TaxTMI 
TaxTMI 
2020 (10) TMI 1397
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....gaged in the business and lease of aircrafts, and other associated activities. Respondent No. 1 is one of the group companies of Respondent No 2. Respondent No. 2 was running his business, in India, through Respondent No. 1. 4. The aircraft, forming subject matter of the present controversy - which was an ATR 72-500, bearing Manufacturer Serial Number (MSN) 688 - was owned by Respondent No 1. 5. The petitioner proposed to lease the aforesaid aircraft (hereinafter referred to as "the aircraft") from Respondent No 1. The following communications ensued, between the petitioner and the respondent, prior to issuance of the Letter of Intent: (i) On 24th July, 2019, the respondent wrote, to the petitioner, acknowledging the desire, of the petitioner, to lease the MSN 688 aircraft, with effect from 1st October, 2019, for a period of 3 years. Lease rent was fixed at Rs. 37 lakhs per month, plus 5% GST, for the first 18 months, and Rs. 40 lakhs per month, plus 5% GST for the remaining 18 months. Additionally, the letter noted that the petitioner would have to pay Maintenance Reserves, to the respondent, @ US $400 per flying cycle/flying hour. (ii) On 19th August, 2019....
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....etitioner and the respondent, would supersede the LOI. 7. Clause 20 of the LOI stipulated as under: "20. Governing Law: This Proposal and the underlying documents for the contemplated transaction shall be governed by the laws of India without regard to conflict of laws principles. Lessee and Lessor agree to submit to the exclusive jurisdiction of the courts located in Singapore with regard to any claim of matter arising under or in connection with this Proposal or the Lease Documentation. The English-language shall be used in all documents and proceedings." 8. On 7th September, 2019, the respondent wrote to the petitioner, stating that it was confident of working with the DGCA to get the CoA issued for the aircraft. 9. On 12th November, 2019, a Lease Deed was executed, between the petitioner and the respondent. According to the petitioner, this Lease Deed was superseded by a subsequent Lease Deed, executed on 9th December, 2019. The respondent, however, refutes the submission, by pointing out that the Schedules to the Lease Deed dated 9th December, 2019, were not signed by the parties. For the purposes of this judgment, it would hardly matter whether one ....
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....tion. Possession of the aircraft was to be with the petitioner, whereas right, title and interest in the aircraft was, as per Clause 5 of the Lease Deed, to vest with the respondent. Clause 6 required the respondent to deliver, and the petitioner to accept, the aircraft, with a current and valid COR, issued by the IOMAR. Acceptance of the aircraft was, as per Clause 6.2, to be by way of execution of a Delivery Acceptance Certificate, in accordance with Schedule II to the Lease Deed. Clause 7 provided for the modes of termination of the Lease Deed, whereas Clause 8 stipulated the rent payable, and the date from which it would be payable. 14. The petition avers that the petitioner had paid, to the respondent, US $ 336,000 towards Security Deposit, Lease Rent, till 15th March, 2020, totalling US $ 112,000, and US $ 26,000 towards the CDSS Kit. 15. On 4th March, 2020, the petitioner wrote to the respondent, requiring for confirmation of the final date, by which the aircraft would be delivered. The respondent replied, on 5th March, 2020, alleging that delay in delivery of the aircraft was because of the delay, on the part of the petitioner, in finalising the painting, design, etc.....
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.... 2nd April, 2020, the respondent addressed a detailed communication, to the petitioner, asserting that the aircraft had been ferried to Hyderabad on 29th November, 2019, and was ready for inspection and acceptance by the petitioner on 1st December, 2019, as per the terms of the Lease Agreement. Obtaining COR and COA, it was further asserted, was the responsibility of the petitioner, and not of the respondent. The communication alleged default, on the part of the petitioner, in payment of Security Deposit and Advance Lease Rent, as per the terms of the Lease Agreement. The delay in completion of the work, as desired by the petitioner, on the aircraft, it was further alleged, continued owing to the internal decision-making process of the petitioner. This delay, according to the communication, continued till March, 2020. The petitioner, it was alleged, became liable to pay Maintenance Reserves, to the respondent, w.e.f. 1st February, 2020. Thereafter, vide email dated 5th March, 2020, it was alleged that the petitioner had unilaterally terminated the Lease Agreement, thereby obviating the necessity of any termination notice having to be issued by the respondent. In these circumstances....
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....530,000, it is submitted, has become payable to the petitioner by the respondent. The petitioner asserts that it has a good prima facie case and that the balance of convenience and special equities are overwhelmingly in its favour. Denial of interim relief, as sought in the petition, it is further asserted, would result in irreparable injury to the petitioner. 24. The petition prays for (i) a restraint, against the respondents creating any third party interest/right/title on the aircraft, or from selling, transferring or encumbering the aircraft in any manner, (ii) a restraint, against the respondents, from taking the aircraft out of India, and (iii) a direction, to the respondents, to deposit US $ 530,000 (equivalent to Rs. 4,01,05,736/-) in an escrow account. 25. I have heard Mr. Gautam Narayan, learned Counsel for the petitioner, and Mr. Arvind Kamath, learned Senior Counsel for the respondent, at length. Rival Submissions and Findings Re. Territorial Jurisdiction 26. A preliminary objection was raised, by Mr. Arvind Kamath, learned Senior Counsel for the respondents, to the effect that this Court did not have the territorial jurisdictio....
