Kerala High Court
M/S. Sree Lekshmi Cashew Enterprises ... vs M/S Barrow Lane And Ballard Ltd on 20 August, 2025
RFA 103/2025
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE C.PRATHEEP KUMAR
WEDNESDAY, THE 20TH DAY OF AUGUST 2025 / 29TH SRAVANA, 1947
RFA NO. 103 OF 2025
OS NO.108 OF 2024 OF ADDITIONAL SUB COURT,KOLLAM
APPELLANT(S)/PLAINTIFF
M/S. SREE LEKSHMI CASHEW ENTERPRISES PVT. LTD.
HAVING ITS REGISTERED OFFICE AT LEKSHMI PRABHA,
KADAPPAKKADA, KOLLAM - 691008, REPRESENTED BY ITS
MANAGING DIRECTOR SUNDARAN PRABHA, AGED 70 YEARS,
S/0 LATE T.M. PRABHA, RESIDING AT LEKSHMI PRABHA,
KADAPPAKKADA, KOLLAM-6
BY ADVS.
SRI.G.KEERTHIVAS
SMT.VIDHYA SANKAR
RESPONDENT(S)/DEFENDANTS
1 M/S BARROW LANE AND BALLARD LTD
HONEYPOT HOUSE, 56 ACREWYS ROAD LONDON, NW 22AD,
REPRESENTED BY THEIR AGENT, BROKER AND AUTHORISED
REPRESENTATIVE P. SASEENDRAN, AGED ABOUT 65 YEARS,
RESIDING AT THIRUVATHIRA, KELI NAGAR 195,
RANDAMKUTTY, KILIKOLLOOR P.O., KOLLAM, PIN - 691004
2 P. SASEENDRAN
AGED ABOUT 65 YEARS, RESIDING AT THIRUVATHIRA, KELI
NAGAR, 195, RANDAMKUTTY, KILIKOLLOOR P.O., KOLLAM,
PIN - 691004
BY ADV SHRI.T.R.ASWAS
THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON
6.8.2025, THE COURT ON 20.08.2025 DELIVERED THE FOLLOWING:
RFA 103/2025
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C.R.
JUDGMENT
Dated : 20th August, 2025
The plaintiff who filed an anti-international arbitration suit as OS 108 of
2024, before the Additional Sub Court, Kollam, is the appellant herein. (For the
purpose of convenience, the parties are hereafter referred to, as per their rank
before the trial court.).
2. FACTS OF THE CASE:- The plaintiff is a company incorporated
under the Indian Companies Act, having its registered office at Kollam. The 1 st
defendant is a Private Limited company, having registered office at London,
UK. The 2nd defendant is the authorized agent and broker of the 1st defendant,
acting on behalf of the 1 st defendant. The plaintiff company is engaged in the
business of cashew processing and exports. The 1 st defendant company is
engaged in the business of supplying various types of nuts to processors,
packers and wholesalers. The 2nd defendant claiming to be the authorized agent
of the 1st defendant, approached the plaintiff for the purchase of Indian
American Standard Current crop whole 320 cashew kernels, and a deal was
negotiated and confirmed by the 2nd defendant on behalf of the 1st defendant at
Kollam. Accordingly, on 10.04.2024, the 2 nd defendant on behalf of the 1st
defendant, had given a confirmation letter regarding the deal for sale of Indian
American Standard Current crop, whole 320 cashew kernel, one full container
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load containing about 700 cartons for price USD 2.86 per 1b with the shipment
period May 2024. The mode of payment was fixed by cash against the
document on presentation. On the same day, another deal was also confirmed
at Kollam, on same terms, with the shipment period June, 2024. In both the
deals, there was specific understanding to execute a proper contract, containing
all the details such as price, advance payment if any, disputes, redressal clauses
etc. But after issuing the confirmation letters (Ext.A2 and A3), no such contract
was executed between the parties. Since the entire transaction was held in
Kollam and the confirmation letter was also signed and delivered at Kollam, in
case of any dispute with regard to the above deal, the courts at Kollam alone
have jurisdiction. After the confirmation letter, the price of raw cashew nuts in
international markets skyrocketed, for no fault of the plaintiff. The raw cashew
nuts expected by the plaintiff from overseas were not delivered by the overseas
shipper because they had backed out from the same due to sudden and huge
price inflation. Therefore, the plaintiff was unable to fulfill the agreed terms in
the confirmation letter, due to a force majeure event. Since the confirmation
letter issued by the 2nd defendant was not signed by the plaintiff and no
payment was received by the plaintiff, it is only an offer and has not yet
evolved into an enforceable and binding contract between the parties. The
confirmation letter also lacks clarity concerning arbitration clause, including
the selection of arbitrators, mode of arbitration and other essential details.
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Therefore, the defendant has no right or authority to unilaterally pursue the
arbitration proceedings against the plaintiff.
3. According to the plaintiff, on 12.7.2024 the defendants sent
Ext.A4, an email to the plaintiff demanding performance of the contents of the
confirmation letter under the pretext that it is a concluded contract. As per
Ext.A5 email dated 15.07.2024, a reply was sent by the plaintiff to the
defendants stating that the contract was frustrated due to impossibility in
performing the same, and that it got terminated. However, the defendants sent
an intimidating letter stating that they have already moved for arbitration and
appointed an arbitrator of their choice, ignoring the requests made by the
plaintiff. In the absence of any specific contract between the parties, no such
arbitration proceeding could be initiated by the defendant. The attempt of the
1st defendant is to have the arbitration proceedings held in London, United
Kingdom, without having jurisdiction and against legal principles. Therefore,
the plaintiff filed this anti-arbitration suit seeking an injunction restraining the
defendants from continuing any legal proceedings against the plaintiff.
4. EVIDENCE:- In the suit, the 2nd defendant was made the
representative of the 1st defendant and notice to the 1 st defendant was also
served on the 2nd defendant. However, the 2nd defendant remained ex parte
before the trial court. The plaintiff filed a proof affidavit and marked Exhibits
A1 to A16. After evaluating the evidence on record, the trial court dismissed
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the suit on the ground that the suit for injunction restraining international
arbitration is not maintainable. Being aggrieved by the above judgment and
decree of the trial court, the plaintiff preferred this appeal, raising various
grounds.
5. POINTS:- Now the points that arise for consideration are the
following
1) Whether there was a concluded contract between the plaintiff and
the 1st defendant for supplying cashew kernel?
2) Whether there is any valid arbitration clause in the said contract?
3) What is the scope of judicial intervention in an anti-
international arbitration suit?
4) Whether the plaintiff is entitled to get a decree restraining the
international arbitration proceedings initiated by the first defendant
against him?
6. Heard Sri.G.Keerthivas Giri, the learned counsel for the
appellant/plaintiff and Sri.T.R.Aswas, the learned counsel for the 1st defendant.
7. MAIN ARGUMENTS:- One of the arguments advanced by the
learned counsel for the appellant is that there was no concluded contract
between the plaintiff and the 1st defendant. According to him, there was only
some correspondence between the parties and the understanding was to enter
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into a formal contract signed by the parties. According to the plaintiff, such a
concluded contract was not executed because of some intervening
circumstances like huge hike in price of cashew kernel and failure of the
plaintiff's overseas shippers to supply raw cashews. It was further argued that
in this case there is no valid arbitration clause. Further it was argued that the
entire cause of action arose in Kollam. The above arguments of the learned
counsel for the appellant were stoutly denied by the learned counsel for the 1 st
defendant and according to him, Exts.A2 and A3 are two concluded contracts
with specific arbitration clause and as such the suit itself is not maintainable.
