TaxTMI 
TaxTMI 
2002 (3) TMI 824
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....ation under section 9 of the Arbitration and Conciliation Act, 1996 ('the Act') before the IIIrd Addl. District Judge, Indore, M.P. against the appellant and the 2nd respondent. One of the interim reliefs sought was an order of injunction restraining these parties from alienating, transferring and/or creating third party right, disposing of, dealing with and/or selling their business assets and properties. The appellant raised the plea of maintainability of such an application. The appellant contended that Part I of the Act would not apply to arbitrations where the place of arbitration is not in India. This application was dismissed by the IIIrd Addl. District Judge on 1-2-2000. It was held that the Court at Indore had jurisdiction and the application was maintainable. The appellant filed a writ petition before the High Court of Madhya Pradesh, Indore Bench. The said writ petition has been dismissed by the impugned judgment dated 10-10-2000. 4. On behalf of the appellants, Mr. Sen submits that Part I only applies to arbitrations where the place of arbitration is in India. He submits that if the place of arbitration is not in India then Part II of the Act would apply. He relies o....
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....lating thereto." Mr. Sen submits that sub-sections (3), (4) and (5) of section 2 would necessarily only apply to arbitration which take place in India. He submits that, therefore, even though the sub-section (4) of section 2 uses the words 'every arbitration' and sub-section (5) of section 2 uses the words "all arbitrations and to all proceedings relating thereto", they must necessarily refer only to arbitrations which take place in India. He submits that otherwise there would be a conflict between sub-section (2) on one hand and sub-sections (4) and/or (5) on the other. Mr. Sen submits that if it is held that Part I applies to all arbitrations, i.e., even to arbitrations whose place of arbitration is not in India, then sub-section (2) of section 2 would become redundant and/or otiose. 7. Mr. Sen submits that in this matter arbitration is being held in Paris, i.e., out of India. He submits that to such arbitrations Part I does not apply. He submits that sections 9 and 17 fall in Part I. He submits that sections 9 and 17 would not apply and cannot be used in cases where the place of arbitration is not in India. 8. Mr. Sen submits out that Part II deals with enforcement of f....
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....e place outside India. He points out that earlier, two single Judges of the Delhi High Court had held that Part I applies to arbitrations which take place outside India. He points out that now a Division Bench of the Delhi High Court has held that Part I does not apply to arbitrations which take place outside India. He submits that, therefore, now the only High Court which has held, that Part I applies to arbitrations which take place outside India, is the Madhya Pradesh High Court, which has so held by the impugned judgment. Mr. Sen took us through the authority of the Division Bench of the Delhi High Court in the case of Marriott International Inc. v. Ansal Hotels Ltd. AIR 2000 Delhi 377. He also took us through an unreported judgment of a Division Bench of the Calcutta High Court in the case of Keventor Agro Ltd. v. Seagram Co. Ltd. [A.P.O. Nos. 490, 499 of 1997 and C.S. No. 592 of 1997 dated 27-1-1998]. These authorities adopt, more or less, the same reasoning as has been canvassed by Mr. Sen. The Delhi High Court further notices that this reasoning may lead to a situation where a party may be left remedyless and, therefore, would work hardship on a party. The Delhi High Court,....
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....would not be able to apply for interim relief in India even though the properties and assets are in India. Thus, a party may not be able to get any interim relief at all. 15. It is, thus, necessary to see whether the language of the Act is so plain and unambiguous as to admit of only the interpretation suggested by Mr. Sen. It must be borne in mind that the very object of the Act, was to establish a uniform legal framework for the fair and efficient settlement of disputes arising in international commercial arbitration. The conventional way of interpreting a statute is to seek the intention of its makers. If a statutory provision is open to more than one interpretation then the Court has to choose that interpretation which represents the true intention of the Legislature. This task often is not an easy one and several difficulties arise on account of variety of reasons, but at the same, it must be borne in mind that it is impossible even for the most imaginative Legislature to forestall exhaustively situations and circumstances that may emerge after enacting a statute where its application may be called for. It is in such a situation the Courts' duty to expound arises with a cau....
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....te purports to be regulating and that alternative is to be rejected which will introduce uncertainty, friction or confusion into the working of the system." This principle was accepted by Subba Rao, J. while construing section 193 of the Sea Customs Act, 1878 and in coming to the conclusion that the Chief of Customs Authority was not an officer of custom - Collector of Customs v. Digvijaysinhji Spg. & Wvg. Mills Ltd. AIR 1961 SC 1549. 16. A reading of the provisions shows that the Act applies to arbitrations which are held in India between Indian nationals and to International commercial arbitrations whether held in India or out of India. Section 2(1)(f) defines an international commercial arbitration. The definition makes no distinction between international commercial arbitrations held in India or outside India. An international commercial arbitration may be held in a country which is a signatory to either the New York Convention or the Geneva Convention (the convention country). An international commercial arbitration may be held in a non-convention country. The Act nowhere provides that its provisions are not to apply to international commercial arbitrations which take place....