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....tre (SIAC). 29. Mr. Kamath submits that, the petitioner and the respondent having agreed to submit themselves to the jurisdiction of the courts at Singapore, this Court is proscribed from entertaining the present matter. 30. In this context, it is also appropriate to reproduce Section 2(2) and 20 of the 1996 Act, thus: "(2) This Part shall apply where the place of arbitration is in India: Provided that subject to an agreement to the contrary, the provisions of sections 9, 27 and clause (a) of sub-section (1) and sub-section (3) of section 37 shall also apply to international commercial arbitration, even if the place of arbitration is outside India, and an arbitral award made or to be made in such place is enforceable and recognised under the provisions of Part II of this Act." "International commercial arbitration" is defined, in clause (f) of Section 2 of the 1996 Act, thus: "(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 1 of the parties is - (i) an individual ....
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....urisdiction of this Court, to entertain the present petition, Mr. Kamath emphasises the omission of the word "express", in the proviso to Section 2(2) of the 1996 Act, denoting a departure by the legislature, to that extent, from the recommendation of the Law Commission. The ouster of jurisdiction, as contemplated by the proviso to Section 2(2) does not, therefore, he submits, need to be "express"; it can also be implied. 36. Mr. Kamath also submits that the petitioner is not without a remedy in Singapore, and invites attention, in this context, to Section 12A of the International Arbitration Act, which empowers the Court to order interim measures. 37. In response to the objection, of Mr. Kamath, to the territorial jurisdiction of this Court to adjudicate on the present petition, Mr. Gautam Narayan advanced the following submissions: (i) The aircraft was located at Hyderabad. It was required to be registered with the DGCA, and operated in accordance with the Aircraft Act, 1934, Aircraft Rules, 1937 and the CAR issued by the DGCA. The most efficacious remedy, available to the petitioner was, therefore, by means of recourse to the jurisdiction of this Court under Secti....
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....re, in Mr. Narayan's submission result in rendering the petitioner remediless, in that it would not be able to seek, or obtain, a pre-arbitration injunction from any forum. (viii) Courts in Singapore could not provide any efficacious alternative remedy. Mr. Gautam Narayan relied, in this context, on the judgment of the Singapore Court of Appeal in Maldives Airport Co. Ltd v. GMR Male International Airport Pte Ltd (2013) SGCA 16 and SSL International plc v. TTK LIG Ltd (2011) EWCA Civ 1170, which denied interim relief in cases in which an unacceptable degree of supervision in a foreign land would be involved. (ix) Courts in Singapore exercised the jurisdiction, to secure assets located abroad only if they had in personam jurisdiction over the parties, i.e., where the parties had presented themselves before Courts in Singapore. For this purpose, Mr. Gautam Narayan relied on Five Ocean Corporation v. Cingler Ship Pte Ltd. (2015) SGHC 311 As such, without first approaching the SIAC, it was not possible for the petitioner to petition the Courts at Singapore. (x) Section 12A of the International Arbitration Act did not apply at the pre-arbitration stage. Mr....
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....he fundamental question of whether this Court possesses, or does not possess, jurisdiction to deal with the matter. 40. Having said that, the submissions of Mr. Gautam Narayan, on the possibility of obtaining interim relief, from a Singaporean court, do assume some relevance, as the discussion hereinafter would reveal. 41. The fundamental issue to be addressed is, therefore, whether this Court has the jurisdiction to hear and decide the present case, and not whether the petitioner has any other alternate, or efficacious, remedy available with it. The plea of alternate remedy predicates the existence of jurisdiction and, consequently, the existence of a remedy before the Court which has been petitioned. There can be no question of an alternate remedy, if the remedy that has been invoked itself does not exist, in the first place. 42. I do not deem it necessary, however, to refer to the commentary on "International Commercial Arbitration" by Gary Born, or to Articles 19 and 17J of the UNCITRAL Model. Arbitration law, in India, is codified, in the form of the 1996 Act. Jurisdiction, in a Court, to adjudicate a petition under Section 9 of the 1996 Act, must, therefore, emanate ....
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.... Turning, therefore, to the black-and-white precedents, of the Supreme Court, on the issue, the entire law may, in my view, be comprehensively understood by the study of seven judgments, namely (in chronological order) Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (2012) 9 SCC 552 (hereinafter referred to as "BALCO"), Swastik Gases Pvt. Ltd v. Indian Oil Corporation Ltd. (2013) 9 SCC 32, B.E. Siomese Von Staraburg Niedenthal v. Chhatisgarh Investment Ltd, (2015) 12 SCC 225, Indus Mobile Distribution Pvt. Ltd v. Datawind Innovations Pvt. Ltd (2017) 7 SCC 678, Brahmani River Pellets Ltd. v. Kamachi Industries Ltd., BGS SGS Soma JV v. NHPC Ltd (2020) 4 SCC 234 and Mankastu Impex Pvt. Ltd. v. Airvisual Ltd. Precedential Analysis and the 246th Report of the Law Commission of India 45. BALCO (2012) 9 SCC 552: 45.1 BALCO (2012) 9 SCC 552, rendered by a Constitution Bench, emanated from Section 2(2) of the 1996 Act, prior to the insertion, in the said sub-Rule, of the proviso thereto. Section 2(2), as it stood at that time, therefore, made the provisions of Part I of the 1996 Act applicable "where the place of arbitration is in India". There was a differen....