The learned counsel would further argue that there was a long standing
relationship between the appellant and the 1 st respondent and that all previous
contracts between the parties were entered into in the similar manner, as in the
case of Ext.A2 and A3.
8. In the instant case, Exhibits A2 and A3 confirmation letters dated
10.4.2024 are the crucial documents relied upon by the 1st defendant. It is true
that, in those documents the plaintiff and the 1 st defendant did not sign, but the
2nd defendant, signed as the agent of the 1st defendant. In Ext.A5 reply dated
15.7.2024 issued by the plaintiff, the plaintiff admits the existence of a contract
with the 1st defendant and contends that due to the sudden price hike it became
impossible to perform. Further, in Exhibit A5, the plaintiff seeks extension of
time, for performing the contract. In Exhibit A8 reply dated 19.7.2024 issued
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by the plaintiff to the brokers of the plaintiff as well as to the 1 st defendant also,
the existence of the contract was not denied. In Ext.A10 reply dated 26.7.2024,
the plaintiff while admitting the longstanding relationship with the 1st
defendant expresses their readiness to supply the goods by January - February,
2025. In Exhibit A12 reply dated 21.8.2024 also the plaintiff undertakes to
supply the goods in January - February, 2025. There is no dispute with regard
to these letters and correspondences between the plaintiff and the 1 st defendant
through their brokers. Therefore, from Exhibits A2, A3, A4, A5, A8, A10 and
A12 correspondence it is crystal clear that the plaintiff agreed to sell to the 1 st
defendant cashew kernels as per the terms and conditions stipulated in Exts.A2
and A3.
9. ARBITRATION AGREEMENT- NO PARTICULAR FORM:-
With regard to the arbitration agreement also, according to the learned counsel,
what is important is the intention of the parties. According to him, there is no
particular form for an arbitration agreement and from the contents of the
arbitration clause in the contract, the intention of the parties is to be gathered.
In the decision in Visa International Limited v. Continental Resources
(USA) Limited, (2009) 2 SCC 55, in paragraph 18 the Apex Court held that :-
"18. That an arbitration agreement is not required to be in
any particular form has been reiterated in more than one decision.
[see:Bihar State Mineral Development Corporation Vs. Encon
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Building (2003) 7 SCC 418]. What is required is to gather the
intention of the parties as to whether they have agreed for resolution
of the disputes through arbitration. What is required to be decided in
an application under Section 11 of the Act is whether there is any
arbitration agreement as defined in the Act? It needs no reiteration
that Section 7 of the Act does not prescribe any particular form and
it is immaterial whether or not expression `arbitration' or
`arbitrator' or `arbitrators' has been used in the agreement."
10. In the decision in Visa International Limited (supra) the Apex
Court further held in paragraph 25 and 26 that :
"25. The submission is unsustainable for more than one
reason. No party can be allowed to take advantage of inartistic
drafting of arbitration clause in any agreement as long as clear
intention of parties to go for arbitration in case of any future disputes
is evident from the agreement and material on record including
surrounding circumstances.
26.What is required to be gathered is the intention of the
parties from the surrounding circumstances including the conduct of
the parties and the evidence such as exchange of correspondence
between the parties. The respondent in none of its letters addressed
to the applicant suggested that the dispute between the parties is
required to be settled through conciliation and not by arbitration. In
response to the applicant's letter invoking the arbitration clause the
respondent merely objected to the names inter-alia contending the
suggested arbitration would not be cost effective and the demand for
arbitration itself was a premature one."
Therefore, it can be seen that an arbitration agreement does not require any
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particular form.
11. ABSENCE OF SIGNATURE-EFFECT:- Now the question to be
considered is, whether in an international business contract, the signature of the
parties is a prerequisite, so as to bind them? As I have already noted above, on
behalf of the 1st defendant, their agent the 2 nd defendant affixed his signature,
while the plaintiff's signature is not there. The learned counsel for the 1 st
defendant would argue that absence of the signature has no relevance and what
is relevant is the intention of the parties. Relying upon the decision in Trimex
International FZE Limited, Dubai v. Vedanta Aluminium Limited, India,
(2010) 3 SCC 1, the learned counsel would argue that absence of signature is
not relevant when intention of the parties is clear. In the above decision, in
paragraph 57, the Apex Court held that :
".......It is essential that the intention of the parties be considered in
order to conclude whether parties were ad idem as far as adopting
arbitration as a method of dispute resolution was concerned. In those
circumstances, the stand of the respondent that in the absence of a
signed contract, the arbitration clause cannot be relied upon is liable
to be rejected."
12. Therefore, for the mere reason that the signature of the plaintiff
was not present in Exts.A2 and A3, it cannot be held that the said document
will not create a valid contract. As noted above, from the subsequent
correspondence Exts.A4,A5, A8, A10 and A12, the intention of the parties is
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clear, namely, to do business in sale of cashew kernel. Therefore, even though
in Exhibits A2 and A3 the plaintiff and the 1st defendant have not subscribed
their signature, from their subsequent correspondence through Exts.A4,A5, A8,
A10 and A12, makes their intention clear and it is to enter into a valid contract
between the plaintiff and the 1st defendant. Therefore, it is to be held that, as
per Exts.A2 and A3 the plaintiff and 1 st defendant entered into two valid and
concluded contracts.
13. The learned counsel for the 1st respondent would further argue
that, in the light of Exception 1 to Section 28 of the Contract Act, the present
suit itself is not maintainable. Exception 1 to Section 28 of the Indian Contract
Act reads as follows:
"28. Agreements in restraint of legal proceedings, void.-Every
agreement,--
(a) ................
(b) ................
Exception 1.--Saving of contract to refer to arbitration or
mediation dispute that may arise.-- This section shall not render
illegal a contract, by which two or more persons agree that any
dispute which may arise between them in respect of any subject or
class of subjects shall be referred to arbitration, and that only the
amount awarded in such arbitration shall be recoverable in respect
of the dispute so referred. "
14. As per the above exception, if the parties to a contract agrees to
resolve their dispute through mediation, such a clause in the agreement is valid
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and not hit by Section 28 of the Contract Act. The learned counsel would
further argue that in the light of Section 5 of the Arbitration and Conciliation
Act, 1996 also, the present suit is barred. Section 5 of the Arbitration and
Conciliation Act, 1996 reads as follows:
"5. Extent of judicial intervention.- Notwithstanding anything
contained in any other law for the time being in force, in matters
governed by this Part, no judicial authority shall intervene except
where so provided in this Part."
15. In this case, the learned counsel for the appellant challenges the
very validity of the Arbitration clauses in Exhibits A2 and A3. According to
him, the arbitration clause in Exts.A2 and A3 are incomplete and vague as they
do not give the essential details like the seat of arbitration, the law governing
the arbitration etc. It was also argued that Exhibit A2 and A3 does not in any
way oust the jurisdiction of Indian courts or the application of Indian laws.
