2016 (6) TMI 1338
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....ly 06, 2011 passed by the Ld. District Judge, Gautam Budh Nagar, UP in Misc. Case No. 33 of 2010, under Section 34 of the Act of 1996, initially filed before the High Court of Judicature, Allahabad but later on transferred by the Supreme Court vide its order dated September 15, 2015 in SLP Civil No. 22318/2010). The OMP 255/2010 is an Enforcement Petition under Section 47 and 49 of the Act of 1996 filed by Roger Shashoua and two others seeking enforcement of final Award dated January 5, 2010. The parties in this petition shall be referred to, not by their status in different petitions but by their names. Facts:-- 2. Facts which are relevant for the purpose of the issues need to be decided by this order are that, on October 20, 1997, ITECL was allotted a property located at A-II, Sector-62, Noida for a sum of Rs. 1.5 Crores paid as allotment money. Mukesh Sharma, Roger Shashoua and the International Trade Expo. Centre Ltd. signed a Shareholders Agreement on July 1, 1998 whereby ITCEL was restructured as a Joint Venture Company. The paid up share capital of ITCEL was Rs. 3 Crores, divided into 30 lakh shares. Mukesh Sharma and Roger Shashoua equally held 15 lakh shares each in ....
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....against competing business of ITECL in derogation of Indian law, more particularly Press Note No. 18 and Pres Note No. 1 whereby it was decided that Foreign Financial Corporation/Technical Collaborators with tie up in India cannot operate themselves or through subsidiary in India in the same field without the consent of the Joint Venture partner. In the said suit, Roger Shashoua filed an application under Section 8 of the Arbitration & Conciliation Act, inter-alia on the ground that there was an arbitration clause in the Shareholder Agreement executed between Mukesh Sharma and Roger Shashoua that all matters concerning the scope of the said suit had to be referred to the Arbitration. The Civil Judge, vide its order dated April 25, 2005 allowed the application under Section 8 and referred the parties to Arbitration. The ITECL challenged the order of the Civil Judge dated April 25, 2005, by filing first appeal before the High Court at Allahabad which was dismissed on May 9, 2008 by holding inter-alia that the Court is not concerned whether the order of injunction could be granted by the Civil Court on merits. The Court is only concerned whether Civil Court rightly returned the procee....
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....005. 4. The ICC Arbitral Tribunal at London continued between Mukesh Sharma and Roger Shashoua and two others. Accordingly, the Arbitral Tribunal communicated the terms of reference on February 27, 2006. On February 12, 2007, the Arbitral Tribunal passed Jurisdiction Award and further passed Cost Award on November 17, 2007. Thereafter, the matter was reserved for final order/Award in May, 2008. 5. The ITE filed RFA(OS) No. 9/2006 against the judgment dated December 20, 2005 of the learned Single Judge in CS(OS) 926/2005. On February 21, 2006, an interim order was granted by the Division Bench in RFA(OS) 9/2006 thereby restraining the arbitration proceedings against ITE. It appears that on February 27, 2006 when the terms of reference were signed by Roger Shashoua and two others and Mukesh Sharma in accordance with ICC Rules, the ITE did not sign the same. As stated above, on February 12, 2007 the Arbitral Tribunal rendered the partial Award on jurisdiction. It appears that with regard to ITE, it was held by the Tribunal that in the light of the injunction of this Court in favour of ITE, a separate Award would be passed at a later stage, upon giving an opportunity to make subm....
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....iminary response to Misc. Case No. 33/2010 before the Ld. District Judge, Gautam Budh Nagar raising specific objections on the ground of jurisdiction, as well as delay in filing the petition under Section 34 of the Act. On July 6, 2011, the Ld. District Judge at Noida returned the objections filed by ITECL under Section 34 of the Act for want of jurisdiction. An appeal was filed under Section 37 of the Arbitration & Conciliation Act being FAO No. 1304(D)/2011 by the ITECL against the order dated July 6, 2011 before the Allahabad High Court on August 1, 2011. In the meantime, Final Award dated August 5, 2011 was passed by the Tribunal incorporating directions qua the ITE. The ITE filed OMP 914/2011 seeking setting aside under Section 34 of the Act of the Awards of the Arbitral Tribunal dated February 27, 2007, November 17, 2007, January 19, 2010 (should be January 5, 2010) and Award dated August 5, 2011. 8. On March 13, 2013, an appeal filed by ITECL was dismissed by the Allahabad High Court for non prosecution, which was subsequently restored on August 28, 2013. On April 2, 2014, the Allahabad High Court dismissed FAO No. 1304(D)/2011 as being non-maintainable under Section 37 o....