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....strict Judge, Bilaspur. The learned District Judge dismissed the applications vide order dated 20th July, 2004. BALCO challenged the dismissal by way of appeals before the High Court of Chhattisgarh. The appeals were also dismissed, by a Division Bench of the High Court, vide order dated 10th August, 2005, holding that they were not maintainable. BALCO appealed to the Supreme Court. 45.4 Tagged, with the BALCO appeal, was the appeal in Bharti Shipyard Ltd v. Ferrostaal AG SLP (C) 27824/2011 which, however, dealt with an application under Section 9 of the 1996 Act. The facts, in this case, also deserve to be noticed. Bharti Shipyard Ltd. (hereinafter referred to as "BSL") entered into to shipbuilding contracts with Ferrostaal AG (hereinafter referred to as "FAG"), whereunder BSL was to construct vessels and deliver them to FAG. BSL and FAG agreed to settlement of the dispute, by arbitration, under the Rules of the London Maritime Arbitrators Association (LMAA), in London. Two requests, for arbitration of the disputes which arose between them, were submitted by FAG, in accordance with the rules of the LMAA. 45.5 During the pendency thereof, FAG filed applications, u....
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....rt) that "a plain reading of Section 2(2) makes it clear that Part I is limited in its application to arbitrations which take place in India". (ii) The Supreme Court went on to hold, further, that the "seat of the arbitration" was the "centre of gravity" thereof. At the same time, it is clarified that the arbitral proceedings were not required, necessarily, to be conducted at the "seat of arbitration", as the arbitrators were at liberty to hold meetings at different, convenient, locations. The law governing the arbitration was, however, it was held, normally the "law of the seat or place where the arbitration is held" (in para-76 of the report). The Constitution Bench went on to approve the theory, postulated in Redfern and Hunter on International Arbitration Blackaby, Partasides, Redfern and Hunter (Eds.), Redfern and Hunter on International Arbitration (5th Edn, Oxford University Press, Oxford/New York 2009)., that "the concept that an arbitration is governed by the law of the place in which it is held, which is the 'seat' (or 'forum' or locus arbitri) of the arbitration, is well established in both the theory and practice of international arbitration. Re....
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....ng "The Place of Arbitration": "The preceding discussion has been on the basis that there is only one "place" of arbitration. This will be the place chosen by or on behalf of the parties; and it will be designated in the arbitration agreement or the terms of the reference or the minutes of proceedings or in some other way as the place or "seat" of the arbitration. This does not mean, however, that the Arbitral Tribunal must hold all its meetings or hearings at the place of arbitration. International commercial arbitration often involves people of many different nationalities, from many different countries. In these circumstances, it is by no means unusual for an Arbitral Tribunal to hold meetings - or even hearings - in a place other than the designated place of arbitration, either for its own convenience or for the convenience of the parties or their witnesses…. It may be more convenient for an Arbitral Tribunal sitting in one country to conduct a hearing in another country - for instance, for the purpose of taking evidence. In such circumstances, each move of the Arbitral Tribunal does not of itself mean that the seat of arbitration changes. The seat of the arbitrat....
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....on over the arbitration or the award. It would only mean that the parties have contractually imported from the Arbitration Act, 1996, those provisions which are concerned with the internal conduct of their arbitration and which are not inconsistent with the mandatory provisions of the English Procedural Law/curial law. This necessarily follows from the fact that Part I applies only to arbitrations having their seat/place in India." (Underscoring supplied; Italics in original) (vii) The Constitution Bench went on to hold, in para 123 of the report, that it was "clear that the regulation of conduct of arbitration and challenge to an award would have to be done by the courts of the country in which the arbitration is being conducted". Such a court, alone, it was held, was the "supervisory court possessed of the power to annul the award". (viii) Thereafter, from para 155 of the report, the Supreme Court addressed, squarely, the issue of "interim measures, etc. by the Indian courts where the seat of arbitration is outside India" - precisely the issue which arises in the present case. The very first submission, advanced to support the existence of jurisdiction, in In....
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.... which take place in India" and that holding otherwise "would be to do violence to the policy of the territoriality declared in Section 2(2) of the Arbitration Act, 1996". (ix) The Constitution Bench also went on to address the grievance that exclusion, of Section 9, to foreign seated arbitrations, would result in great hardship to parties who were in need of interim measures, by tellingly observing thus (in paras 163 and 164 of the report): "163. In our opinion, the aforesaid judgment in Reliance Industries Ltd. [(2002) 1 All ER (Comm) 59: (2002) 1 Lloyd's Rep 645] does not lead to the conclusion that the parties were left without any remedy. Rather the remedy was pursued in England to its logical conclusion. Merely because the remedy in such circumstances may be more onerous from the viewpoint of one party is not the same as a party being left without a remedy. Similar would be the position in cases where parties seek interim relief with regard to the protection of the assets. Once the parties have chosen voluntarily that the seat of the arbitration shall be outside India, they are impliedly also understood to have chosen the necessary incidents and conseque....