Therefore, according to the learned counsel, the so called arbitration clause
present in Exhibit A2 and A3 is ambiguous, incomplete and lacks the necessary
particulates to constitute a valid arbitration agreement. Further, according to
him, the arbitration clause in an agreement should have its own legs and it is to
be considered as a separate agreement, dehors the original agreement.
According to him, the so-called agreement for arbitration in Exhibit A2 and A3
lacks clarity so as to have its own legs and on that ground also, according to
him, there is no valid arbitration clause. According to the learned counsel,
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application of Section 16 as well as 5 of the Arbitration and Conciliation Act
pre-supposes a validly constituted arbitration clause and also a validly executed
contract. According to him, in the instant case there is no validly executed
contract as well as a valid arbitration clause and as such Sections 5 and 16 of
the Arbitration and Conciliation Act have no application.
16. RULE OF CONTRA PREFERENTEM IN COMMERCIAL
CONTRACTS:- The learned counsel for the appellant relying upon the
decision of the Hon'ble Supreme Court in Export Credit Guarantee
Corporation of India v. Garg Sons International, (2014) 1 SCC 686, would
argue that in the instant case, Exhibits A2 and A3 were unilaterally drafted by
the 1st respondent and there was no opportunity for the plaintiff to negotiate in
respect of the above terms. It was also argued that the arbitration clause in
Exhibits A2 and A3 refers to terms and conditions as per NDFTA, a foreign
entity with rules and regulations unknown to the appellant. Therefore, it was
argued that in the above contracts, the appellant had no equal bargaining power
and hence it is a clear instance of forum not convenience.
17. The learned counsel for the 1st respondent would argue that in the
case of commercial contracts, the presumption is of equal bargaining power
between the parties and as such one party cannot plead ignorance about the
clauses contained in the contract. The law is well settled that the rule of contra
preferentem does not apply in case of commercial contract, for the reason that a
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clause in a commercial contract is bilateral and has mutually been agreed upon
(Export Credit Guarantee Corporation of India Ltd. v. Garg Sons
International, (2014) 1 SCC 686).
18. The learned counsel, relying upon the arbitration clause in
Exts.A2 and A3, would argue that the parties have subjected themselves to
arbitration as per the Nut & Dried Fruit Trade Association Rules (NDFTA
Rules) relating to arbitration and as such, the plaintiff cannot repudiate the said
clause expressly mentioned in Exts.A2 and A3. The learned counsel for the
appellant would argue that the appellant is not a member of the said association
and as such, the plaintiff is not bound by the NDFTA Rules. Admittedly the
plaintiff is a well reputed company engaged in the business field for several
years and they had business with the 1 st defendant also for several years. Since
the presumption is that the contract was entered into after bilateral and
mutually been agreed upon terms, rule of contra preferentem does not apply in
such commercial contracts. In the above circumstance, now the plaintiff cannot
contend that they entered into Exhibits A2 and A3 agreements without knowing
its contents.
19. According to the learned counsel for the 1 st respondent, on
several previous occasions, in similar circumstances, the plaintiff honored the
contract and shipped the same kind of goods to the 1 st defendant/respondent
and that in such instances also, the contract contained the identical terms of
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NDFTA Rules and its arbitration clause. In the counter affidavit filed by the 1st
defendant, there was a specific averment that on identical terms and conditions
on earlier occasions, the plaintiff shipped the same kind of goods to the 1 st
defendant, but the same was not denied in the reply affidavit filed by the
plaintiff. Moreover, in Exhibits A10 and A12 letters issued by the plaintiff, they
admitted long standing business relationship with the 1 st defendant. The fact
that in the previous contracts also similar arbitration clauses were available in
Exhibits A2 and A3 was not denied by the learned counsel for the plaintiff also.
The explanation given by the learned counsel in that respect is that, on previous
occasions there was no dispute between the parties and as such, the impact of
such a clause was never noticed by the plaintiff. Therefore, it can be seen that
the very same arbitration clause present in Exhibits A2 and A3 were already
present in the previous contracts between the parties and as such, now the
plaintiff cannot take a contention that they are not aware of the NDFTA Rules
and its arbitration as mentioned in Exhibit A2 and A3. The fact that on previous
occasions there was no dispute and hence, the above arbitration clause was not
invoked and its impact was not understood by the plaintiff, is not a ground for
denying the said arbitration clause present in Exts.A2 and A3.
20. As argued by the learned counsel for the 1st respondent, in Exhibit
A4 e-mail communication dated 12.7.2024 itself, the 1st defendant has
mentioned about the arbitration clause. Thereafter, the appellant has issued
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Exhibit A5 letter dated 15.7.2024, Exhibit A8 letter dated 19.7.2024, Exhibit
A10 letter dated 26.7.2024 and Exhibit A12 letter dated 21.8.2024. In those
letters also, the appellant has not denied the existence of the arbitration clause
brought to his notice by the 1st defendant through Exhibit A4 e-mail
communication dated 12.7.2024. Thereafter, only in Exhibit A16 letter dated
13.9.2024, the plaintiff questioned the validity of the Arbitration clause for the
first time. Till then, the plaintiff was only seeking time for honouring the
contract on the ground that the price of the cashew has skyrocketed. However,
in the meantime, as per Exhibit A15, arbitral claim dated 29.08.2024 the 1 st
defendant had appointed their arbitrator and called upon the plaintiff to
nominate their own arbitrator. Thereafter, the appellant preferred the present
suit on 01.10.2024. The trial court dismissed the suit on 22.01.2025 and
thereafter, on 07.02.2025 the Arbitral Tribunal passed an award in respect of
the dispute between the plaintiff and the defendant and communicated the
award to the plaintiff. Thereafter the present appeal has been preferred on
22.03.2025.
21. PARTIES CAN CHOOSE SEAT OF ARBITRATION OUTSIDE
INDIA:- Another argument advanced by the learned counsel for the appellant is
with regard to the jurisdiction of the Arbitral Tribunal constituted by the 1st
defendant. The attempt of the learned counsel for the appellant is to show that
the entire cause of action arose within the limits of the courts in Kollam district
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and as such the 1st defendant was not justified in initiating arbitration
proceedings in London. The learned counsel for the 1st respondent, relying
upon the arbitration clause in Exts.A2 and A3, would argue that the parties
have subjected themselves to arbitration as per the Nut & Dried Fruit Trade
Association Rules (NDFTA Rules) relating to arbitration and as per the above
Rules the seat of arbitration is in London and hence the plaintiff cannot now
question the seat of arbitration chosen by the parties.
22. In the decision in PASL Wind Solutions Private Limited v. GE
Power Conversion India Private Limited (2021) 7 SCC 1, the question
involved was whether two companies incorporated in India can choose a forum
for arbitration outside India and whether an award made at such a forum
outside India, to which the Convention on the Recognition and Enforcement of
Foreign Arbitral Awards 1958 applies, can be said to be a foreign award under
Part II of the Arbitration and Conciliation Act, 1996. The Apex Court held that
the parties can mutually agree to resolve their dispute by arbitration and they
can also choose the seat of arbitration in a foreign country. It was also held that
if the place of arbitration is not India, Part I of the Arbitration and Conciliation
Act does not apply. At the same time, the Award passed in such an instance will
be a foreign award enforceable under Part II of the Arbitration and Conciliation
Act.