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....the order be sent to the Registrar General of the High Court of Delhi. The learned Chief Justice of the High Court of Delhi is requested to nominate a Judge who will hear the writ petition as well as the application preferred under Section 34 of the Act. The nominated judge, we request, should to dispose both the matters by the end of November 2015. Let the matter be listed for further hearing on 08.12.2015." 9. Noting the facts, Mr. Vashist appearing for ITECL in Writ Petition(C) No. 10954/2015 would attack the order passed by the learned District Judge, Gautam Budh Nagar dated July 6, 2011 in Misc. Case No. 33/2010, which is a petition filed under Section 34 of the Arbitration & Conciliation Act by stating that the Ld. District Judge, Gautam Budh Nagar, U.P erroneously held that an application for enforcement of the arbitral award confers exclusive jurisdiction on this Court by virtue of Section 42 of the Act of 1996. According to him, it is a settled law that execution/enforcement applications are not applications within the meaning of Section 42 of the Act of 1996 and therefore do not confer jurisdiction. In this regard he would rely upon the judgment of S.K. Brothe....
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....dh Nagar, Noida in the year 2005 being Suit No. 257/2005. (viii) Noida Court was thus the court of competent jurisdiction within the meaning of Section 2(1)(e) of the Act of 1996. It is not disputed that Delhi Courts also had jurisdiction. However, the ITECL being dominus litis was entitled to choose which court to approach. (ix) The Roger Shashoua in the said suit filed an application under Section 8 of the Act for referring the disputes to arbitration as per the arbitration clause contained in the alleged arbitration agreement. (x) Significantly, Roger Shashoua took no objection to the territorial jurisdiction of the Noida Court in the Section 8 application. (xi) That the Civil Judge, Gautam Budh Nagar, allowed the said application under section 8 of the Act vide order dated April 25, 2005 and referred the disputes to arbitration. (xii) Thus, arbitration proceedings between the parties were initiated pursuant to the order of the Civil Judge, Gautam Budh Nagar on the application filed by the Roger Shashoua in the Civil Suit which culminated in passing of various arbitral awards, impugned in the Section 34 petitions, which has also been ....
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....he arbitral award." 12. He would state, even assuming without admitting, the writ petition is decided against the petitioner, the petitioner has the right to file its objection under Section 34 before this Court and seek a decision on merits. However, if the present writ petition is allowed, all the subsequent objections and applications filed by the parties are to be transferred to the Gautam Budh Nagar Court, being the Principal Civil Court exercising exclusive jurisdiction in terms of Section 42 of the Act of 1996. 13. On the other hand, Mr. Dayan Krishnan, learned Senior Counsel appearing for Roger Shashoua and two others would take preliminary objection to the maintainability of petitions under Section 34 of the Act of 1996 being OMP No. 914/2011, OMP 4/2008 and Misc. Case No. 33/2010, whose order is in challenge in W.P. No. 10954/2015 to contend that the contract providing that the arbitral proceedings shall be governed by ICC Rules with venue of arbitration at London, which means that the procedural aspects thereof are governed by the English Law, it necessarily implies that Part 1 of Arbitration &Conciliation Act, 1996 stands impliedly excluded and therefore, the peti....
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....it for injunction against IEM, a separate Company and the Arbitration proceedings culminating into the award were a result of an independent reference and not the order of the Civil Judge. He would further state, it has been held in (2000) 4 SCC 539 P. Anand Gajapathi Raju & Ors. v. P.V.G. Raju (Died) & Ors., that an application before a court under Section 8 merely brings to the court's notice that the subject-matter of the action before it is the subject-matter of an arbitration agreement. This would not be such an application as contemplated under Section 42 of the Act as the court trying the action may or may not have had jurisdiction to try the suit to start with or be the competent court within the meaning of Section 2(e) of the new Act. Furthermore, in view of the aforesaid pronouncements, the judgment of this Court in Hertz (supra) is per-incuriam. 16. On the other hand, on maintainability of objections under Section 34 of the Act, it is the submission of Mr. Abhinav Vashist, learned Senior Counsel for ITECL, which is without prejudice to the stand of the ITECL, that the Court of District Judge, Gautam Budh Nagar is the Principal Civil Court, which has the jurisdicti....