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....risdiction to adjudicate the lis, as the agreement was subject to jurisdiction of courts at Kolkata. The High Court agreed with IOCL and dismissed the petition, of Swastik, on the ground of jurisdiction. Swastik appealed to the Supreme Court. 46.4 Admittedly, Clause 18 in the agreement between Swastik and IOCL, which provided for "Jurisdiction", postulated that "the agreement shall be subject to jurisdiction of the courts at Kolkata". Even so, Swastik contended, before the Supreme Court, that the jurisdiction of courts at Jaipur was not ousted, as the major part of the cause of action had arisen within such jurisdiction. 46.5 The Supreme Court held that, in view of Section 2(1)(e) of the 1996 Act, read with Section 20 of the Code of Civil Procedure, 1908 (CPC), "there remains no doubt that the Chief Justice of the designated Judge of the Rajasthan High Court has jurisdiction in the matter". Even so, it noted (in para 31 of the report), "the question is, whether parties by virtue of Clause 18 of the agreement have agreed to exclude the jurisdiction of the courts at Jaipur or, in other words, whether in view of Clause 18 of the agreement, the jurisdiction of the Chi....
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....nt that the Act is territorial in nature and sections 9 and 34 will apply only when the seat of arbitration is in India. The seat is the "centre of gravity" of arbitration, and even where two foreign parties arbitrate in India, Part I would apply and, by virtue of Section 2(7), the award would be a "domestic award". The Supreme Court recognized the "seat" of arbitration to be the juridical seat; however, in line with international practice, it was observed that the arbitral hearings may take place at a location other than the seat of arbitration. The distinction between "seat" and "venue" was, therefore, recognized. In such a scenario, only if the seat is determined to be India, Part I would be applicable. If the seat was foreign, Part I would be inapplicable. Even if Part I was expressly included "it would only mean that the parties have contractually imported from the Arbitration Act, 1996, those provisions which are concerned with the internal conduct of their arbitration and which are not inconsistent with the mandatory provisions of the [foreign] Procedural Law/Curial Law." The same cannot be used to confer jurisdiction on an Indian Court. However, the decision in BALCO was ex....
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....ion 2(1)(e) which, as it stood then, read as under: "(e) "Court" means the principal Civil Court of original jurisdiction in the 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 the suit, but does not include any Civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes". The Law Commission Report recommended amendment of Section 2(1)(e), by the addition of the words "in the case of an arbitration other than international commercial arbitration", before the words "the principal Civil Court of original jurisdiction" in sub-section (i), and insertion of sub-section (ii), specific to international commercial arbitration. These changes would become apparent from the amended Section 2(1)(e), which already stands reproduced in para 43 supra. (ii) The Law Commission Report also contains the following recommendations, for amendments in Section 2 of the 1996 Act: "(v) In sub-section (1), after clause (h), insert clause "(hh) "seat of the arbitrat....
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.... delete the word "place" and add the word "seat"." These recommendations, for amendment of Sections 20 and 31 were, however, not accepted, and the provisions remained inviolate. 47.3. While the recommendation, qua Section 2(1)(e), was accepted and implemented, and the clause was amended accordingly, the amendments relating to Section 2(2) were not accepted in toto. While a proviso was added, to the said sub-section, the proposal to add, after the words "shall apply", the word "only", was not implemented. Similarly, the word "express", as contained in the proposed proviso to Section 2(2), did not figure in the proviso as it ultimately came to be inserted vide the Arbitration and Conciliation (Amendment) Act, 2016 (hereinafter referred to as "the 2016 Amendment Act"). What impact these deviations have, when compared with the original recommendations of the Law Commission, would become more apparent from the discussion that follows hereinafter. 48. B.E. Siomese Von Staraburg Niedenthal (2015) 12 SCC 225 48.1. In the context of the controversy before me, this judgment, though brief, assumes considerable importance. An agreement, for raising mines, located ....
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....ement and appointing Justice H.R. Malhotra, a retired Judge of this Court, as Sole arbitrator. Indus objected to the appointment of Justice Malhotra, vide its reply dated 15th October, 2015. 49.3. DIPL moved two petitions before this Court, one under Section 9, seeking certain pre-arbitral interim reliefs, and another under Section 11, for appointment of an arbitrator. Both the petitions were disposed of, vide judgment dated 3rd June, 2016 Datawind Innovations (P) Ltd v. Indus Mobile Distribution (P) Ltd,. An objection, raised by Indus, to the maintainability of the Section 9 petition before this Court, was rejected, holding that the "exclusive jurisdiction clause", i.e. Clause 19, in the agreement between the parties, would not apply on facts, as no part of the cause of action had arisen within the jurisdiction of any court in Mumbai. In other words, this Court was of the opinion that the parties could not, by an exclusive jurisdiction clause, confer jurisdiction on a court, within the jurisdiction of which no part of the cause of action had arisen. This Court opined that only courts of Delhi, Chennai or Amritsar, would have jurisdiction in the matter and that, therefore,....