23. SUPPRESSION OF FACTS:- The learned counsel for the 1st
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respondent would argue that the plaintiff has filed the suit before the trial court
after the commencement of the arbitration proceedings, but suppressing the fact
that arbitration has already commenced. He would also argue that in this case
the Arbitrator has passed an award even before the appeal was filed even then,
in the appeal, passing of the arbitral award was suppressed by the plaintiff. On
the other hand, according to the learned counsel for the plaintiff, when the suit
was filed, no such award was passed and only after dismissal of the suit and
before the plaintiff obtained a certified copy of the judgment, the so called
award was passed and since the appeal is filed challenging the impugned
judgment decree passed in the suit, there is no scope for mentioning about the
award in this appeal also. Therefore, according to him, there is nothing wrong
in not mentioning the award in the appeal. The learned counsel would further
submit that, at the time of the admission itself he has brought to the attention of
this court about the passing of the award and as such, nothing was suppressed
from this court regarding the award passed in this case. In this context it is to
be noted that, though in the memorandum of appeal there is no mention about
the award, at the time of admission it was seen disclosed.
24. After the 2015 amendment to Section 2(1)(e) (ii) of the
Arbitration and Conciliation Act, the jurisdiction in matters relating to
international commercial arbitration is exclusively with the High Court.
Therefore, when an application for execution of the award against the appellant
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is filed by the 1st defendant, the plaintiff will get an opportunity to raise his
objections as provided under Section 48 of the Arbitration and Conciliation
Act.
25. Section 48 of the Arbitration and Conciliation Act, 1996, reads as
follows:
"48. Conditions for enforcement of foreign awards.
(1) Enforcement of a foreign award may be refused, at the request of
the party against whom it is invoked, only if that party furnishes to
the Court proof that
(a) the parties to the agreement referred to in section 44 were, under
the law applicable to them, under some incapacity, or the said
agreement is not valid under the law to which the parties have
subjected it or, failing any indication thereon, under the law of the
country where the award was made; or
(b) the party against whom the award is invoked was not given
proper notice of the appointment of the arbitrator or of the arbitral
proceedings or was otherwise unable to present his case; or
(c) the award deals with a difference not contemplated by or not
falling within the terms of the submission to arbitration, or it contains
decisions on matters beyond the scope of the submission to
arbitration:Provided that, if the decisions on matters submitted to
arbitration can be separated from those not so submitted, that part of
the award which contains decisions on matters submitted to
arbitration may be enforced; or
(d) the composition of the arbitral authority or the arbitral procedure
was not in accordance with the agreement of the parties, or, failing
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such agreement, was not in accordance with the law of the country
where the arbitration took place;or
(e) the award has not yet become binding on the parties, or has been
set aside or suspended by a competent authority of the country in
which, or under the law of which, that award was made.
(2) Enforcement of an arbitral award may also be refused if the Court
finds that-
(a) the subject-matter of the difference is not capable of settlement by
arbitration under the law of India; or
(b) the enforcement of the award would be contrary to the public
policy of India.
[Explanation 1. [Substituted by Act No.3 of 2016 dated
31.12.2015.] - For the avoidance of any doubt, it is clarified that an
award is in conflict with the public policy of India, only if,-
(i) the making of the award was induced or affected by fraud or
corruption or was in violation of section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian law;or
(iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2. - For the avoidance of doubt, the test as to whether
there is a contravention with the fundamental policy of Indian law
shall not entail a review on the merits of the dispute.]
(3) If an application for the setting aside or suspension of the award
has been made to a competent authority referred to in clause (e) of
sub-section (1) the Court may, if it considers it proper, adjourn the
decision on the enforcement of the award and may also, on the
application of the party claiming enforcement of the award, order the
other party to give suitable security."
Object1
26. It is true that, at present, the 1st defendant cannot file an execution
petition for executing the award passed in his favour, in the light of an ad
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interim injunction passed by this court, at the time of admission, restraining the
respondents from proceeding with the execution of the award passed against
the plaintiff. According to the learned counsel, the civil court has no
jurisdiction to grant any such injunction as the suit itself is not maintainable.
Therefore, he prayed for immediate lifting of the ad interim injunction and also
prayed for awarding exemplary costs against the plaintiff.
27. OBJECT OF THE ARBITRATION:- The object of Arbitration
and Conciliation (Amendment) Act, 2015 was to make arbitration process cost
effective, speedy, with minimum Court intervention. In the decision in Union
of India v. Varindera Constructions Ltd. and Others, (2018) 7 SCC 794,
with regard to the primary object of the arbitration, the Hon'ble Supreme Court
held in paragraph 12 as follows:
"The primary object of the arbitration is to reach a final
disposition in a speedy, effective, inexpensive and expeditious
manner. In order to regulate the law regarding arbitration,
legislature came up with legislation which is known as Arbitration
and Conciliation Act, 1996. In order to make arbitration process
more effective, legislature restricted the role of courts in case where
matter is subject to the arbitration. Section 5 of the Act specifically
restricted the interference of the courts to some extent. In other
words, it is only in exceptional circumstances, as provided by this
Act, the court is entitled to intervene in the dispute which is subject
matter of arbitration. Such intervention may be before, at or after the
arbitration proceeding, as the case may be. In short, court shall not
intervene with the subject matter of arbitration unless injustice is
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caused to either of the parties."
28. In the decision in International Nut Alliance LLC v. Johns
Cashew Company, 2022 (1) KLT 222, a Division Bench of this Court while
dealing with the necessity to complete the arbitral proceeding as per the
schedule and without delay, held in paragraph 9 that :
"It is also well known that schedules fixed by Arbitral
tribunals abroad for completion of arbitral proceedings and for
enhancement of arbitral awards are strictly adhered to, having
regard to the adverse impact, the delay would have on international
commercial dealings".
29. In the decision in Kandla Export Corporation and Ors. v. OCI
Corporation and Ors., (2018) 14 SCC 715 while examining the objectives of
the Arbitration and Conciliation Act,1996 and Commercial Courts Act, 2015 in
paragraph 28, the Apex Court held that :
"The matter can be looked at from a slightly different angle.
Given the objects of both the statutes, it is clear that arbitration
itself is meant to be a speedy resolution of disputes between the
parties. Equally, enforcement of foreign awards should take place
as soon as possible if India is to remain as an equal partner
commercially speaking, in the international community".
30. In the decision in Voestalpine Schienen GMBH v. Delhi Metro
Rail Corporation Ltd. (2017) 4 SCC 665, while emphasizing the necessity to
create a conducive arbitration culture in the country, the Apex Court held
paragraph 30 as follows:
"Time has come to send the positive signals to the international
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business community in order to create a healthy arbitration
environment and a conducive arbitration culture in this country".
31. KOMPETENZ-KOMPETENZ PRINCIPLE:- The learned
counsel for the respondents would argue that even if the plaintiff challenges the
validity of the arbitration agreement or competence or jurisdiction of the
arbitrator, the challenge is to be made before the Arbitral tribunal itself and not
before a civil court. In support of the above argument, the learned counsel has
relied upon Section 16 of the Arbitration and Conciliation Act, which reads as
follows:
16. Competence of arbitral tribunal to rule on its jurisdiction.-
(1) The arbitral tribunal may rule on its own jurisdiction,
including ruling on any objections with respect to the existence or
validity of the arbitration agreement, and for that purpose,
(a) an arbitration clause which forms part of a contract shall
be treated as an agreement independent of the other terms of the
contract; and
(b) a decision by the arbitral tribunal that the contract is null
and void shall not entail ipso jure the invalidity of the arbitration
clause.