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....1956. (viii) That various clauses of the alleged SHA including Clause No. 1(a), 1(b), 1(g), 1(h), 2.6, 3.4, 6.1, 6.2, 8, 9.2, 17.3, 17.6 and 17.9 all mentioned the laws of India and/or the applicability of laws of India. (ix) Without prejudice, the relief prayed by the Roger Shashoua requesting for direction for transfer/sale of shares of the petitioner company can only be executed in India under the laws of India and nowhere else in the world. (x) It may also be noted that there is no connection of either the award or the parties with London except it being a neutral venue for holding arbitration sittings. (xi) The respondent No. 3 is a French citizen and the respondent Nos. 4 and 5 companies are companies incorporated in Cyprus and have nothing to do with London whatsoever." 17. They would state, that London was simply a neutral venue for conduct of arbitration proceedings. The parties under the agreement have not expressly mentioned the seat of arbitration. Keeping in mind the close nexus to the disputes with India and the settled law, the seat of Arbitration is India and not London. For determining the seat of arbitration the Court would h....
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....influenced by a finding that Roger Shashoua and two others had submitted to the jurisdiction of the Indian Courts. The said judgment being contrary to the laws of India is not binding on this Court. Section 13 of the Code of Civil Procedure, 1908 provides that a foreign judgment shall not be conclusive as to any matter directly adjudicated even between the same parties where it appears on the face of the proceedings to be contrary to the law applicable in such cases in India. 19. They would further submit that in BSES Ltd. v. Fenner India Ltd. (2006) 2 SCC 728 it was held that whatever may be the law (of bank guarantees in that case) in other jurisdictions, when the law in India is clear, settled and without any deviation whatsoever, there is no occasion to rely upon foreign case law. They would further submit that Roger Shashoua filed an application under Section 8 of the Act for referring the disputes to arbitration in the suit for injunction filed by the ITECL before the Civil Judge, Gautam Budh Nagar, Noida in the year 2005 being Suit No. 257/2005. Even in the High Court of Allahabad, the Roger Shashoua has relied upon Section 8 and Section 16 of the Act, which are in Part 1....
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....ozco India Private Limited (supra) is concerned, in the said case the governing laws of the Contract were the laws of South Korea (Article 22.1). The conclusion reached by the Court in inferring the seat to be Korea in para 15 and concluding that there was a clear agreement to exclude Part I of the Act was only after considering Article 22.1 of the Contract which provided for the proper law of the contract to be Korean law. In the present case, the proper law of contract is Indian Laws and therefore, there can be no presumption of exclusion of Indian laws (Part 1 of the Act) by the parties. 21. Mr. Abhinav Hansaria, learned counsel appearing for Mukesh Sharma adopts the arguments advanced by Mr. Abhinav Vashist and Mr. Sandeep Sethi. Additionally, he relies upon the judgment reported as 1998) 1 SCC 305 Sumitomo Heavy Industries Ltd. v. ONGC Ltd. to contend that the Supreme Court has time and again applied the test of closest and most real connection for determining the proper Law of Arbitration of a contract. He would state that in Venture Global Engineering v. Satyam Computer Services Ltd. and Anr (2008) 4 SCC 190, the Apex Court has held that the award has an intimate and clos....