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....o an exclusive jurisdiction clause. On the facts of the present case, it is clear that the seat of arbitration is Mumbai and Clause 19 further makes it clear that jurisdiction exclusively vests in the Mumbai courts. Under the Law of Arbitration, unlike the Code of Civil Procedure which applies to suits filed in courts, a reference to "seat" is a concept by which a neutral venue can be chosen by the parties to an arbitration clause. The neutral venue may not in the classical sense have jurisdiction - that is, no part of the cause of action may have arisen at the neutral venue and neither would any of the provisions of Section 16 to 21 of the Code of Civil Procedure be attracted. In arbitration law however, as has been held above, the moment "seat" is determined, the fact that the seat is at Mumbai would vest Mumbai courts with exclusive jurisdiction for purposes of regulating arbitral proceedings arising out of the agreement between the parties. 20. It is well settled that where more than one court has jurisdiction, it is open for parties to exclude all other courts. For an exhaustive analysis of the case law, see Swastik Gases (P) Ltd. v. Indian Oil Corpn. Ltd., (2013) 9 S....
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.... arbitration, resulting in confinement of jurisdiction to the Courts having jurisdiction over such juridical seat. The respondent contended, per contra, that, the cause of action having arisen both at Bhubaneswar and Chennai, both High Courts, i.e., the High Court of Orissa and the High Court of Madras, would have supervisory jurisdiction over the arbitral proceedings. Absent any specific exclusion of the jurisdiction of a court, in the agreement, it was contended that the mere designation of a "seat" of arbitration, did not result, ipso facto, in ouster of the jurisdiction of all courts, save and except the court having territorial jurisdiction over such seat. 50.5. Noting, in detail, the import of the decisions in BALCO (2012) 9 SCC 552, Swastik Gases (2013) 9 SCC 32 and Indus Mobile Distribution (2017) 7 SCC 678, the Supreme Court concluded, in paras 18 and 19 of the report, thus: "18. Where the contract specifies the jurisdiction of the court at a particular place, only such court will have the jurisdiction to deal with the matter and parties intended to exclude all other courts. In the present case, the parties have agreed that the "venue" of arbitration shal....
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....tion 2(1)(e)(i) of the 1996 Act, seeking that the petitioner be returned to NHPC for presentation before the appropriate court at New Delhi and/or the District Judge at Dhemaji, Assam. The case was, subsequently, transferred to the Special Commercial Court, Gurugram which, vide order dated 21st December, 2017, allowed the application of BGS and returned the Section 34 petition to NHPC, for presentation before the proper court having jurisdiction, in New Delhi. NHPC appealed, against the said decision, under Section 37 of the 1996 Act, before the High Court of Punjab and Haryana. Vide judgment dated 12th September, 2018, the High Court of Punjab and Haryana allowed the appeal of NHPC, and held that Delhi was only a convenient venue, where the arbitral proceedings were held, and was not the seat of the arbitration proceedings. As such, part of the cause of action having arisen in Faridabad, the High Court held that the District Judge at Faridabad was possessed of jurisdiction to decide the petition of NHPC. BGS carried the matter to the Supreme Court. 51.4. Before the Supreme Court, BGS contended that, as the sittings of the Arbitral Tribunal had taken place at New Delhi, an....
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....lative history, behind the 1996 Act, and the various provisions thereof. The Supreme Court went on to observe that there was no distinction between the "place of arbitration" and "seat of arbitration" and that Sections 20 and 31(4) of the 1996 Act granted primacy of place to the juridical seat of the arbitral proceedings. In para 32, the Supreme Court observed that "given the new concept of "juridical seat" of the arbitral proceedings, and the importance given by the Arbitration Act, 1996 to this "seat", the arbitral award is now not only to state its date, but also the place of arbitration as determined in accordance with Section 20." The Supreme Court went on to paraphrase, with reference to relevant passages, the law enunciated in BALCO (2012) 9 SCC 552, including, inter alia, the following observations, from para-76 of the report in that case, which clearly synonymizes "place" and "seat" of the arbitration: "It must be pointed out that the law of the seat or place where the arbitration is held, is normally the law to govern that arbitration. The territorial link between the place of arbitration and the law governing that arbitration is well established in the internati....
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.... Section 2(2) and Section 20, the Supreme Court went on, in paras 44, 45, 49, 50 and 53 of the report, to clarify that Section 2(1)(e) did not, in any manner, militate against the exclusive jurisdiction, vesting in the Courts, within whose territory the "seat" of arbitration was situate, in the following words: "44. If paras 75, 76, 96, 110, 116, 123 and 194 of BALCO are to be read together, what becomes clear is that Section 2(1)(e) has to be construed keeping in view Section 20 of the Arbitration Act, 1996, which gives recognition to party autonomy - the Arbitration Act, 1996 having accepted the territoriality principle in Section 2(2), following the UNCITRAL Model Law. The narrow construction of Section 2(1)(e) was expressly rejected by the five-Judge Bench in BALCO. This being so, what has then to be seen is what is the effect Section 20 would have on Section 2(1)(e) of the Arbitration Act, 1996. 45. It was not until this Court's judgment in Indus Mobile Distribution (P) Ltd. v. Datawind Innovations (P) Ltd., (2017) 7 SCC 678: (2017) 3 SCC (Civ) 760 that the provisions of Section 20 were properly analysed in the light of the 246th Report of the Law Commiss....