(2) A plea that the arbitral tribunal does not have jurisdiction
shall be raised not later than the submission of the statement of
defence; however, a party shall not be precluded from raising such
a plea merely because that he has appointed, or participated in the
appointment of, an arbitrator.
(3) A plea that the arbitral tribunal is exceeding the scope of
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its authority shall be raised as soon as the matter alleged to be
beyond the scope of its authority is raised during the arbitral
proceedings.
(4) The arbitral tribunal may, in either of the cases referred to
in sub-section (2) or sub-section (3), admit a later plea if it
considers the delay justified.
(5) The arbitral tribunal shall decide on a plea referred to in
sub-section (2) or sub-section (3) and, where the arbitral tribunal
takes a decision rejecting the plea, continue with the arbitral
proceedings and make an arbitral award.
(6) A party aggrieved by such an arbitral award may make an
application for setting aside such an arbitral award in accordance
with section 34."
32. IF ARBITRATION AGREEMENT ITSELF IS DISPUTED:-
Relying upon several decisions the learned counsel would argue that even if
one of the parties has objection to initiation of arbitration proceedings on the
ground that there is no arbitration agreement or validity of the arbitration
clause or the competence of the Arbitral Tribunal, the remedy is to approach
the Arbitral Tribunal itself and not the civil court. In the decision in Nimet
Resources Inc. and Another v. Essar Steels Ltd. (2000) 7 SCC 497, the Apex
Court has held in paragraph 5 as follows:
"......Therefore, in a matter where there has been some transaction
between the parties and the existence of the arbitration agreement
is in challenge, the proper course for the parties is to trash out
such question under Section 16 of the Act and not under Section 11
of the Act. "
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33. As argued by the learned counsel, unless the court finds that the
agreement itself is null and void, inoperative or incapable of being performed,
the parties shall be referred to mediation. In the decision in Shakti Bhog Foods
Ltd. v. Kola Shipping Limited, (2009) 2 SCC 134, in paragraph 31 and 32,
the Apex Court held that:
"As per the provisions of the Section 45 of the Act, it is clear that at
the request of one of the parties or any person claiming through or
under him the court shall refer the parties to arbitration unless it
finds that the said agreement is null and void, inoperative or
incapable of being performed. In the present case, there appears to
be no such thing to say that the so called agreement entered into by
the parties is in any way to be termed as null and void or
inoperative or incapable of being performed.
It is further observed by us that the claims raised by the
appellant before us about the non-existence of the charter party
agreement can also be raised by the same before the arbitral
tribunal at London. Under the English Arbitration Act 1996, as per
Sections 30 and 31 of the said Act, the arbitral tribunal may rule on
its own jurisdiction and also can decide on the existence of a valid
arbitration agreement. This is similar to the provisions under
Section 16 of the Act, whereby the arbitral tribunal can decide on
its jurisdiction as also on the existence or validity of the arbitration
agreement."
34. In the instant case, there is absolutely no evidence to hold that the
agreement itself is null and void, inoperative or incapable of being performed.
In fact, even the plaintiff has no such specific case. Their case is only to the
effect that the arbitration clause is ambiguous and lacks some details.
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35. Relying upon the decision A.Ayyasamy v. A. Paramasivam and
others, (2016) 10 SCC 386, the learned counsel would argue that even if one
of the parties has objection to initiation of arbitration proceedings on the
ground that there is no arbitration agreement or validity of the arbitration
clause or the competence of the Arbitral Tribunal, the remedy is to approach
the Arbitral Tribunal itself and not the civil court. In the above decision, in
paragraph 12.2 the Apex Court held that :
"12.2. When arbitration proceedings are triggered by one of the
parties because of the existence of an arbitration agreement
between them, Section 5 of the Act, by a non-obstante clause,
provides a clear message that there should not be any judicial
intervention at that stage scuttling the arbitration proceedings.
Even if the other party has objection to initiation of such arbitration
proceedings on the ground that there is no arbitration agreement or
validity of the arbitration clause or the competence of the Arbitral
Tribunal is challenged, Section 16, in clear terms, stipulates that
such objections are to be raised before the Arbitral Tribunal itself
which is to decide, in the first instance, whether there is any
substance in questioning the validity of the arbitration proceedings
on any of the aforesaid grounds. It follows that the party is not
allowed to rush to the Court for an adjudication. Even after the
Arbitral Tribunal rules on its jurisdiction and decides that
arbitration clause is valid or the Arbitral Tribunal is legally
constituted, the aggrieved party has to wait till the final award is
pronounced and only at that stage the aggrieved party is allowed to
raise such objection before the Court in proceedings under Section
34 of the Act while challenging the arbitral award. "
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36. In paragraph 45.2 of A.Ayyasamy (supra), the Apex Court further
held that :
"Parties who enter into commercial dealings and agree to a
resolution of disputes by an arbitral forum exercise an option and
express a choice of a preferred mode for the resolution of their
disputes. Parties in choosing arbitration place priority upon the
speed, flexibility and expertise inherent in arbitral adjudication.
Once parties have agreed to refer disputes to arbitration, the court
must plainly discourage and discountenance litigative strategies
designed to avoid recourse to arbitration. Any other approach
would seriously place in uncertainty the institutional efficacy of
arbitration. Such a consequence must be eschewed."
37. In the decision in Kvaerner Cementation India Ltd. v.
Bajranglal Agarwal and another (2012) 5 SCC 214, the Apex Court held that
objection with respect to existence or validity of the arbitration agreement, is to
be decided by the arbitral tribunal and not by the civil court. In paragraph 3, the
Apex Court held that :
"There cannot be any dispute that in the absence of any arbitration
clause in the agreement, no dispute could be referred for
arbitration to an arbitral Tribunal. But, bearing in mind the very
object with which the Arbitration and Conciliation Act, 1996 has
been enacted and the provisions thereof contained in Section 16
conferring the power on the arbitral Tribunal to rule on its own
jurisdiction including ruling on any objection with respect to
existence or validity of the arbitration agreement, we have no doubt
in our mind that the Civil Court cannot have jurisdiction to go into
that question. "
38. In the decision in Ravi Arya and Ors., v. Palmview
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Investments Overseas Ltd. and Ors. MANU/MH/0214/2019, the Bombay
High Court held in paragraph 30 that :
"..........Moreover, there are decisions of the Apex Court
wherein it is held that once the matter is before the Arbitral
Tribunal, the Civil Court cannot entertain any proceedings seeking
injunction against the Arbitral Tribunal during the course of
arbitration proceedings. So also, bearing in mind the very object
with which the Arbitration and Conciliation Act, 1996 has been
enacted and the provisions thereof contained in Section 16
conferring the power on the Arbitral Tribunal to rule on its own
jurisdiction, including ruling on any objection with respect to
existence or validity of the arbitration agreement, we have no
doubt in our mind that the civil court cannot have jurisdiction to
go into that question. "
39. In the decision in Secure Industries Ltd. v. Godrej and Boyce
MFG. Co. Ltd and Another (2004) 3 SCC 447, in paragraph 11, the Apex
Court held that :
"....The City Civil Court was right in its approach when it said
that the Court could only intervene in respect of matters expressly
provided for in the 1996 Act. The validity of the proceedings
before the Arbitral Tribunal is an issue which the Council, and not
the Court, could decide under Section 16 of the 1996 Act. Sub-
section (1) of Section 16 opens with the words " The Arbitral
Tribunal may rule on its jurisdiction...". It has been held by this
Court that the Arbitral Tribunal's authority under Section 16 is not
confined to the width of its jurisdiction but goes to the very root of
its jurisdiction. (Konkan Railways Corporation Ltd. V. Rani
Construction Pvt. Ltd. 2002 (2) SCC 388). Therefore, the Council
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can go into the question whether its authority had been wrongly
invoked by the appellant and it is open to it to hold that it had no
jurisdiction to proceed with the matter. "
