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CASE NO.: Arbitration Petition  1 of 2005

PETITIONER: SHIN SATELLITE PUBLIC CO. LTD.

RESPONDENT: M/S JAIN STUDIOS LIMITED

DATE OF JUDGMENT: 31/01/2006

BENCH: C.K. Thakker

JUDGMENT: J U D G M E N T

C.K. THAKKER, J.

       This Arbitration Petition is filed by the petitioner, Shin  Satellite Public Co. Ltd. against the respondent, M/s Jain  Studios Ltd. under sub-section (6) of Section 11 of the  Arbitration and Conciliation Act, 1996 (hereinafter referred  to as ’the Act’). It is prayed in the application that Hon’ble  Mr. Justice M. L. Pendse (Retired) be appointed as Sole  Arbitrator, or in the alternative, any other retired Judge of a  High Court may be appointed as an Arbitrator. The Hon’ble  the Chief Justice of India has nominated me to exercise  power under sub-section (6) of Section 11 of the Act and  that is how the matter has been placed before me for  passing an appropriate order.         It is the case of the petitioner that it is a Company  registered under the laws of Thailand, having its principal  office in Thailand. The petitioner carries on the satellite  business and has got three satellites in the orbit, viz.,  Thaicom-1, Thaicom-2 and Thaicom-3. The petitioner,  through above satellites, provides broadcasting and  internet services to various Companies/ firms in the world.  The respondent is a Company duly registered under the  Companies Act, 1956 having its registered office at New  Delhi.         According to the petitioner, an agreement was entered  into between the parties on August 10, 1999 for availing  broadcasting services of the petitioner by the respondent.  The agreement, inter alia, provided for supply of satellite  services, payment of fees, etc. Clause 23 provided for  arbitration in case of dispute arising from the interpretation  or from any matter relating to the performance of the  agreement or rights or obligations of the parties. Since the  dispute arose between the parties, the petitioner, through  advocate addressed a letter/notice to the respondent on  September 9, 2004 demanding for arbitration under clause  23. The petitioner, in the said letter, stated that it had  appointed Hon’ble Mr. Justice M.L. Pendse (Retired) as its  arbitrator and called upon the respondent to appoint an  arbitrator. The petitioner, however, received a letter dated  7th October, 2004 from the respondent’s advocate  contending that the arbitration clause was not legal and  valid and clause 23 of the Arbitration Agreement could not  be termed as ’Arbitration Clause’. According to the  petitioner, thus, the respondent failed to appoint an  arbitrator which compelled the petitioner-company to file

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present application under Section 11(6) of the Act. A prayer  was, therefore, made to make an appointment of an  arbitrator.         On March 17, 2005, notice was issued on the  application. The learned counsel appeared on behalf of the  respondent and waived service of notice. Time was sought  to file counter-affidavit, which was granted.         A reply-affidavit was then filed by the respondent  urging therein that the Arbitration Agreement was not legal  and valid.  It was contended that Clause 23 contained a  condition that the arbitrator’s determination would be  treated as ’final and binding between the parties’ and the  parties had waived ’all rights of appeal or objection in any  jurisdiction’. It was also submitted that the disputes were  to be resolved by arbitration under the rules of United  Nations Commission on International Trade Law  (UNCITRAL). Whereas Agreement in question dated August  10, 1999 provided that the arbitration would be held in  Delhi in accordance with Indian Law, under other two  Agreements, the place of arbitration was fixed at Singapore  and London respectively, and the governing law was  English Law. It was, therefore, stated that in the present  case also, arbitration may be held in London or in  Singapore, where arbitration proceedings were going on  between the parties.         The matter could not be heard finally as the question  as to the nature of function to be performed by the Chief  Justice or his nominee under sub-section (6) of Section 11  of the Act was referred to a seven-Judge Bench.  In SBP &  Company v. Patel Engineering Ltd., (2005) 8 SCC 618 the  point was finally decided. It was held by majority that the  function performed by the Chief Justice or his nominee  under Section 11(6) of the Act is a judicial function. After  the above decision, the matter was placed for hearing and  both the sides were heard.          The learned counsel for the petitioner contended that  an agreement had been entered into between the parties  which contained an arbitration clause and in accordance  with the terms of the agreement, a letter/notice was issued  by the petitioner to the respondent for referring the matter  to an arbitrator. It was also stated that the petitioner has  appointed Hon’ble Mr. Justice M.L. Pendse (Retd.) as its  arbitrator and asked the respondent to appoint an  arbitrator.  The respondent, however, contended that the  Arbitration Agreement was not legal and valid and  arbitration clause was not in consonance with law. In the  circumstances the petitioner has filed the present  application which deserves to be allowed by appointing an  arbitrator.         Learned counsel for the respondent, on the other  hand, submitted that the petition is not maintainable as the  so called arbitration clause can neither be said to be legal,  nor in accordance with law and as such cannot be enforced.  According to the counsel, the arbitration clause takes away  completely the right of the parties to challenge the award  passed by the arbitrator.  Clause 23 of the agreement is  not only in restrain of legal proceedings to be initiated in a  competent court of law but is also against public policy.  Such provisions are held to be unenforceable in several  cases. The petitioner is, therefore, not entitled to seek  enforcement of arbitration clause and the petition is liable  to be dismissed.         On merits, it was submitted that three agreements  had been entered into between the parties. Whereas, in  other two cases, arbitration proceedings were held in