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....ct, subsequent Division Benches of this Court have understood the law to be that once the seat of arbitration is chosen, it amounts to an exclusive jurisdiction clause, insofar as the courts at that seat are concerned. In Enercon (India) Ltd. v. Enercon GmbH, (2014) 5 SCC 1: (2014) 3 SCC (Civ) 59, this Court approved the dictum in Shashoua v. Sharma, 2009 EWHC 957 (Comm) : (2009) 2 Lloyd's Law Rep 376] as follows: (SCC p. 55, para 126) "126. Examining the fact situation in the case, the Court in Shashoua case observed as follows: 'The basis for the court's grant of an anti-suit injunction of the kind sought depended upon the seat of the arbitration. An agreement as to the seat of an arbitration brought in the law of that country as the curial law and was analogous to an exclusive jurisdiction clause. Not only was there agreement to the curial law of the seat,but also to the courts of the seat having supervisory jurisdiction over the arbitration, so that, by agreeing to theseat, the parties agreed that any challenge to an interim or final award was to be made only in the courts of the place designated as the seat of the arbitration. Although, "....
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....rbitration, and no other significant contrary indicia, the inexorable conclusion is that the stated venue is actually the juridical seat of the arbitral proceeding". The distinction between the "seat" and "venue" was, thereby, considerably eviscerated, save and except for cases in which the agreement itself referred, separately, to the "seat" and "venue" of the arbitral process, all contained indicia, indicating to the contrary. It is not necessary to expand on this aspect, as the arbitration agreement between the petitioner and the respondent, in the present case, does not refer to any "venue" of the arbitral proceedings, as distinct from the "seat" thereof. Having said that, para 82 of the report lays down the law so authoritatively, that it necessarily merits reproduction, in extenso: "On a conspectus of the aforesaid judgments, it may be concluded that whenever there is the designation of a place of arbitration in an arbitration clause as being the "venue" of the arbitration proceedings, the expression "arbitration proceedings" would make it clear that the "venue" is really the "seat" of the arbitral proceedings, as the aforesaid expression does not include just one or....
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....e of action at Faridabad did not, therefore, justify invocation of the jurisdiction of the Faridabad courts, to challenge the award. Once the "seat" of the arbitration had been chosen, it was held that an exclusive jurisdiction clause had come into being, so far as courts of the "seat" were concerned. Resultantly, the Supreme Court set aside the judgment of the High Court of Punjab and Haryana and directed that the Section 34 petition be presented in the courts at New Delhi. Had this been the position 52. The judgments, cited hereinabove, unquestionably support the premise that, once the "seat" of arbitration stood identified in the agreement or contract between the parties, and in the absence of any other "exclusive jurisdiction" clause in the contract, courts, having territorial jurisdiction over such seat would, alone, be competent to exercise supervisory control over the arbitral proceedings, which would include applications for grant of interim relief These judgments, however, were rendered prior to the insertion, in Section 2(2), of the proviso thereto, by the 2016 Amendment Act. This proviso stipulated that, even if the place of arbitration which, as per the aforesaid ....
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....ns arising out of or relating to it shall be referred to and finally resolved by arbitration administered in Hong Kong. The place of arbitration shall be Hong Kong. The number of arbitrators shall be one. The arbitration proceedings shall be conducted in English language. 17.3 It is agreed that a party may seek provisional, injunctive or equitable remedies, including but not limited to preliminary injunctive relief, from a court having jurisdiction, before, during or after the pendency of any arbitration proceeding." 53.4. On the aspect of territorial jurisdiction, Airvisual, predictably, relied on the specification, in Clause 17.2 of the MOU, of the place of arbitration as Hong Kong, contending that, once the place of arbitration was outside India, Section 11 of the 1996 Act would not apply. Additionally, it was pointed out, Clause 17.2 also provided for reference, resolution and administration of all disputes, arising out of the MOU, in Hong Kong. The petitioner contended, per contra, that Clause 17.1 specifically conferred jurisdiction, on courts at New Delhi, with the authority to decide disputes between the parties. The objection of Airvisua....
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....ew Delhi shall have jurisdiction. The interpretation to Clause 17.1 shows that the substantive law governing the substantive contract are the laws of India. The words in Clause 17.1, "without regard to its conflicts of laws provisions and courts at New Delhi shall have the jurisdiction" has to be read along with Clause 17.3 of the agreement. As per Clause 17.3, the parties have agreed that the party may seek provisional injunctive or equitable remedies from a court having jurisdiction before, during or after the pendency of any arbitral proceedings. In BALCO v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552: (2012) 4 SCC (Civ) 810, this Court held that: (SCC p. 636, para 157) "157. on a logical and schematic construction of the Arbitration Act, 1996, the Indian courts do not have the power to grant interim measures when the seat of arbitration is outside India." If the arbitration agreement is found to have seat of arbitration outside India, then the Indian courts cannot exercise supervisory jurisdiction over the award or pass interim orders. It would have, therefore, been necessary for the parties to incorporate Clause 17.3 that parties have agreed th....