40. In the decision in Shree Subhlaxmi Fabrics (P) Limited v.
Chand Mal Baradia and others (2005) 10 SCC 704, in paragraph 14 the
Apex Court held that:
"The consistent view taken by this Court, therefore, is that
contentious issues should not be gone into or decided at the stage
of appointment of an arbitrator and no time should be wasted in
such an exercise. The remedy of the aggrieved party is to raise an
objection before the arbitral tribunal as under Section 16 of the
Act it is empowered to rule about its own jurisdiction. It is,
therefore, open to the plaintiff to raise all the pleas before
defendant No. 2 including a plea that there is no arbitration
agreement between the parties for referring any dispute for
arbitration before the Hindustan Chamber of Commerce,
Mumbai...."
41. In the decision in National Aluminium Company Ltd. v.
Subhash Infra Engineers Private Ltd and another (2020) 15 SCC 557, in
paragraph 14 the Apex Court held that :
"14. Having regard to aforesaid judgment of this Court and
various communications between the parties, we are in agreement
with the submission made by the learned senior counsel for the
appellant that, if the first respondent wants to raise an objection
with regard to existence or validity of the arbitration agreement, it
is open for the first respondent to move an application before the
arbitrator, but with such plea, he cannot maintain a suit for
declaration and injunction.....
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42. In the decision in Swiss Timing Limited. v. Commonwealth
Games 2010 Organising Committee, (2014) 6 SCC 677, in paragraph 30, the
Apex Court held that :
"I must also notice here that the defence of the contract being void
is now-a-days taken routinely along with the other usual grounds,
to avoid/delay reference to arbitration. In my opinion, such ground
needs to be summarily rejected unless there is clear indication that
the defence has a reasonable chance of success......"
43. In the above decision, the Apex Court further held that, to shut
out arbitration at the initial stage would destroy the very purpose for which the
parties had entered into arbitration. The court further held that if in an
agreement between the parties before the Civil Court, there is a clause for
arbitration, it is mandatory for the Civil Court to refer the dispute to an
arbitrator.
44. MINIMISE THE SUPERVISORY ROLE OF THE COURTS:-
With regard to the legislative intention to minimise the supervisory role of the
courts in the arbitral process, the Apex Court in Trimex International (supra),
reiterated an earlier decision in Great Offshore Ltd., v. Iranian Offshore
Engg. & Construction Co., (2008) 14 SCC 240, in paragraph 62 as follows:
"The court has to translate the legislative intention especially when
viewed in light of one of the Act's "main objectives": "to minimise
the supervisory role of Courts in the arbitral process. [See:
Statements of Objects and Reasons of Section 4(v] of the Act]. If this
Court adds a number of extra requirements such as stamps, seals
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and originals, we would be enhancing our role, not minimising it.
Moreover, the cost of doing business would increase. It takes time to
implement such formalities. What is even more worrisome is that
the parties' intention to arbitrate would be foiled by formality. Such
a stance would run counter to the very idea of arbitration, wherein
tribunals all over the world generally bend over backwards to
ensure that the parties' intention to arbitrate is upheld. Adding
technicalities disturbs the parties' "autonomy of the will" (l'
autonomie de la volonti), i.e., their wishes..."
45. POWER, DUTY AND JURISDICTION OF THE COURT:- The
power and jurisdiction of courts in arbitral matters was considered by the
Hon'ble Supreme Court in the decision in Adhunik Steels Ltd. v. Orissa
Manganese and Minerals (P) Ltd. (2007) 7 SCC 125 relied upon by the
learned counsel for the 1st respondent. In the above decision, the Apex Court
held in paragraph 12 that:
"The power and jurisdiction of courts in arbitral matters has
been the subject of much discussion. The relationship between courts
and arbitral tribunals have been said to swing between forced
cohabitation and true partnership. The process of arbitration is
dependent on the underlying support of the courts, who alone have
the power to rescue the system when one party seeks to sabotage
it...."
46. In the decision in Ethiopian Airlines v. Stick Travels (P) Ltd.
(2001) 7 SCC 454, in paragraph 3, the Apex Court held that:
".......The laudable objectives and great expectations in spite of best
efforts have never reached the desired results. To reach it, time and
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again comprehensive review of the Arbitration Act through
amendments and re-enactment has been made. Every words of any
statutes having stretchable meaning gives fertility to the Bar to
interpret it such, as to suit the exigency of his client by finding
loopholes in a statute in spite of the best attempt by the legislature to
conclude the disputes at the earliest, by raising various objections
thus frustrating its very objectives. It is here courts have to play an
important role of taking recourse to such interpretation which
subserve the objective and defeat any attempt to flout it. "
47. TERMINATION OF AGREEMENT WILL NOT AFFECT
ARBITRATION CLAUSE:- In the decision in Ashapura Mine-chem Ltd. v.
Gujarat Mineral Development Corporation, (2015) 8 SCC 193, the Apex
Court held that, even though the MoU between the parties was terminated, the
arbitration agreement contained therein will remain valid and the parties are
entitled to invoke the said clause for referring their dispute to arbitration.
48. SUPERVISORY JURISDICTION TO SEAT COURT:- In the
decision in Avitel Post Studioz Limited and others v. HSBC PI Holdings
(Mauritius) Ltd. (2024) 7 SCC 197, the Apex Court held that, it is the seat
court, which has exclusive supervisory jurisdiction to determine claims for a
remedy relating to the existence or scope of arbitrator's jurisdiction or the
allegation of bias. A contrary approach would go against the scheme of the
New York Convention, which has been incorporated in India. The court further
held that, it needs emphasizing that bona fide challenges to arbitral
appointments have to be made in a timely fashion and should not be used
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strategically to delay the enforcement process.
49. SCOPE OF ANTI-ARBITRATION INJUNCTION:- As argued
by the learned counsel for the 1st respondent, time and again the Hon'ble
Supreme Court and this court have deprecated the practice of granting
injunction against execution of foreign awards and also emphasized the
necessity for enforcing foreign awards without delay. The learned counsel for
the appellant relying upon the decision of the Delhi High Court in Engineering
Projects India Ltd. through its Managing director. v. MSA Global LLC
Oman (CS(OS) 243/2025 decided on 25.07.2025) would argue that the
concept of anti-arbitration injunction is not alien to other prominent
jurisdictions, especially in cases of vexatious and oppressive conduct, is not
denied. After referring to the dictionary meaning of the words 'oppressive' and
'vexatious', the Court held that 'vexatious and oppressive' conduct primarily
refers to an abuse of legal process, vexatious by reason of intent and lack of
merit, and oppressive by reason of undue harshness or unfair domination,
which courts are empowered to restrain, in order to preserve the integrity of
judicial proceedings.
