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CASE NO.: Arbitration Petition  4 of 2007

PETITIONER: M/s Shivnath Rai Harnarain (India) Ltd

RESPONDENT: M/s. Abdul Ghaffar Abdul Rehman(Dead) by  L.Rs

DATE OF JUDGMENT: 10/03/2008

BENCH: H.K. SEMA

JUDGMENT: J U D G M E N T

ARBITRATION PETITION NO. 4 OF 2007

H.K.SEMA,J.

(1)             This is an application filed under Section 11(6) of  the Arbitration and Conciliation Act, 1996 (in short "the Act")  for  appointment of an Arbitrator.    

(2)             I have heard Dr.A.M. Singhvi, learned senior  counsel for the applicant and Mr. Kailash Vasdev, learned  senior counsel for the respondents at length.  

(3)             The sole question that arises for consideration in  this petition is as to whether an application under Section  11(6) of the Act is maintainable?

(4)             In view of the order that I propose to pass, it may  not be necessary to recite the entire facts, leading to the filing  of the present application.   

(5)             Suffice it to say that contract Nos.2001-SI/25,  2001-SI/26 both dated 12th January 2001 and Contract  No.2001-SII/41 dated 28th February 2001 were  amended/modified by way of a common addendum No.1 on  2.3.2001.  By an addendum dated 2nd March, 2001 clause (ii)  was introduced.  It reads: "(ii) Settlement of disputes through Indian  Arbitration Council, Delhi."   

(6)             The dispute having arisen and as agreed to by both  the parties the matter was referred to one Mr. Samuel J.  Marshall, who was agent for both the parties in the  transactions and who also agreed to mediate between the  parties.  With the intervention of Mr. Samuel J. Marshal, the  parties arrived at an agreement to resolve the dispute between  the parties.  The settlement agreement was entered into on  18.1.2002.  Clause 18 of the settlement reads: "18. Should any dispute or non  implementation arise this will be adjudicated  solely by Mr. Samuel J. Marshall."

(7)        It also appears from the letter dated 12.11.2002 and  accepted on 21.11.2002 the parties have agreed to resolve the  dispute under the following conditions:

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1.      That the venue for resolution of this dispute  will take place in Singapore, assuming that  Mr. Marshall is resident there, alternatively  the UK;

2.      That the Agreement dated 18th January  2002 is governed by India Law; and

3.      UNCITRAL rules will apply.   

(8)             Pursuant to the aforesaid agreement, an application  was filed sometime in January 2004, before the Arbitrator  namely Mr. Samuel J. Marshall.  However, the respondents  herein did not participate in the arbitration proceedings.  On  20.6.2005, the Arbitrator proceeded with the arbitration at  Singapore and passed the Award in favour of the applicant. (9)             Aggrieved by the Award dated 20.6.2005, the  respondents herein challenged the said Award before the High  Court of Republic of Singapore in Originating Motion  No.35/2005/H inter alia on the ground of violation of  principles of natural justice. On 31.7.2006, the High Court of  Singapore, set aside the Award with a liberty to the parties to  apply for fresh arbitration.   This is undisputed that the  applicant herein did not apply for fresh arbitration before the  Arbitrator at Singapore.  However, this application has been  filed before this Court under Section 11(6) of the Act.          (10)            Dr.Singhvi, learned senior counsel for the applicant,  would submit that the agreement is governed by Indian Law  and, therefore, the law in India is applicable and thus, this  Court can appoint Arbitrator in exercise of power under  Section 11(6) of the Act.   Per contra Mr. Kailash Vasdev,  learned senior counsel for the respondents, would content that  this application under Section 11(6) is not maintainable  inasmuch as the parties have referred to the Arbitrator Mr.  Samuel J. Marshall in Singapore.  The Award was passed by  Mr. Marshall at Singapore and the Award was set aside by the  High Court of Singapore with liberty to apply for fresh  arbitration and, therefore, the appropriate Court to apply is  the Court at Singapore and this application is misconceived.           (11)            The facts are not disputed that the parties by a  mutual agreement referred the dispute to Mr. Samuel J.  Marshall.  Mr. Samuel J. Marshall proceeded with the  arbitration and passed the Award on 20.6.2005, which was set  aside by the High Court of Singapore on 31.7.2006.          (12)          Section 2(1)(e) of the Act defines Court. It reads: "(e) "Court" means the principal Civil Court of  original jurisdiction in a district, and includes  the High Court in exercise of its ordinary  original civil jurisdiction, having jurisdiction to  decide the questions forming the subject-matter  of the arbitration if the same had been the  subject-matter of a suit, but does not include  any civil court of a grade inferior to such  principal Civil Court, or any Court of Small  Causes"                   Further, Section 42 of the Act provides  jurisdiction of the Court.  It reads:

"Jurisdiction.- Notwithstanding anything  contained elsewhere in this Part or in any other

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law for the time being in force, where with  respect to an arbitration agreement any  application under this Part has been made in a  Court, that Court alone shall have jurisdiction  over the arbitral proceedings and all subsequent  applications arising out of that agreement and  the arbitral proceedings shall be made in that  Court and in no other Court."   

              (13)       Section 42 read thus, provides that notwithstanding  anything contained elsewhere in this part or in any other law  for the time being in force, where with respect to an arbitrator  agreement any application under this part has been made in a  court, that court alone shall have jurisdiction over the arbitral  proceedings and all subsequent applications arising out of  that agreement and the arbitral proceedings shall be made in  that court and in no other court.  

(14)      In the present case, as already adumbrated, the  parties agreed to refer to the Arbitrator, Mr. Samuel J.  Marshall for resolution of the dispute at Singapore.  The  Award of the Arbitrator was passed at Singapore.  The Award  of the Arbitrator was set aside by the High Court of Singapore  and, therefore, in my view, the Court at Singapore, which  alone shall have jurisdiction over the arbitral proceedings and  all applications arising out of that agreement shall be made in  that Court and no other Court.            (15)            In support of his contention, Dr. Singhvi referred to  the judgment of this Court, rendered in National Agricultural  Coop. Marketing Federation India Ltd.   Vs.  Gains Trading  Ltd., (2007) 5 SCC 692.  In that case Clause 17 of the  agreement deals with arbitration and it provides that the  dispute be settled amicably by negotiation and mutual  agreement and if no settlement can be reached the matter in  dispute shall then be referred to and finally resolved by an  arbitration in Hong Kong in accordance with the provisions of  the Arbitration and Conciliation Act, 1996.

(16)            The question raised in that case was that whether  Section 11 of the Act is inapplicable in regard to the  arbitrations, which are to take place outside India?  The  argument in that case was that as the venue of arbitration was  outside India, Section 11 would not apply and, therefore,  neither the Chief Justice of India nor his designate will have  the jurisdiction to appoint an arbitrator.   

(17)            The aforesaid contention has been repelled in  paragraph 9 of the judgment as under:- "9. The rules of interpretation require the  clause to be read in the ordinary and natural  sense, except where that would lead to an  absurdity. No part of a term or clause should  be considered as a meaningless surplusage,  when it is in consonance with the other parts  of the clause and expresses the specific  intention of parties. When read normally, the  arbitration clause makes it clear that the  matter in dispute shall be referred to and  finally resolved by arbitration in accordance  with the provisions of the Arbitration and  Conciliation Act, 1996 (or any statutory  modification, enactment or amendment  thereof) and the venue of arbitration shall be

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Hong Kong. This interpretation does not render  any part of the arbitration clause meaningless  or redundant. Merely because the parties have  agreed that the venue of arbitration shall be  Hong Kong, it does not follow that laws in force  in Hong Kong will apply. The arbitration clause  states that the Arbitration and Conciliation  Act, 1996 (an Indian statute) will apply.  Therefore, the said Act will govern the  appointment of arbitrator, the reference of  disputes and the entire process and procedure  of arbitration from the stage of appointment of  arbitrator till the award is made and  executed/given effect to.   (18)        In my view, the facts of that case are not squarely  applicable in the present case.  The facts of the case at hand,  as already adumbrated, the parties to the agreement agreed to  refer the dispute to the Arbitrator Mr.Samuel J.Marshall.  The  Award was passed by the said Arbitrator at Singapore.  The  Award was also set aside by the High Court of Singapore with  liberty to apply for fresh arbitration. (19)            Having mutually agreed to have the dispute referred  to an arbitrator at Singapore, the applicant is not permitted to  turn around and say that this Court be appointed an  arbitrator.   (20)         In the facts and circumstances of the case, as recited  above, filing of an application under Section 11(6) of the Act,  before this Court, is misconceived.  The application is,  accordingly dismissed.   No costs.