2016 (6) TMI 1338 - HC - Indian Laws

Court dismisses writ petition challenging District Judge's order, directs filing under Section 34 in High Court. Arbitration Act applies

Mukesh Sharma and Ors. Versus Roger Shashoua and Ors.

The court dismissed the writ petition challenging the order of the District Judge, Gautam Budh Nagar, and directed that the petition under Section 34 be ... Maintainability of petition - Section 34 of the Act of 1996 - Territorial Jurisdiction - Held that:- The arbitration clause stipulates that the arbitration shall be, in accordance with the Rules of conciliation and arbitration of International Chamber of Commerce, Paris. The contract shall be governed by the Indian laws. The Agreement does not stipulate the law which shall govern the arbitration agreement. The case of Mr. Krishnan is, since the parties have agreed, the arbitration would take place in London and no other place, there was an implied exclusion to the applicability of Indian law to the arbitration agreement and accordingly the procedure for challenging the Award would be governed by the law of the seat of Arbitration i.e., English law. The Court was conscious of the fact that the effect of submitting to the jurisdiction of this court by filing an application under Section 9 cannot be decided without hearing full evidence about what took place and effect of it from the perspective of both Indian Law and the principles of English conflict of laws. No doubt, the High Court has held that England is the seat of arbitration and on the principle akin to exclusive jurisdiction clause, it held, as a matter of principle, the foreign Court should not decide matters, which are for that Court to decide in the context of an anti suit injunction - Suffice to state that the Court itself has stated, the effect of submission to the jurisdiction need to be decided, and there was no final decision on that count. Further, the Court was taking a prima facie view for grant of anti suit injunction. Whether the order passed by learned District Judge, Gautam Budh Nagar, U.P dated July 6, 2011 directing the return of the petition to the petitioner is justified? - Held that:- The reasoning given by the learned District Judge in directing return of the petition under Section 34 of the Act to ITECL on the ground that Roger Shashoua and two others had earlier filed a petition under Section 47 and 49 of the Act of 1996 in this Court and the said petition being prior in time, the petition under Section 34 would be hit by Section 42, is erroneous - Admittedly, the petition filed by Roger Shashoua and others, is under Section 47 and 49 of the Act, so the bar of Section 42 would not be applicable to the petition under Section 34 of the Act filed by ITECL before the District Judge, Gautam Budh Nagar. Noting the impugned order of the District Judge is erroneous and not legally tenable but no purpose would be achieved by remanding the case back to the District Judge, Gautam Budh Nagar, as it is clear that on the ground that a petition under Section 9 of the Act of 1996, as was initially filed by Roger Shashoua and others in this Court, the same would trigger the bar of Section 42 of the Act of 1996 making the petition under Section 34 as not maintainable before the District Judge, Gautam Budh Nagar. The petitioner ITECL shall file the petition under Section 34, which was directed to be returned back in terms of the order of the Ld. District Judge, Gautam Budh Nagar before this Court on or before 15th July, 2016. Issues Involved:1. Jurisdiction of the Court under Section 34 of the Arbitration & Conciliation Act, 1996.2. Applicability of Part I of the Arbitration & Conciliation Act, 1996.3. Territorial Jurisdiction of the District Judge, Gautam Budh Nagar.4. Effect of prior applications under Section 9 and Section 34 of the Arbitration & Conciliation Act, 1996.5. Enforcement of Arbitral Awards under Section 47 and 49 of the Arbitration & Conciliation Act, 1996.Detailed Analysis:1. Jurisdiction of the Court under Section 34 of the Arbitration & Conciliation Act, 1996:The primary issue was whether the petitions filed under Section 34 of the Arbitration & Conciliation Act, 1996, were maintainable. The court held that the arbitral proceedings were governed by ICC Rules with the venue of arbitration at London. Despite the venue being London, the substantive law governing the agreement was Indian law. The court concluded that Part I of the Arbitration & Conciliation Act, 1996, was applicable, rejecting the argument that it was excluded by necessary implication.2. Applicability of Part I of the Arbitration & Conciliation Act, 1996:The court examined whether Part I of the Arbitration & Conciliation Act, 1996, was excluded by necessary implication. It relied on the precedent set by Bhatia International and other judgments, which emphasized the 'closest and most real connection' test. The court found that the arbitration agreement had a close connection with India, as the substantive law of the contract was Indian law, and the arbitration agreement did not expressly exclude the applicability of Part I of the Act.3. Territorial Jurisdiction of the District Judge, Gautam Budh Nagar:The court addressed whether the District Judge, Gautam Budh Nagar, had the territorial jurisdiction to entertain the petition under Section 34. It noted that the initial application under Part I of the Act was filed in the Principal Civil Court of the Civil Judge, Gautam Budh Nagar. However, the court concluded that the petition under Section 34 was not maintainable before the District Judge, Gautam Budh Nagar, due to the bar of Section 42, as a prior application under Section 9 was filed in the Delhi High Court.4. Effect of Prior Applications under Section 9 and Section 34 of the Arbitration & Conciliation Act, 1996:The court examined the effect of prior applications under Section 9 and Section 34. It held that the petition under Section 9 filed by Roger Shashoua and others in the Delhi High Court triggered the bar of Section 42, making the subsequent petition under Section 34 filed by ITECL before the District Judge, Gautam Budh Nagar, not maintainable. The court emphasized that the first application under Part I of the Act determines the jurisdiction for all subsequent applications.5. Enforcement of Arbitral Awards under Section 47 and 49 of the Arbitration & Conciliation Act, 1996:The court noted that the petition filed by Roger Shashoua and others under Section 47 and 49 of the Act for the enforcement of the arbitral award did not confer exclusive jurisdiction under Section 42. It held that execution applications are not 'arbitral proceedings' within the meaning of Section 42 and thus do not trigger the bar of Section 42.Conclusion:The court dismissed the writ petition challenging the order of the District Judge, Gautam Budh Nagar, and directed that the petition under Section 34 be filed in the Delhi High Court. The court also rejected the plea of non-maintainability of petitions under Section 34 of the Arbitration & Conciliation Act, 1996, affirming the applicability of Part I of the Act to the arbitration agreement. The petitions were ordered to be listed for hearing on a specified date.