50. In support of the argument that a suit for an anti-arbitration
injunction will lie in a civil court, the learned counsel for the plaintiff has relied
upon the decision of the Kolkata High Court in The Board of Trustees of the
Port of Kolkata v. Louis Dreyfus Armatures SAS, (2014) SCC OnLine Cal.
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17695. In the above decision, the Kolkata High Court held that if the party
raises an issue as to the existence of a valid arbitration agreement and court
finds that no such agreement exists, or if the arbitration agreement is null and
void, inoperative or incapable of being performed, or the continuation of a
foreign arbitration proceeding would be oppressive, vexatious or
unconscionable, a suit for anti-arbitration injunction will lie in a civil court.
51. Relying upon the decision of the Hon'ble Supreme Court in
PASL, Wind Solutions Private Limited v. G E Power Consortium India
Private Limited, (2021) 7 SCC 1, the learned counsel would argue that Part-I
of the Arbitration and Conciliation Act has no application to a foreign seated
arbitration and Part II has application only with respect to enforcement of a
foreign award and as such, the present suit filed by him is not an application
either under Part I or under Part II and hence it is not barred under any law.
52. DEFENCE OF FORUM NON-CONVENIENCE:- In the decision
in Modi Entertainment Network and Ors. v. W.S.G Crickets PTE Ltd.
(2003) 4 SCC 341, the dispute was with regard to telecast of the Cricket World
Cup held in Kenya between 03.10.2000 and 15.10.2000. When there arose
some dispute, the appellants filed a suit in the Bombay High Court claiming
damages, while the respondent filed an action in the High Court of Justice,
Queens Bench Division, England. A Single Judge of the High Court granted
anti suit injunction against the proceeding in England, while the same was
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vacated by a Division Bench of the same High Court. While upholding the
decision of the Division Bench of the High Court, the Hon'ble Supreme Court
held that:
"It cannot be laid down as a general principle that, once the parties
have agreed to submit to the jurisdiction of a foreign court, the
proceedings or the action brought either in the court of natural
jurisdiction or in the court of choice will per se be oppressive or
vexatious."
The court further held that,
"......But then the jurisdiction clause indicates that the intention of
the parties is to resolve the dispute in accordance with the principles
of English law by an English court, unless good and sufficient
reasons are shown by the appellants, the intention of the parties as
evidenced by their contract must be given effect to."
53. In the above decision, one of the contentions raised by the
appellant that the English Court is a forum non-convenience in view of the
alleged breach of the agreement by the respondent in the manner not foreseen,
was held not good and sufficient reason to ignore the jurisdiction clause. The
second ground raised by the appellant that the English Court has no connection
with either of the parties or the subject matter and it is not a court of natural
jurisdiction are not good and sufficient reason in itself to justify the court of
natural jurisdiction to interdict action in a foreign court of choice of the parties.
54. SIMILAR REMEDIES AVAILABLE UNDER THE ENGLISH
ARBITRATION ACT, 1996:- Relying upon the provisions of the English
Arbitration Act, 1996, the learned counsel for the respondents would submit
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that, the remedies available to a party to an arbitration agreement in India are
available as per the English Arbitration Act also. As per Section 30 of the
English Arbitration Act, 1996, the tribunal itself has the jurisdiction to rule on
its own jurisdiction, including whether there is a valid arbitration agreement,
whether the tribunal is properly constituted, and what matters have been
submitted to arbitration in accordance with the arbitration agreement. Sub-
section (2) of Section 30, further provides that any such ruling under sub-
section (1) may be challenged by any available arbitral process of appeal or
review or in accordance with the provisions of this Part. Section 31 provides
for objection to substantive jurisdiction of the tribunal. As argued by the
learned counsel for the 1st respondent, the remedy under Section 31 of the
English Arbitration Act is an additional remedy available under the above Act.
Section 67 deals with challenging the Award, which is corresponding to Section
34 of the Indian Arbitration and Conciliation Act. Section 68 is the remedy
available for challenging the Award. Therefore, in the light of Sections 30, 31,
67 and 68 of the English Arbitration Act, it can be seen that all the remedies
available under the Indian Arbitration and Conciliation Act are available under
the English Arbitration Act also.
55. It is true that in Exhibit A2 and A3 the seat of arbitration as well
as the law applicable for the arbitration were not specified. Instead, Exhibits A2
and A3 only state that NDFTA Rules will apply. At the time of arguments, the
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learned counsel for the 1st respondent has produced a copy of the Rules of
Arbitration and Appeal under the NDFTA referred to in Exhibit A2 and A3. The
learned counsel for the appellant has vehemently opposed the receipt of the
above Rules on the ground that, in Exhibits A2 and A3 the details like the seat
of arbitration and the law of arbitration are not specified and the said lacuna
cannot be filled up by producing additional evidence at the appellate stage. It is
to be noted that in Exhibit A2 and A3, it is specifically stated that the dispute is
to be resolved through arbitration as per NDFTA Rules. It also states that both
parties have knowledge about the above Rules. It is true that the details of the
NDFTA Rules were not appended to Exhibits A2 and A3. I have already found
that the parties were doing business in similar field for the past several years
and it has come out in evidence that in their previous contracts also similar
arbitration clauses were there. In the above circumstance, in order to clarify
and explain the Rules referred to in Exhibit A2 and A3, there is nothing wrong
in referring to the NDFTA Rules produced at the time of arguments. As per the
above rules, the seat of the Arbitration shall be in London.
56. In the decision in Bharath Aluminium Company Ltd. v. Kaiser
Aluminium Technical Service Inc. and Ors. (2012) 9 SCC 552, the question
involved was whether a suit for interim injunction would be maintainable in
India, on the basis of an international commercial arbitration with a seat outside
India. A Five Judges Bench of the Apex Court held that no suit for injunction
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simplicitor would be maintainable in India on the basis of an international
commercial arbitration with a seat outside India.
57. A Seven Judges Bench of the Hon'ble Supreme Court n the
decision in IN Re: Interplay between Arbitration Agreements under the
Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899,
(2024) 6 SCC 1, held that the power of the court is limited to the enquiry under
Section 8 and 11 to see whether an arbitration agreement prima facie exists and
under the principle of competence-competence, the arbitral tribunal has the
authority to rule on jurisdiction and related objections including stamp duty
compliance as per Section 16 of the Act. While dealing with the interplay
between the Stamp Act and the Arbitration and Conciliation Act, the court
further held that, Section 5 of the Act limits the judicial authority in the sphere,
only to the extent that provided in Part I of the Arbitration and Conciliation
Act. It was further held that one of the main objectives behind the enactment of
the Arbitration and Conciliation Act was to minimise the supervisory role of
courts in the arbitral process by confining it only to the circumstances
stipulated by the legislature. It was further held that, therefore, every provision
of the Arbitration Act ought to be construed in view of Section 5 to give true
effect to the legislative intention of minimal judicial intervention.
The 7 Judges Bench reiterated that it is a general rule of international
arbitration law that an Arbitral Tribunal has the power to determine its own
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jurisdiction.