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foreign country, in this case the venue is Delhi. This would  create enormous difficulties for both the parties.  If an  arbitration is held in London or in Singapore, the dispute  can be decided along with other matters. It was stated that  the respondent has no objection if the petitioner is  agreeable to the suggestion of the respondent to hold  arbitration out of India.         The question for consideration before me is whether  the arbitration agreement is legal, valid and enforceable.  Before considering respective contentions of learned  counsel on the point, it would be appropriate if the relevant  clauses of the agreement are considered. As already stated,  the agreement had been entered into on 10th August, 1999.  It was duly signed by the parties. It provides for resolution  of disputes, if any, arising between the parties to the  agreement. Clause 19 relates to "Governing Law" and  declares that the rights and responsibilities of the parties  would be governed by Indian Law. Clause 23 deals with  arbitration and is, therefore, material and may be quoted in  extenso: "23.    ARBITRATION         Any dispute arising from the interpretation  or from any matter relating to the performance  of this Agreement or relating to any right or  obligation herein contained which cannot be  resolved by the parties shall be referred to and  finally resolved by arbitration under the rules of  the United Nations Commission on International  Trade Law (UNCITRAL). The arbitration shall be  held in New Delhi and shall be in the English  language. The arbitrator’s determination shall  be final and binding between the parties and  the parties waive all rights of appeal or  objection in any jurisdiction. The costs of the  arbitration shall be shared by the parties  equally." (emphasis supplied)         Clause 20 is another relevant clause providing  severability and reads thus: "20.    SEVERABILITY         If any provision of this agreement is held  invalid, illegal or unenforceable for any reason,  including by judgment of, or interpretation of  relevant law, by any Court of competent  jurisdiction, the continuation in full force and  effect of the remainder of them shall not be  prejudiced."

       The main contention of the learned counsel for the  respondent is that clause 23 made the arbitrator’s  determination "final and binding between the parties" and  the parties have waived all rights of appeal or objection "in  any jurisdiction". According to the counsel, the said  provision is inconsistent with Section 28 of the Contract  Act, 1872 as also against public policy.         In reply, the learned counsel for the petitioner  submitted that clause 23 is in several parts and all parts  are severable. It was expressly conceded before me by the  learned counsel for the petitioner that the italicized portion  on which reliance was placed by the learned counsel for the  respondent is not in consonance with law and is not  enforceable. He, however, submitted that the said part is  independent of other parts and ignoring the offending part,  the remaining parts which are legal, valid and binding, can

