Inc. (supra) as
adjudicated by the High Court of Justice, Queen‟s Bench Division
Admiralty Court and by the Court of Appeal for the proposition that
anti-suit injunction cannot be granted solely in aid of a judgment. The
said case stands adequately distinguished by the case of Munib Masri
(supra), wherein to protect the jurisdiction of English Court, it was
held that the English Court may injunct a foreign defendant against
whom there is an English judgment (in proceedings to which the
foreign defendant has submitted) from seeking to re-litigate the same
issues abroad.
106. The defendant‟s reliance upon the judgment in Horlicks Ltd.
(supra) is also misplaced as the said case was intrinsically not one of
anti-suit injunction but was of applicability of „forum non
convenience‟ amongst domestic fora. The reliance placed upon page
193 of the said judgment wherein reference is made to a Canadian
judgment noted by the Division Bench of this Court is also of no avail
to the defendant as the same was neither the view of the Division
Bench nor it endorsed the Canadian view. The question was only
whether the principle of „forum non convenience‟ would apply to
domestic fora. In fact, the proposition of law as sought to be
advanced on behalf of the defendant based on the Horlicks case
(supra) is neither followed in the said case nor in any other judgment
of any Indian Court, namely, that the decision of the foreign Court
cannot be pre-empted until a proceeding has been launched in that
Court and the applicant for an injunction in the domestic Court has
sought from the foreign court a termination of the foreign proceeding
and failed. It merits recalling that in the ONGC case (supra), the
Supreme Court specifically held that merely because the same relief
can be obtained from the foreign court is no ground to refuse anti-suit
injunction. The Division Bench of this Court in the case of Essel
Sports Pvt. Ltd. (supra) also granted anti-suit injunction without
asking the plaintiff to first approach the London Court.
107. The recent decision of the Supreme Court in Yograj
Infrastructure Ltd. (supra) cited by the defendant is wholly
inapplicable to the facts of the present case. In the said case, an
appeal was filed under Section 37(2)(b) of the Arbitration and
Conciliation Act, 1996 for setting aside an interim order. After
noting that there was no ambiguity that the Singapore International
Arbitration Centre Rules (for short "SIAC Rules") would be the curial
law of the arbitration proceedings and the seat of arbitration was at
Singapore, the Court observed that the immediate question which
arose was "Whether in such a case the provisions of Section 2(2),
which indicates that Part I of the above Act would apply, where the
place of arbitration is in India, would be a bar to the invocation of
the provisions of Sections 34 and 37 of the Act, as far as the present
arbitral proceedings, which are being conducted in Singapore, are
concerned." On consideration of the decision in Bhatia
International (supra), Venture Global Engineering (supra) and
Citation Infowares Ltd. (supra) , the Court held that the said
decisions would have no application once the parties agreed by virtue
of Clause 27.1 of the agreement that the arbitration proceedings
would be conducted in Singapore, i.e., the seat of arbitration would be
in Singapore, in accordance with the SIAC Rules as in force at the
time of the signing of the agreement. This effectively shut out the
applicability of Part I of the 1996 Act, including the right of appeal
under Section 37 thereof. It is beyond cavil that this is precisely what
has been held by the Supreme Court in paras 15 to 20 of its judgment
in the present case.
108. As regards the test laid down by the Supreme Court in the case
of Modi Entertainment Network (supra), there is no denying the fact
that the same have been squarely met in the following manner:-
(a) It is not denied that the plaintiff and the defendant are
amenable to the personal jurisdiction of this court.
(b) If the injunction is denied, ends of justice will be
defeated as the plaintiff will be required to re-litigate on
the aspect of „seat of arbitration‟ before the English
Court.
(c) In view of the clear finding of the Supreme Court that
Kuala Lumpur was the seat of arbitration, it cannot be
said that restraining the defendant from pursuing its
claim before the English Court is against the principle of
comity of nations.
109. While it is well established that an injunction is granted as an
ancillary to the main relief and flows out of a cause of action which
has accrued to the plaintiff and even quia timet injunctions are
granted by Courts on the plaintiff‟s establishing to the satisfaction of
the Court that some threatened action by the defendant will constitute
an actionable civil wrong, in contrast in an anti-suit injunction action
the plaintiff does not have to establish either accrual of a cause of
action or apprehension of an actionable wrong. In that sense, an anti-
suit injunction is unique in its conception and there is no denying that
the equitable power to grant an anti-suit injunction in restraint of a
litigation in foreign soil exists only to serve equity and shut out
unconscionability. The grant or non-grant of such an injunction
wholly depends upon whether the assumption of jurisdiction by a
foreign court in the facts and circumstances of a particular case, taken
in their entirety and viewed holistically, would be oppressive or
vexatious or an abuse of the process or would amount to the loss of
juridical or other advantage, in the context of all other factors, to one
or the other party or an injustice would be perpetuated thereby.
110. Viewed from any angle, the present case prima facie appears to
this Court to be one which could justify the passing of such an
injunction order. On the other hand, if the injunction is declined, the
plaintiff would be vexed twice over(that is, once in the natural forum
and once in the foreign forum) for establishing its plea that Kuala
Lumpur is the designated seat of arbitration which cannot be changed
without altering the contract itself. It would be neither fair nor
equitable to compel the plaintiff to re-commence pursuit of a matter
in a foreign country when the highest court of this land has held in
favour of the plaintiff, that too, on the defendant invoking its
jurisdiction. This would amount to perpetuating injustice and
possibly result in conflicting judgments of two courts causing
significant harm to the arbitration proceedings and delaying the same
for an indefinite period of time, possibly resulting in their abrupt
termination.
111. In conclusion, it may be stated that judged by the tri-partite test
of prima facie case, balance of convenience and irreparable injury,
the present case is a proper case for the grant of an injunction in
favour of the plaintiff. Prima facie the initiation of proceedings by
the defendant at London during the pendency of the Special Leave
Petition before the Supreme Court of India was unconscionable,
vexatious and oppressive and an abuse of the process of law. It
would be unduly harsh on the plaintiff to put the plaintiff through the
inconvenience and uncertainty of litigating more than once on the
same issue at a prohibitively high cost in a foreign land. The balance
of convenience also tilts in favour of the plaintiff, as a necessary
outcome of multiplicity of proceedings could be potentially
conflicting decisions. Most importantly, the preservation of the
integrity of the proceedings before the Hon‟ble Supreme Court of
India, which culminated in the final judgment and order dated
11.05.2011, must necessarily be protected. The plaintiff has a high
degree of probability of obtaining the relief sought for in the plaint,
and as noticed hereinabove, the plaintiff, as is clear from the order of
the English Court dated 14.11.2011, has made it expressly clear that
its participation in the proceedings before the English Court is
without prejudice to its challenge to the jurisdiction of the English
Court. Hence, the same cannot be an inhibiting factor in the grant of
injunction based on comity of nations. The relief sought for in the
application, if not granted, will cause irreversible loss and damage to
the plaintiff without any juridical advantage enuring to the defendant.
112. Resultantly, this Court hereby passes an order of temporary
injunction restraining the defendant from pursuing Claim No.2009,
Folio 1382 filed in the High Court of Justice, Queen‟s Bench
Division, Commercial Court, London against the plaintiff.
113. IA No.21069/2011 is allowed accordingly.
CS(OS) 3314/2011
List on 16th April, 2012 for laying down the time frame for the
disposal of the above suit.
REVA KHETRAPAL
(JUDGE)
March 05, 2012
km