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....d' would include an interim award. 19. Section 2(1)(f) defines an international commercial arbitration. It reads as follows : "2(f) 'international commercial arbitration' means an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India and where at least one of the parties is- (i) an individual who is a national of, or habitually resident in, any country other than India; or (ii) a body corporate which is incorporated in any country other than India; or (iii) a company or an association or a body of individuals whose central management and control is exercised in any country other than India; or (iv) the Government of a foreign country;" As stated above the definition of 'international commercial arbitration' makes no distinction between international commercial arbitrations which take place in India or internal commercial arbitrations which take place outside India. 20. Section 2(1)(e) defines 'Court' as follows : "(e) 'court' means the principle civil court of original jurisdiction in a district, and includes the High Cou....
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....at Part I or any provision therein will not apply. Thus, in respect of arbitrations which take place outside India even the non-derogable provisions of Part I can be excluded. Such an agreement may be express or implied. 22. If read in this manner there would be no conflict between section 1 and section 2(2). The words 'every arbitration' in sub-section (4) of section 2 and the words "all arbitrations and all proceedings relating thereto" in sub-section (5) of section 2 are wide. Sub-sections (4) and (5) of section 2 are not made subject to sub-section (2) of section 2. It is significant that sub-section (5) is made subject to sub-section (4) but not to sub-section (2). To accept Mr. Sen's submission would necessitate adding words in sub-sections (4) and (5) of section 2, which the Legislature has purposely omitted to add, viz., "Subject to provision of sub-section (2)". However, read in the manner set out hereinabove there would also be no conflict between sub-section (2) of section 2 and sub-sections (4) and/or (5) of section 2. 23. That the Legislature did not intend to exclude the applicability of Part I to arbitrations, which take place outside India, is further clear....
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....8. 25. The beginning part of section 28 of the Act reads as follows : 28. "Rules applicable to substance of dispute.-(1) Where the place of arbitration is situate in India,-" Section 28 is in Part I. If Part I was not to apply to an arbitration which takes place outside India there would be no necessity to specify that the rules are to apply "where the place of arbitration is situate in India". It has been held in the case of National Thermal Power Corpn. v. Singer Co. [1992] 3 SCC 551 that in international commercial arbitrations parties are at liberty to choose, expressly or by necessary implication, the law and the procedure to be made applicable. The procedure or the rules governing such arbitration may be of the country where the arbitration is being held or the body under whose aegis the arbitration is being held. All bodies which conduct arbitrations and all countries have rules and laws governing arbitrations. Thus, section 28 does not provide for rules where the place of arbitration is out of India. 26. Mr. Sen had also submitted that Part II, which deals with enforcement of foreign awards does not contain any provision similar to section 9 or section 17 ....
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....State." [Emphasis supplied] Thus, article 1(2) uses the word 'only' to emphasize that the provisions of that Law are to apply if the place of arbitration is in the Territory of that State. Significantly in section 2(2) the word 'only' has been omitted. The omission of this word changes the whole complexion of the sentence. The omission of the word 'only' in section 2(2) indicates that this sub-section is only an inclusive and clarificatory provision. As stated above it is not providing that provisions of Part I do not apply to arbitration which take place outside India. Thus, there was no necessity of separately providing that section 9 would apply. 28. Now let us consider section 9. It reads as follows : "Interim measures, etc., by Court.-A party may, before, or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to a Court- (i) for the appointment of a guardian for a minor or a person of unsound mind for the purposes of arbitral proceedings; or (ii) for an interim measure of protection in respect of any of the following matters, namely:- (a) the p....
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....ility of section 9 it has done so specifically. 29. We see no substance in the submission that there would be unnecessary interference by Courts in arbitral proceedings. Section 5 provides that no judicial authority shall intervene except where so provided. Section 9 does not permit any or all applications. It only permits applications for interim measures mentioned in clauses (i) and (ii) thereof. Thus, there cannot be applications under section 9 for stay of arbitral proceedings or to challenge the existence or validity of arbitration agreements or the jurisdiction of the Arbitral Tribunal. All such challenges would have to be made before the Arbitral Tribunal under the Act. 30. Mr. Sen had also submitted that the term 'arbitral award' includes an interim award. He had submitted that it would be open for the Arbitral Tribunal to pass interim awards and those interim awards could be enforced in India under Part II. However, there is a difference between an 'interim award' and an 'interim order'. Undoubtedly, the Arbitral Tribunal could pass an interim award. But an interim order or directions passed by the Arbitral Tribunal would not be enforceable in India. Thus, even in re....