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be enforced.         Moreover, the agreement itself provides for  severability. Clause 20 of the agreement declares that if  any provision is held invalid, illegal or unenforceable for  any reason, it would not affect other clauses. It was,  therefore, submitted that ignoring the objectionable part  relating to acceptance of arbitrator’s determination as ’final  and binding’ and waiving right of objecting the award as  unenforceable, the remaining parts can be enforced.  The  petition, therefore, deserves to be allowed.         In the light of submissions of the learned counsel, let  me consider the legal position.         In Halsbury’s Laws of England (Fourth Edition);  Volume 9; Para 430; p. 297, it has been stated: "430. Severance of illegal and void  provisions. A contract will rarely be totally  illegal or void and certain parts of it may be  entirely lawful in themselves. The question  therefore arises whether the illegal or void parts  may be separated or "severed" from the  contract and the rest of the contract enforced  without them. Nearly all the cases arise in the  context of restraint of trade, but the following  principles are applicable to contracts in general.

       First, as a general rule, severance is  probably not possible where the objectionable  parts of the contract involve illegality and not  mere void promises. In one type of case,  however, the courts have adopted what  amounts almost to a principle of severance by  holding that if a statute allows works to be done  up to a financial limit without a licence but  requires a licence above that limit, then, where  works are done under a contract which does not  specify an amount but which in the event  exceeds the financial limit permitted without  licence, the cost of the works up to that limit is  recoverable.

       Secondly, where severance is allowed, it  must be possible simply to strike out the  offending parts but the court will not rewrite or  rearrange the contract.

       Thirdly, even if the promises can be struck  out as afore-mentioned, the court will not do  this if to do so would alter entirely the scope  and intention of the agreement.

       Fourthly, the contract, shorn of the  offending parts, must retain the characteristics  of a valid contract, so that if severance will  remove the whole or main consideration given  by one party the contract becomes  unenforceable. Otherwise, the offending  promise simply drops out and the other parts of  the contract are enforceable.

       Reference may be made to Chitty on Contracts (29th  Edition); Volume I; pp. 1048-49; "16-188         Introductory. Where all the terms  of a contract are illegal or against public policy  or where the whole contract is prohibited by  statute, clearly no action can be brought by the

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guilty party on the contract; but sometimes,  although parts of a contract are unenforceable  for such reasons, other parts, were they to  stand alone, would be unobjectionable. The  question then arises whether the  unobjectionable may be enforced and the  objectionable disregarded or "severed". The  same question arises in relation to bonds where  the condition is partly against the law.

16-189  Partial statutory invalidity. It was  laid down in some of the older cases that there  is a distinction between a deed or condition  which is void in part by statute and one which is  void in part at common law. This distinction  must now be understood to apply only to cases  where the statute enacts that an agreement or  deed made in violation of its provisions shall be  wholly void. Unless that is so, then provided the  good part is separable from and not dependent  on the bad, that part only will be void which  contravenes the provisions of the statute. The  general rule is that "where you cannot sever the  illegal from the legal part of a covenant, the  contract is altogether void; but, where you can  sever them, whether the illegality be created by  statute or by the common law, you may reject  the bad part and retain the good." Thus, a  covenant in a lease that the tenant should pay  "all parliamentary taxes," only included such as  he might lawfully pay, and a separate covenant  to pay the landlord’s property tax, which it was  illegal for a tenant to contract to pay, although  void, did not affect the validity of the  instrument. In some situations where there is a  statutory requirement to obtain a licence for  work above a stipulated financial limit but up to  that limit no licence is required, the courts will  enforce a contract up to that limit. There is  some doubt whether this applies to a lump sum  contract "for a single and indivisible work."  Even in this situation if the cost element can be  divided into its legal and illegal components, the  courts will enforce the former but not the latter.                                         (emphasis supplied)

       It is no doubt true that a court of law will read the  agreement as it is and cannot rewrite nor create a new  one.  It is also true that the contract must be read as a  whole and it is not open to dissect it by taking out a part  treating it to be contrary to law and by ordering  enforcement of the rest if otherwise it is not permissible.   But it is well-settled that if the contract is in several parts,  some of which are legal and enforceable and some are  unenforceable, lawful parts can be enforced provided they  are severable.           The learned counsel for the petitioner, in my  opinion, rightly submitted that the court must consider the  question keeping in view settled legal position and record a  finding whether or not the agreement is severable.  If the  court holds the agreement severable, it should implement  and enforce that part which is legal, valid and in  consonance of law.         In several cases, courts have held that partial