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....bjection, of Mr. Kamath, to the jurisdiction of this Court to entertain the present petition, has to be examined in the backdrop of the law, as set out hereinabove. 55. De hors the proviso to Section 2(2) of the 1996 Act, there can be little doubt that once the "seat of arbitration" has been fixed as Singapore, courts at Singapore would have exclusive jurisdiction to supervise the arbitral proceedings. Applying BALCO (2012) 9 SCC 552, it is also clear that such supervision would extend not only to the arbitral proceedings, per se, culminating in the award, but would also include the power to grant interim reliefs, whether at pre-arbitral or post-arbitral stage. In other words, Section 9 jurisdiction would also stand divested, from this Court. 56. That, however, is the position de hors the proviso to Section 2(2). The proviso to Section 2(2), which came into effect on 23rd October, 2015, changes the goalpost. By operation of this proviso, Section 9 of the 1996 Act would also apply to international commercial arbitration, where the place of arbitration is outside India. It is not in dispute that any arbitral award, issued by the SIAC, would be enforceable and recognised under P....
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.... the seat of the arbitration is abroad". As has been observed by the Law Commission, in such a situation, the party seeking pre-arbitral interim injunction, would have to obtain an interim order from the foreign Court, or the arbitral tribunal situated abroad, and, thereafter, to file a civil suit to enforce the right created by such interim order which, otherwise, would not be directly enforceable by way of an execution petition, as it would not qualify as a "judgment" or "decree", for the purposes of Section 13 and 44A of the CPC. Similarly, disobedience, by the party against whom an injunction may, if at all, be obtained from a foreign Court, would also require the applicant seeking injunction to initiate contempt proceedings in the foreign Court and, thereafter, enforce the judgment of the foreign Court under Section 13 and 44A of the CPC. These reliefs, as the Law Commission has observed, are likely to be more chimerical than substantial. 61. In this context, the reliance, by Mr. Gautam Narayan, on the decision, of the Court of Appeal in Singapore, in Maldives Airport Co. Ltd (2013) SGCA 16 and Five Ocean Corporation (2015) SGHC 311, is, ex facie, apt. In Maldives Airport C....
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....e arbitral tribunal, and any arbitral or other institution or person vested by the parties with power in that regard, has no power or is unable for the time being to act effectively. (7) An order made by the High Court or a Judge thereof under subsection (2) shall cease to have effect in whole or in part (as the case may be) if the arbitral tribunal, or any such arbitral or other institution or person having power to act in relation to the subject-matter of the order, makes an order which expressly relates to the whole or part of the order under subsection (2)." 63. A reading of Section 12A indicates that it applies "in relation to an arbitration", and can be invoked by "a party or proposed party to the arbitral proceedings". Mr. Gautam Narayan submits that the very tenor of this provision indicates that it applies only to an existing arbitration, i.e., after the arbitral proceedings have commenced. This submission has not been discountenanced, by Mr. Kamath, by citing any instance, either during arguments or in the written submissions filed consequent to conclusion of hearing, in which courts in Singapore have entertained applications, for interim relief, under Section....
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....urisdiction of the courts of Singapore". This argument cannot be accepted, for the simple reason that courts at Singapore cannot grant relief under Section 9 of the 1996 Act. The mere submission, by the parties, to the exclusive jurisdiction of courts in Singapore cannot, therefore, wish away the applicability of the proviso to Section 2(2). As already noted hereinabove, the statutory, and precedential, position that obtains, in Singapore, as highlighted by Mr. Gautam Narayan and noted hereinabove, indicates that it may be tremendously difficult, if not impossible, for the petitioner to prosecute any proceeding, for grant of pre-arbitral interim relief, before Singapore courts in the present case. Mr. Kamath, despite having argued the matter persuasively and at length, has been unable to disabuse me of this belief. 67. In fact, the concern expressed by the Law Commission, which constituted the raison d'etre for the introduction of the proviso to Section 2(2), was precisely this. The main justification, for introducing the proviso, was that courts in the foreign country would not efficaciously be in a position to grant pre-arbitral interim relief, to secure assets which may b....
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....d by Mankastu before this Court, was maintainable. Mankastu did not have, for its benefit, any provision, akin to the proviso to Section 2(2). The Supreme Court observed, in the circumstances, that the fixation of Hong Kong as the "seat of arbitration" operated, consequently, to exclude the jurisdiction of this Court to adjudicate on the Section 11 application of Mankastu. Significantly, Mankastu chose to rely on Clause 17.1, of the MOU under consideration in that case, which stipulated that "courts at New Delhi shall have the jurisdiction". The Supreme Court repelled the submission, holding that, in order for such a contention to sustain, Clause 17.3 (in that case) would have had to specifically stipulate "that parties have agreed that a party may seek interim relief for which Delhi Court would have jurisdiction". 71. Extrapolating this reasoning to Clause 22.1 in the present case, read with the requirement of an "agreement to the contrary", for the proviso to Section 2(2) to be rendered inapplicable, the mere conferment of exclusive jurisdiction, on courts at Singapore, by Clause 22.1, would not suffice as an "agreement to the contrary", within the meaning of the proviso to Se....
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....upplied) 74. Significantly, on 9th December, 2019 itself, the following email was addressed, by the respondent to the petitioner: "Hello Raj, Thank you very much for the scanned copy. I would recommend we also signed the annexures and schedules tomorrow and complete the document. What say? Chenna Reddy, N." "What" Raj "said", neither side is able to clarify, at this juncture. Even so, there is no traversal, either by way of counter affidavit, or even in the written submissions filed by the respondent, to the assertion, in para 4.4.15 of the petition, that the parties were ad idem to the Schedules, in the Lease Deed dated 12th November, 2019, being treated as Schedules to the Lease Deed dated 9th December, 2019. The afore extracted email, from the respondent also indicates, in any case, that the respondent was agreeable to this proposal. The respondent has, in its written submission, merely averred that "the issue of the object of entering into the second Lease Deed and as to why the schedules were not attached, and if there was consensus ad idem are matters of evidence." That may be so; however, if the petitioner desired to contest the juri....