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....ee: Videocon Industries Ltd. v. Union of India & Anr., (2011) 6 SCC 161, Dozco India Private Limited v. Doosan Infracore Company Limited, (2011) 6 SCC 179, Yograj Infrastructure Limited v. Ssang Yong Engineering and Construction Company Limited, (2011) 9 SCC 735), the very judgment in this case reported in Reliance Industries Limited v. Union of India, (2014) 7 SCC 603, and a recent judgment in Harmony Innovation Shipping Ltd. v. Gupta Coal India Ltd. & Anr." 24. A perusal of the aforesaid paragraph would show, the Supreme Court has held that the Court in several judgments has held that Part I is excluded by necessary implication, if it is found that on the facts of a case, either the juridical seat of the arbitration is outside India or the law governing the arbitration agreement, is a law other than Indian law. While holding so, the Supreme Court referred to its judgments in Videocon Industries Ltd. (supra), Dozco India (P) Ltd. (supra), Yograj Infrastructure Ltd. v. Ssang Yong Engg. and Construction Co. Ltd. (2011) 9 SCC 735, Reliance Industries Ltd. (supra) and Harmony Innovation Shipping Ltd. v. Gupta Coal India Ltd. (2015) 9 SCC 172. In fact, some of the judgments, as refe....
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....les 22 and 23 of the Distributorship Agreement between the parties in this case spell out a clear agreement between the parties excluding Part I of the Act. (ii) The law laid down in Bhatia International v. Bulk Trading S.A. & Anr. (cited supra) and Indtel Technical Services Private Ltd. v. W.S. Atkins Rail Ltd. (cited supra), as also in Citation Infowares Ltd. v. Equinox Corporation (cited supra) is not applicable to the present case. (iii) Since the interpretation of Article 23.1 suggests that the law governing the arbitration will be Korean law and the seat of arbitration will be Seoul in Korea, there will be no question of applicability of Section 11(6) of the Act and the appointment of Arbitrator in terms of that provision." 28. The reliance placed by Mr. Dayan Krishnan, on Union of India v. Reliance Industries Ltd.(supra), is concerned, the Supreme Court has extensively referred to its earlier judgment dated May 28, 2014 (Reliance Industries Ltd. v. Union of India (2014) 6 SCC 603). In para 2, it referred to the following clauses of the Agreement between the parties:-- "ARTICLE 32: APPLICABLE LAW AND LANGUAGE OF THE CONTRACT 32.1 Subject....
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.... be convenient. It is also agreed by the parties that the terms and conditions of the arbitration agreement in Article 33 of the PSCs shall remain in full force and effect and be applicable to the arbitration proceedings. 37. The essential dispute between the parties is as to whether Part I of the Arbitration Act, 1996 would be applicable to the arbitration agreement irrespective of the fact that the seat of arbitration is outside India. To find a conclusive answer to the issue as to whether applicability of Part I of the Arbitration Act, 1996 has been excluded, it would be necessary to discover the intention of the parties. Beyond this parties are not agreed on any issue. 38. We are also of the opinion that since the ratio of law laid down in Balco [Balco v. Kaiser Aluminium Technical Services Inc. has been made prospective in operation by the Constitution Bench itself, we are bound by the decision rendered in Bhatia International. Therefore, at the outset, it would be appropriate to reproduce the relevant ratio of Bhatia International in para 32 which is as under: "32. To conclude, we hold that the provisions of Part I would apply to all arbitrations an....
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....ue for appointment of an arbitrator (Article 33.5). Further, in case the two arbitrators fail to make the appointment of the third arbitrator within 30 days of the appointment of the second arbitrator, again the Secretary General of the Permanent Court of Arbitration at The Hague may, at the request of either party appoint the third arbitrator. In the face of this, it is difficult to appreciate the submission of the respondent Union of India that the Arbitration Act, 1996 (Part I) would be applicable to the arbitration proceedings. In the event, the Union of India intended to ensure that the Arbitration Act, 1996 shall apply to the arbitration proceedings, Article 33.5 should have provided that in default of a party appointing its arbitrator, such arbitrator may, at the request of the first party be appointed by the Chief Justice of India or any person or institution designated by him. Thus, the Permanent Court of Arbitration at The Hague can be approached for the appointment of the arbitrator, in case of default by any of the parties. This, in our opinion, is a strong indication that applicability of the Arbitration Act, 1996 was excluded by the parties by consensus. Further, the ....