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invalidity in contract will not ipso facto make the whole  contract void or unenforceable. Wherever a contract  contains legal as well as illegal parts and objectionable  parts can be severed, effect has been given to legal and  valid parts striking out the offending parts.         In Goldsoll v. Goldman, (1914) 2 Ch 603, the  defendant was a dealer in imitation jewellery in London. He  sold his business to the plaintiff and covenanted not to  compete with the plaintiff as a "dealer in real or imitation  jewellery in any part of the United Kingdom, the United  States of America, Russia or Spain". When the covenant  was sought to be enforced, it was contended that the same  was in restrain of a trade and could not be enforced. It  was, however, held that the covenant was unreasonable  and unenforceable insofar as it extended to ’real’ jewellery  and also to competition outside the United Kingdom.  But it  was valid, reasonable and enforceable with regard to rest,  namely, dealing in imitation jewellery and in United  Kingdom. According to the Court, the words "real or" and  the listed places outside the United Kingdom could be  severed leaving only reasonable covenant which was  enforceable.         In Attwood v. Lamont, (1920) 2 KB 146, the plaintiff  was carrying on business as a draper, tailor and general  outfitter at Kidderminster. By a contract for employment,  the defendant agreed with the plaintiff that he would not,  at any time thereafter "either on his own account or on  that of any wife of his or in partnership with or as  assistant, servant or agent to any other person, persons or  company carry on or be in any way directly or indirectly  concerned in any of the following grades or businesses,  that is to say, the trade or business of a tailor, dressmaker,  general draper, milliner, hatter, haberdasher, gentlemen’s,  ladies’ or children’s outfitter at any place within a radius of  ten miles of" Kidderminster. The defendant, however,  subsequently set up business as a tailor at Worcester,  outside the ten miles limit, but obtained and executed  tailoring orders in Kidderminster. When the plaintiff  brought an action, it was contended by the defendant that  the agreement was illegal and could not be enforced. The  Court, however, held that various parts of the contract  were severable and valid part thereof could be enforced.  Upholding the argument of the plaintiff and granting relief  in his favour, the Court observed that the Courts would  sever in a proper case, where the severance can be made  by using a ’blue pencil’.  But it could be done only in those  cases where the part so enforceable is clearly severable  and not where it could not be severed. By such process,  main purport and substance of the clause cannot be  ignored or overlooked.  Thus, a covenant "not to carry on  business in Birmingham or within 100 miles" may be  severed so as to reduce the area to Birmingham, but a  covenant "not to carry on business within 100 miles of  Birmingham" will not be severed so as to read "will not  carry on business in Birmingham".  The distinction may  appear to be artificial, but is well-settled.         In Re Davstone Estates Ltd.’s Leases, Manprop, Ltd.  v. O’Dell & Ors., [1969] 2 All ER 849, on which reliance  was placed by the learned counsel for the respondent, is  clearly distinguishable. In that case, the Court held that the  agreement entered into between the parties was opposed  to public policy and hence was not enforceable.          Similarly, Kall-Kwik Printing (U.K.) Limited v. Frank  Clearence Rush, 1996 FSR 114, instead of supporting the  respondent, helps the petitioner.  There it was observed

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that if the covenant is severable, it could be implemented  by applying the ’blue pencil’ test.         The legal position in India is not different.          In Coringa Oil Co. v. Koegler, ILR (1876) 1 Cal 466, a  clause in the agreement stated that all disputes be referred  to arbitrator of two competent London Brokers and their  decision would be ’final’. Dealing with the question of  legality of such clause, the Court held that the contract  could be enforced by excluding the part as regards  challenge to such award. It would not affect the jurisdiction  of the court, and to that extent, the clause is not  enforceable.  The other stipulation, however, would not  become void or inoperative.         In Babasaheb Rahimsaheb v. Rajaram Raghunath,  AIR 1931 Bom 264, there were several clauses in the  contract.  When the question as to enforceability came up  before the court, it was held that if different clauses in an  agreement are separable, the fact that one clause is void  does not necessarily cause the other clauses to fail.         In Union Construction Co. (P) Ltd. v. Chief Engineer,  Eastern Command, Lucknow & Anr., AIR 1960 All 72, a  similar contention was raised that the Arbitration  Agreement giving finality and conclusiveness was illegal  and unenforceable as it was hit by Section 28 of the  Contract Act. Clause 68 of the Arbitration Agreement,  which was similar to the case on hand, read thus: "68. Arbitration. \027 All disputes, between the  parties to the Contract arising out of or relating  to the Contract, other than those for which the  decision of the C.W.E. or of any other person is  by the Contract expressed to be final and  conclusive, shall after written notice by either  party to the Contract to the other of them be  referred to the sole arbitration of an Engineer.  Officer to be appointed by the authority  mentioned in the tender documents.