58. SUMMARY OF THE ABOVE DISCUSSION:
i) An arbitration agreement does not require any particular form. What
is required is the intention of the parties to resolve their dispute
through arbitration.
ii) For the validity of an arbitration agreement, absence of signature of
any of the parties is not material and what is essential is the intention
of the parties for resolving their dispute through mediation. If their
intention is clear from their conduct, absence of signature of any party
in the agreement is not relevant.
iii) In commercial contracts, the presumption is of equal bargaining
power between the contracting parties and hence the rule of contra
preferentem does not apply in such contracts.
iv) The primary object of the Arbitration is to reach a final disposition in
a speedy, effective, inexpensive and expeditious manner.
v) The legislative intention is to minimize the supervisory role of the
courts in the arbitral process, by confining it only to the circumstances
stipulated by the legislature.
vi) A civil court can interfere in the dispute, which is a subject matter of
arbitration only in exceptional circumstances as provided under
Section 5 of the Arbitration and Conciliation Act, 1996.
vii) All questions relating to the validity of the Arbitration agreement, the
competence and jurisdiction of the arbitrator etc. are to be decided by
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the Arbitral Tribunal itself and not by the Civil Court.
viii) Enforcement of foreign awards should take place as soon as
possible if India is to remain as an equal partner in the international
business community. We also have to send positive signals to the
international business community in order to create a healthy
arbitration environment and a conducive arbitration culture in this
country.
ix) Even two companies incorporated in India can choose a foreign
country as the seat of their arbitration.
x) Anti arbitration injunction is an exceptional remedy which can be
granted only in exceptional circumstances like no agreement exists,
arbitration agreement is null and void, inoperative or incapable of
being performed or if continuation of a foreign arbitration proceeding
would be oppressive, vexatious or unconscionable.
xi) Once the parties have agreed to submit to the jurisdiction of a foreign
court, the proceedings brought either in the court of natural
jurisdiction or in the court of choice, per se, will not be oppressive or
vexatious.
xii) No suit for injunction siplicitor would be maintainable in India on the
basis of an international commercial arbitration with a seat outside
India. It is the seat of the court which has exclusive supervisory
jurisdiction to intervene in case of necessities.
59. In the instant case, by way of Exhibit A2 and A3 documents,
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there are two written contracts between the plaintiff and the first defendant. In
Exhibit A2 and A3, there is an arbitration clause. It is true that in Exhibit A2
and A3, the details like the seat of arbitration and the law applicable for
arbitration are not specifically mentioned. However, from the contents of the
arbitration clause available in Exhibits A2 and A3 it can be safely concluded
that, what is intended by the parties is NDFTA Rules. Therefore, it can be seen
that both the parties have agreed to resolve their dispute through arbitration as
per the NDFTA Rules. As per the NDFTA Rules, the seat of arbitration is
London in England and as such the law applicable is the Arbitration Act of
England. There is no merit in the argument that the arbitration clause in
Exts.A2 and A3 are vague and not specific. In the instant case there is also no
evidence to hold that the arbitration agreement is null and void, inoperative or
incapable of being performed, or the continuation of a foreign arbitration
proceeding would be oppressive, vexatious or unconscionable, so as to
maintain a suit for anti-arbitration injunction in a civil court. In the above
circumstance, all questions including the validity of the arbitration clause is to
be decided by the arbitral tribunal and not by a civil court. In this case there are
no exceptional circumstances so as to deviate from the above rule.
60. From Exhibit A15 it can be seen that, on 29.08.2024, the 1 st
defendant had initiated the arbitration proceedings. It was thereafter on
01.10.2024, the plaintiff filed the suit before the trial court. It means that the
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plaintiff filed the present suit after the commencement of the arbitration
proceedings. The law is well settled that, once the arbitration proceedings has
commenced, the Civil Court has no jurisdiction to restrain the same. A suit for
anti-arbitration injunction is beyond the scope of a civil court. Moreover, the
civil court has no jurisdiction to pass an order of injunction against an
arbitration seated outside India. In the above circumstances, the trial court was
perfectly justified in holding that the present suit is not maintainable. In the
above circumstance, I do not find any irregularity or illegality in the impugned
judgment and decree passed by the trial court so as to call for any interference.
In the above circumstances, this appeal is liable to be dismissed. Points
answered accordingly.
61. Relying upon the decision of the Hon'ble Supreme Court in
Ramrameshwari Devi and others v. Nirmala Devi and others (2011) 8 SCC
249, the learned counsel for the 1st respondent would argue that, in the instant
case, the appellant has obtained an ex parte injunction suppressing material
facts and as such, compensatory cost is to be awarded to the 1 st respondent. It is
true that in the above decision, the Apex Court held in paragraph 38 that:
"If injunction has been granted on the basis of false pleadings or
forged documents, then the Court concerned must impose costs,
grant realistic or actual mesne profits and or order prosecution.
This must be done to discourage the dishonest and unscrupulous
litigants from abusing the judicial system. In substance, we have to
remove the incentive or profit for the wrongdoer."
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62. It is true that the learned counsel for the 1 st defendant has prayed
for exemplary costs, on the ground that the plaintiff has obtained an ad-interim
injunction after filing a suit which is not at all maintainable. It is to be noted
that, though the plaintiff filed the suit, the trial court has dismissed the same. In
appeal, this Court has passed an ad interim injunction only on 29.04.2025.
Today this court is dismissing the appeal and vacating the ad-interim injunction
passed by this court. Since the appeal has been disposed of without much delay,
the 1st defendant has not suffered much on account of the interim injunction for
such a period. Therefore, I hold that this is not a fit case in which the prayer for
exemplary costs can be awarded. At the same time, in the facts and
circumstance of this case, I find no grounds to deny costs to the 1st respondent.
63. CONCLUSION:- In the result, this appeal is dismissed, with
costs to the 1st respondent. The ad interim injunction passed by this court on
29.04.2025 is hereby vacated.
64. OTHER REMEDIES LEFT OPEN:- The learned counsel for the
appellant would argue that the findings in the impugned judgment and decree
of the trial court on the merits of Exhibits A2 and A3 agreements, unless set
aside, will stand in the way of resorting to other remedies available under Part
II of the Arbitration and Conciliation Act. It is to be noted that the trial court
has dismissed the suit on the ground that it is not maintainable. At the instance
of the 1st respondent, an arbitrator was appointed and he has already passed an
2025:KER:62893
Award against the appellant. In the above circumstances, the impugned
judgment and decree of the trial court shall not be allowed to stand in the way
of the plaintiff's right to take any contentions, which may be available under
Section 48 of the above Act, in any proceedings for enforcement of the
Arbitration Award. The learned counsel for the respondents also has not
opposed such a remedy available to the appellant. Therefore, while dismissing
this appeal, I am inclined to clarify that the findings contained in the impugned
judgment and decree of the trial court other than the issue on the
maintainability of the suit cannot be considered as conclusive findings and
those issues are left open to be agitated in appropriate proceedings.
All the pending interlocutory applications in the appeal stand dismissed.
Sd/-
C.Pratheep Kumar, Judge
Mrcs/8.8.
2025:KER:62893
APPENDIX
PETITIONER ANNEXURES
Section 8 Memo SECTION 8 MEMO