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....ate to the public policy of India, Part I of the Arbitration Act, 1996 would be applicable. Applicability of Part I of the Arbitration Act, 1996 is not dependent on the nature of challenge to the award. Whether or not the award is challenged on the ground of public policy, it would have to satisfy the precondition that the Arbitration Act, 1996 is applicable to the arbitration agreement. In our opinion, the High Court has committed a jurisdictional error in holding that the provisions contained in Article 33.12 are relevant only for the determination of the curial law applicable to the proceedings. We have already noticed earlier that the parties by agreement have provided that the juridical seat of the arbitration shall be in London. Necessary amendment has also been made in the PSCs, as recorded by the final partial consent award dated 14-9-2011. It is noteworthy that the Arbitration Act, 1996 does not define or mention juridical seat. The term "juridical seat" on the other hand is specifically defined in Section 3 of the English Arbitration Act. Therefore, this would clearly indicate that the parties understood that the arbitration law of England would be applicable to the arbit....
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....s to be mentioned that Shri Ranjit Kumar's valiant attempt to reopen a question settled twice over, that is by dismissal of both a review petition and a curative petition on the very ground urged before us, must meet with the same fate. His argument citing the case of Mathura Prasad Bajoo Jaiswal v. Dossibai N.B. Jeejeebhoy, (1970) 1 SCC 613, that res judicata would not attach to questions relating to jurisdiction, would not apply in the present case as the effect of clause 34.2 of the PSC raises at best a mixed question of fact and law and not a pure question of jurisdiction unrelated to facts. Therefore, both on grounds of res judicata as well as the law laid down in the judgment dated 28.5.2014, this application under Section 14 deserves to be dismissed. It is also an abuse of the process of the Court as has rightly been argued by Dr. Singhvi. It is only after moving under the UNCITRAL Arbitration Rules and getting an adverse judgment from the Permanent Court of Arbitration dated 10.06.2013 that the present application was filed under Section 14 of the Arbitration Act two days later i.e. on 12.6.2013." 32. In Yograj Infrastructure Ltd.(supra), the Supreme Court was dealin....
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....no ambiguity that the procedural law with regard to the arbitration proceedings, is the SIAC Rules. Clause 27.2 makes it clear that the seat of arbitration would be Singapore. 50. What we are, therefore, left with to consider is the question as to what would be the law on the basis whereof the arbitral proceedings were to be decided. 51. In our view, Clause 28 of the Agreement provides the answer. As indicated hereinabove, Clause 28 indicates that the governing law of the agreement would be the law of India, i.e., the Arbitration and Conciliation Act, 1996. The learned Counsel for the parties have quite correctly spelt out the distinction between the "proper law" of the contract and the "curial law" to determine the law which is to govern the arbitration itself. While the proper law is the law which governs the agreement itself, in the absence of any other stipulation in the arbitration clause as to which law would apply in respect of the arbitral proceedings, it is now well-settled that it is the law governing the contract which would also be the law applicable to the Arbitral Tribunal itself. Clause 27.1 makes it quite clear that the Curial law which regulates t....
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....pore, i.e., the seat of arbitration would be in Singapore, in accordance with the Singapore International Arbitration Centre Rules as in force at the time of signing of the Agreement." 34. In a more recent judgment of the Supreme Court in Harmony Innovation Shipping Ltd. v. Gupta Coal India Ltd. (2015) 9 SCC 172, the Supreme Court was concerned with an agreement, which stipulated that the contract is to be governed and construed according to the English Law. The Supreme Court held it forms as a part of arbitration clause. The Supreme Court also noted that there were ample indication through various phrases like "arbitration in London to apply", arbitrators are to be the Members of "London Arbitration Association" and the contract "to be governed and construed according to the English Law". The Supreme Court also observed, there is no other stipulation relating to applicability of any law to the Agreement. That apart, Supreme Court also noted that if the dispute is for an amount of less $ 50000 then the arbitration should be conducted in accordance with small claims, procedure of London Maritime Arbitration Association. The Supreme Court also held that if the stipulations are not....