       Unless the parties otherwise agree, such  reference shall not take place until after the  completion, alleged completion or abandonment  of the Works or the determination of the  Contract.

       The venue of Arbitration shall be such  place or places as may be fixed by the  Arbitrator in his sole discretion.

       The award of the Arbitrator shall be final,  conclusive and binding on both parties to the  Contract."                       (emphasis supplied)

       The Court held that the sub-clause making the award  ’final and conclusive’ was clearly separable from the main  clause which made reference to an arbitrator imperative.  "The existence of the sub-clause or the fact that the sub- clause appears to be void does not in any way affect the  right of the parties to have recourse to arbitration and does  not make a reference to an arbitrator any the less an  alternative remedy."          In the present case, clause 23 relates to arbitration. It  is in various parts. The first part mandates that, if there is  a dispute between the parties, it shall be referred to and  finally resolved by arbitration. It clarifies that the rules of  UNCITRAL would apply to such arbitration. It then directs

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that the arbitration shall be held in Delhi and will be in  English language. It stipulates that the costs of arbitration  shall be shared by the parties equally. The offending and  objectionable part, no doubt, expressly makes the  arbitrator’s determination "final and binding between the  parties" and declares that the parties have waived the  rights of appeal or objection "in any jurisdiction". The said  objectionable part, in my opinion, however, is clearly  severable as it is independent of the dispute being referred  to and resolved by an arbitrator. Hence, even in the  absence of any other clause, the part as to referring the  dispute to arbitrator can be given effect to and enforced.  By implementing that part, it cannot be said that the Court  is doing something which is not contemplated by the  parties or by ’interpretative process’, the Court is re-writing  the contract which is in the nature of ’novatio’. The  intention of the parties is explicitly clear and they have  agreed that the dispute, if any, would be referred to an  arbitrator. To that extent, therefore, the agreement is  legal, lawful and the offending part as to the finality and  restraint in approaching a Court of law can be separated  and severed by using a ’blue pencil’.         The proper test for deciding validity or otherwise of an  agreement or order is ’substantial severability’ and not  ’textual divisibility’.  It is the duty of the court to severe  and separate trivial or technical part by retaining the main  or substantial part and by giving effect to the latter if it is  legal, lawful and otherwise enforceable. In such cases, the  Court must consider the question whether the parties could  have agreed on the valid terms of the agreement had they  known that the other terms were invalid or unlawful. If the  answer to the said question is in the affirmative, the  doctrine of severability would apply and the valid terms of  the agreement could be enforced, ignoring invalid terms.  To hold otherwise would be "to expose the covenanter to  the almost inevitable risk of litigation which in nine cases  out of ten he is very ill able to afford, should he venture to  act upon his own opinion as to how far the restraint upon  him would be held by the court to be reasonable, while it  may give the covenantee the full benefit of unreasonable  provisions if the covenanter is unable to face litigation."         The agreement in the instant case can be enforced on  an additional ground as well.  As already noted, clause 20  (Severability) expressly states that if any provision of the  agreement is held invalid, illegal or unenforceable, it would  not prejudice the remainder. In my view, clause 20 makes  the matter free from doubt.  The intention of the parties is  abundantly clear and even if a part of the agreement is  held unlawful, the lawful parts must be enforced.   Reference of a dispute to an arbitrator, by no means can  be declared illegal or unlawful.  To that extent, therefore,  no objection can be raised by the respondent against the  agreement.         It may be stated here that on behalf of the  respondent, it was submitted that if the matter is referred  to arbitration in London or in Singapore, it had no  objection. But as the Arbitration Agreement provides ’Delhi’  as the venue and since that part of the agreement is  enforceable, the prayer of the respondent cannot be  granted.         Finally, it was submitted by the respondent that if this  Court is not upholding the objection of the respondent and  is inclined to grant the prayer of the petitioner, some time  may be granted to the respondent to make an appointment  of an arbitrator.  It was not done earlier because according

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to the respondent, clause 23 was not enforceable. The  learned counsel for the petitioner objects to such a prayer.   According to him, a letter/notice was issued and in spite of  request by the petitioner, the respondent had failed to  exercise his right to appoint an arbitrator.  At this belated  stage, now, the respondent cannot be permitted to take  advantage of its own default. In my opinion, since there is  failure on the part of the respondent in making an  appointment of an arbitrator in accordance with the  agreement, the prayer cannot be granted.         For the foregoing reasons, the arbitration petition  stands allowed and Hon’ble Mr. Justice M.L. Pendse  (Retired) is accordingly appointed as Sole Arbitrator. In the  facts and circumstances of the case, there shall be no order  as to costs.                                 \005\005\005\005\005\005\005\005\005.J.                                                   (C.K. Thakker) New Delhi, January 31 , 2006.

       In Babasaheb Rahimsaheb v. Rajaram Raghunath  Alpe, AIR 1931 Bom. 264, there were several clauses in the  contract. The parties were wrestlers and agreed to wrestle  in Poona on a particular day. It was void that if either of  them failed to turn up, then he was to forfeit Rs.500/- to  the opposite party and the winner was to receive Rs.1125/-  as gate money. The defendant failed to turn up in the ring  and the plaintiff sued him for Rs.500/-. It was contended  on behalf of the defendant that the contract was a  wagering contract and the plaintiff could not enforce it. The  plea, however, was negatived. The Court observed:         "In an agreement, if different clauses are  separable, the fact that one clause is void does  not necessarily cause the other clauses to fail.  In the present case, we are not satisfied that  Cl.2, which is now in question, cannot be  separated from the last clause, and even on the  view put forward by the petitioner the claim  based on Cl.2 would appear to be legal. But  even the last point raised by the petitioner is  not in our opinion proved. The words in the  English statute are somewhat different. It is to  be noted that in the present case the stakes did  not come out of the pockets of the parties, but  had to be paid from the gate money provided  by the public".

       In Union Construction Co. (Private Ltd.) v. Chief  Engineer, Eastern Command, Lucknow and Anr., AIR 1960  Allahabad 72, a similar contention was raised that the  Arbitration Agreement giving finality and conclusiveness  was illegal and not enforceable, has been hit by Section 28  of the Contract Act but the contention was negatived.  Clause 68 of the Arbitration Agreement which is akin to the  case in hand read thus: "68. Arbitration. \027 All disputes, between the  parties to the Contract arising out of or relating  to the Contract, other than those for which the  decision of the C.W.E. or of any other person is  by the Contract expressed to be final and  conclusive, shall after written notice by either  party to the Contract to the other of them be

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referred to the sole arbitration of an Engineer.  Officer to be appointed by the authority  mentioned in the tender documents.         Unless the parties otherwise agree, such  reference shall not take place until after the  completion, alleged completion or abandonment  of the Works or the determination of the  Contract.         The venue of Arbitration shall be such  place or places as may be fixed by the  Arbitrator in his sole discretion.         The award of the Arbitrator shall be final,  conclusive and binding on both parties to the  Contract."