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....rcon GMBH that the term 'venue' ought to be read as 'seat'. It was observed that "in virtually all jurisdictions, it is an accepted proposition of law that the seat normally carries with it the choice of that country's arbitration/Curial law. But this would arise only if the Curial law is not specifically chosen by the parties." On the facts of that case, it was concluded that the parties have exclusively chosen the Indian law i.e., Act of 1996 as the curial law. It was further observed "If one has regard to the factors connecting the dispute to India and the absence of any factors connecting it to England, the only reasonable conclusion is that the parties have chosen London, only as the venue of the arbitration. All the other connecting factors would place the seat firmly in India." 39. In a recent judgment in the case of Carzonrent India Pvt. Ltd. (supra), this Court has interpreted identical provisions of the Agreement, wherein the parties chose Singapore as the venue of arbitration, held that there is nothing in clause 14, which indicates that there is any implied exclusion of the applicability of Indian law. On the other hand, the clause begins by stati....
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....gement or waiver of the arbitration agreement and is not to effect the relevant powers reserved to the arbitral tribunal. It cannot, therefore, effect the seat of the arbitration, the agreement to the curial law and the exclusive supervisory powers of the English courts in relation to the conduct of the arbitration and the validity of the award. 44. In para 47, it is noted that Mukesh Sharma had submitted that Roger Shashoua's and two others conduct before this court when making submissions in the context of the Mukesh Sharma's section 34 petition throughout 2008 also amounts to a submission to the jurisdiction of this Court, whilst Roger Shashoua and two others maintained that, not only it is impossible for them to have submitted prior to notice being issued in the proceedings but that, in any event, as a matter of fact, their counsel throughout made it plain that Roger Shashoua and two others did object to the jurisdiction of the Court to determine the matters, which Mukesh Sharma wished to put it before it. 45. In para 48, the High Court has held as under:-- "48. On both these matters there is a large body of factual evidence which is seriously in dispute.....
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....lems in any event. On the basis of what I have already decided, England is the seat of the arbitration and since this carries with it something akin to an exclusive jurisdiction clause, as a matter of principle the foreign court should not decide matters which are for this court to decide in the context of an anti suit injunction. As I have said, the question of submission goes to the exercise of my discretion to grant an injunction and this is not simply a matter of Indian law. The principles of English private international law are called into play when deciding whether what took place in India and its effect in Indian law should impact upon the exercise of this court's discretion. If for example the claimants had submitted to the jurisdiction of the Indian courts as a matter of technicality, whilst making it plain that they had no intention of doing so, that would be a much less forceful point for the defendant than a full blown submission to the jurisdiction of the Delhi High Court, which would be recognised anywhere in the world as being a voluntary acceptance of that court's jurisdiction to act at the behest of the defendant to do all the things which the claimant now....
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....set, I may state here, 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 in view of the judgment of this Court in Daelim Industrial Co. Ltd. v. Numaligarh Refinery Ltd. 2009(3) Arb.LR 524(Delhi), wherein this Court in para 16 held as under:-- "16. Applying the same reasoning, Section 42 would also not apply to execution applications. The execution application is not "arbitral proceedings" within the meaning of Section 42 of the Act and is not a subsequent application arising out of the agreement and the arbitral proceedings. In fact the arbitral proceedings come to an end when the time for making an application to set aside the arbitral award expires and the execution application is an enforcement of the award. Thus the place of filing of the execution application need not be the place of the filing of the application under Section 34 of the Act for the rea....
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....trict Judge, Gautam Budh Nagar, in view of the judgment of the Supreme Court in State of West Bengal v. Associated Contractors (2015) 1 SCC 32 vide para 25(c) would not be available to Mr. Vashist. The petition under Section 9 filed by Roger Shashoua and others in this Court is the first and prior to the petition under Section 34 of the Arbitration & Conciliation Act by ITECL before the Ld. District Judge and would be hit by Section 42 of the Act of 1996 and would not be maintainable. 54. Further, insofar as the submission of Mr. Vashist that the dispute relates to SHA; to the property in Noida, the corporate office of ITECL is in Noida, the subject-matter of dispute between the parties relatable to Noida property is also without merit and the same would also not confer jurisdiction on the Noida Court as the cause of action, subject-matter of the dispute between the parties is the resolution dated October 29, 2003 and other reliefs relatable to transfer of shares etc, which need to be seen from the perspective of the registered office of the ITECL which is in Delhi. 55. Noting the impugned order of the District Judge is erroneous and not legally tenable but no purpose would b....
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