       According to the Court, the sub-clause making the  award final and conclusive was clearly seperable from the  main clause which makes a reference to an arbitrator  imperative. "The existence of the sub-clause or the fact  that the sub-clause appears to be void does not in any way  affect the right of the parties to have recourse to  arbitration and does not make a reference to an arbitrator  any the less an alternative remedy." Similar questions also  came up for consideration while dealing with Article 13 of  the Constitution. The said Article indicates that laws  inconsistent with or in derogation of the Fundamental  Rights contained in Part III of the Constitution would "to  the extent of such inconsistency, be void". In  R.M.D.Chamarbaugwalla & Anr. v. Union of India & Anr.  (1957) SCR 930 : AIR 1957 SC 628, the Constitution Bench  of this Court held that when an Act is held to be  inconsistent with the Constitution, it ca partly be saved, if it  satisfies the test of severability. When a statute is in part- wise, it will enforce the rest if it is severable from what is  invalid. The Court summarized the principles as follows:         1. In determining whether the valid parts  of a statute are separable from the invalid parts  thereof, it is the intention of the legislature that  is the determining factor. The test to be applied  is whether the legislature would have enacted  the valid part if it had known that the rest of  the statute was invalid. Vide Corpus Juris  Secundum, Vol. 82, p. 156; Sutherland on  Statutory Construction, Vol. 2, pp. 176-177.  2. If the valid and invalid provisions are so  inextricably mixed up that they cannot be  separated from one another, then the invalidity  of a portion must result in the invalidity of the  Act in its entirety. On the other hand, if they  are so distinct and separate that after striking  out what is invalid, what remains is in itself a  complete code independent of the rest, then it  will be upheld notwithstanding that the rest has  become unenforceable. Vide Cooley’s  Constitutional Limitations, Vol. 1 at pp. 360- 361; Crawford on Statutory Construction, pp.  217-218.  3. Even when the provisions which are valid are  distinct and separate from those which are  invalid, if they all form part of a single scheme  which is intended to be operative as a whole,  then also the invalidity of a part will result in  the failure of the whole. Vide Crawford on  Statutory Construction, pp. 218-219.  4. Likewise, when the valid and invalid parts of

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a statute are independent and do not form part  of a scheme but what is left after omitting the  invalid portion is so thin and truncated as to be  in substance different from what it was when it  emerged out of the legislature, then also it will  be rejected in its entirety.  5. The separability of the valid and invalid  provisions of a statute does not depend on  whether the law is enacted in the same section  or different sections; (Vide Cooley’s  Constitutional Limitations, Vol. 1, pp. 361-362);  it is not the form, but the substance of the  matter that is material, and that has to be  ascertained on an examination of the Act as a  whole and of the setting of the relevant  provisions therein.  6. If after the invalid portion is expunged from  the statute what remains cannot be enforced  without making alterations and modifications  therein, then the whole of it must be struck  down as void, as otherwise it will amount to  judicial legislation. Vide Sutherland on Statutory  Construction, Vol. 2, p. 194.  7. In determining the legislative intent on the  question of separability, it will be legitimate to  take into account the history of the legislation,  its object, the title and the preamble to it. Vide  Sutherland on Statutory Construction, Vol. 2,  pp. 177-178.          It is an accepted principle of law that while  interpreting statutory provisions, the Court would attempt  to find out the intention of the Legislature and try to save  statute to the extent it is possible.          Read Dickerson has suggested: ".... the Courts are at least free from control by  original legislatures. Curtis, for one, has  contended that consistently with the  ascertained meaning of the statute, a court  should be able to shake off the dust of the past  plant its feet firmly in the present.  ..... The Legislature which passed the stature  has adjourned and its members gone home to  their constituents or to a long rest from all law  making. So why bother about what they  intended or what they would have done ? Better  be prophetic than archaeological, better deal  with the future than with the past, better pay a  decent respect for a future legislature than  stand in awe of one that has folded up its  papers and jointed its friends at the country  club or in the cemetery....  ..... Let the Courts deliberate on what the  present or a future legislature would do after it  had read the court’s opinion, after the situation  has been explained, after the Court has  exhibited the whole fabric of the law into which  this particular bit of legislation had to be  adjusted."         In Attwood v. Lamont (1920) 2 K.B. 146, the plaintiff  was carrying on business as a draper, tailor and general  outfitter. By a contract for employment, the defendant  agreed with the plaintiff that he would not, at any time  thereafter "either on his own account or on that of any wife  of his or in partnership with or as assistant, servant or  agent to any other person, persons or company carry on or

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be in any way directly or indirectly concerned in any of the  following grades or businesses, that is to say, the trade or  business of a tailor, dressmaker, general draper, milliner,  hatter, haberdasher, gentlemen’s, ladies’ or children’s  outfitter at any place within a radius of ten miles of"  Kidderminister. The defendant subsequently set up  business as a tailor at Worcester, outside the ten miles  limit, but obtained and executed tailoring orders in  Kidderminister. When the plaintiff approached a Court of  law, it was contended by the defendant that the agreement  was illegal and could not be enforced. The Court however  held that various parts were severable and that valid part  could be enforced. Upholding the argument of the plaintiff,  the Court observed that the Courts would sever in a proper  case, where the severance can be performed by a blue  pencil but not otherwise. It was however observed that this  can be done only in those cases where the part so  enforceable is clearly severable and not where it would not  be severed. By the said process, main purport and  substance of the clause can be ignored.         In Re Davstone Estates Ltd.’s Leases, Manprop, Ltd.  v. O’Dell & Ors. [1969] 2 All E.R. 849, on which reliance  was placed by the learned counsel for the respondent, is  clearly distinguishable. In that case, the Court held that the  agreement entered into was not legal and valid and hence  was not enforceable. Similarly, Kall-Kwik Printing (U.K.)  Limited v. Frank Clearence Rush [1996] F.S.R. 114 also  does not help the respondent. On the contrary, in the said  case it was held that if the covenant is severable, the same  can be implemented. In the present case, clause 23 relates  to arbitration, mainly it is in four parts. The first part states  that, if there is dispute between the parties, it shall be  referred to and finally resolved by arbitration. It also says  that the rules of UNCITRAL would apply to such arbitration.  It then states that the arbitration shall be held in Delhi and  will be in English language. It also states that the costs of  arbitration shall be shared by the parties equally. The  disputed part declares the arbitrator’s determination as  "final and binding between the parties" and also that  parties have waived the rights of appeal or objection in any  jurisdiction. The said objectionable part, in my opinion, is  clearly severable as it is independent of matter being  raised to and decided by an arbitrator. Therefore, even in  the absence of any other clause, the said part can be given  effect to and enforced. By implementing the said part, it  cannot be said that the Court is doing something which is  not contemplated by the parties or by interpretative  process, the Court is re-writing a contract which is in the  form of novatio. The intention of the parties is abundantly  clear that in case of dispute, the matter must be referred  to arbitrator. To that extent, therefore, the agreement is  legal, valid, in accordance with law and enforceable.         In the instant case, such an agreement can be  enforced even on an additional ground and that is clause  20 (severability). The said clause expressly states that if  any provision of the agreement is held invalid, illegal or  unenforceable, it would not prejudice the remainder. In my  judgment, therefore, the intense of the parties is  abundantly clear that in case of dispute the matter was to  be referred to arbitrator and to that extent, no objection  can be raised by the respondent.         In fact, on behalf of the respondent also, it was  submitted that if the matter is referred to arbitration in  foreign country, it had no objection but as the Arbitration  Agreement in question provides ’Delhi’ as the venue and as

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such a provision is enforceable, the prayer of the  respondent cannot be accepted.         Finally, it was submitted that if this Court is not  upholding the objection of the respondent and inclined to  grant the prayer of the petitioner, some time may be  granted to make an appointment of an arbitrator which was  not done earlier because according to the respondent,  there was no provision in the agreement for arbitration and  clause 23 was not enforceable. The learned counsel for the  petitioner has objected to such a prayer, according to him,  a letter/notice was issued and in spite of a request has  been made, the respondent had failed to exercise his right  to appoint an arbitrator and at this belated stage, no such  prayer deserves to be granted. In my opinion, since there  is failure on the part of the respondent in making of  appointment in accordance with the agreement, the prayer  cannot be granted.         For the foregoing reasons, the arbitration petition  stands allowed and Hon’ble Mr. Justice M.L. Pendse  (Retired) is accordingly appointed as Sole Arbitrator. In the  facts and circumstances of the case, there shall be no order  as to costs.