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....raft in respect of which the conditions required in 3.1 are not satisfied, or which is already validly registered in another country, shall be registered in India." (Emphasis supplied) "3.5 Application for Registration of Aircraft The owner or his authorized representative may apply for registration of the aircraft in the prescribed form CA-28 (Appendix 'A') completed with the following documents at least five working days for aircraft on outright purchase and ten working days for aircraft on lease, before the expected date of issue of Certificate of Registration. i. Customs clearance certificate/bill of entry of the aircraft. ii. Certificate of deregistration from the previous registering authority. iii. An evidence to the effect that the aircraft has been purchased for wholly owned by the applicant. For this purpose, a copy of invoice shall be accepted. iv. For aircraft purchased from a previous owner, an affidavit as required. v. In case the aircraft is taken on dry lease a copy of the lease agreement. vi. In case the aircraft is owned by a company or corporation, a document of registration of the....
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.... the said submission.) 81. Mr. Gautam Narayan pointed out, further, that Clause 8.1 of the Lease Deed made events, in respect of the Aircraft, to be payable with effect from 15th December, 2019, which was specifically as the "Rent Commencement Date". As such, submits Mr. Gautam Narayan, the Aircraft ought to have been delivered to the petitioner by the said date. In the absence of such delivery, there would be no question of the petitioner having to pay any lease rental. For this purpose, Mr. Gautam Narayan also places reliance on Clause 8.2, which stipulates that "in consideration of the lease of the Aircraft, the Lessee shall, on and from the Rent Commencement Date pay regularly in advance on or before 15th day of the month during the Lease Term to the Lessor an amount equivalent to United States Dollars Fifty-six Thousand only as rent in respect of the Aircraft (Rent)." Mr. Gautam Narayan submits that, without delivery of the Aircraft in accordance with the covenants of the Lease Deed, no liability, to pay rent, could be fastened on the petitioner. He also points out that there is no other clause, in the lease Deed, providing for delivery of the aircraft. Despite this fact, M....
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....maintain its commitments inspite of payments made in time. Hence decision-making from EAPL to advice next plan of action to continue with operating lease beside note followings. 1. Hand over the aircraft to BCPL post our head of Eng inspection carried out. 2. Hand over require documents. 3. Decision to advice who will carry out work scope on CDSS and seats if needs to replace BCPL happy to carry out under its own scope however if EAPL finds under its approval will help BCPL has no issue keeping it under EAPL. 4. As per agreed terms seats replacement cost will be born by EAPL or EAPL installs balance 6 seats. 5. Support towards C of R and C of A. 6. If C of A does not get thru due to An age of an aircraft then EAPL return our money minus ferry cost which agreed between self and Channa. 7. Lease payment continues but Mr. applicable only from 15th May towards calendar due charges. channa I am keeping all transparent here so our relation stays cordial rest is all your call as discussed. Regards Sanjay" (Emphasis supplied) (iv) e-mail dated 2nd April, 2020, from the respondent to the pe....
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.... to Lessee paying Early Termination Fee (ETF) of United State Dollars Three Hundred Thousand (USD 300,000.00) and all other outstanding due amounts. Upon fulfilling the aircraft redelivery condition as per Deed, the Security Deposit shall be refunded to the Lessee in accordance with the provisions of this Deed. ii. The Lessee may terminate this Deed by paying the Lessor 6 (six) month Rent at the rates stipulated under the Deed, in lieu of such 6 (six) month notice. Lessee must forthwith redeliver the aircraft to the Lessor. The termination is subject to Lessee paying Early Termination Fee (ETF) of United State Dollars Three Hundred Thousand (USD 300,000.00) and all other outstanding due amounts. Upon fulfilling the conditions for termination of lease, the Security Deposit shall be refunded to the Lessee in accordance with the provisions of this Deed. iii. Not contravening any of the terms in Clause 7.1.(i) or Clause 7.1.(ii) above, the Lessee is exempted from the payment of Early Termination Fee (ETF) of United State Dollars Three Hundred Thousand (USD 300,000.00) subject to completion of 24 continuous months of lease. 7.2. Termination by the Lessor for b....
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.... tear excepted), and (iii) any unpaid statutory or other dues payable by the Lessee, during the Lease Term under this Deed, to any authorities or service providers with respect to the Aircraft. 7.4.3. If the Security Deposit is not refunded by the Lessor to Lessee within fourteen (14) days from the Aircraft redelivery by the Lessee in accordance with the terms of this Deed upon early termination or expiry of the Lease Term, then the Lessor shall be liable to refund the Security Deposit, after adjustments in terms of this Deed, to Lessee along with interest to be calculated at the rate of 18 % (eighteen percent) per annum for the period of delay. The liability of the Lessor to such refund to the Lessee under this Deed and the right of the Lessee to recover the same from the Lessor shall survive the termination or expiry of this Deed. 7.4.4. In the event of the Lessee's failure to return the Aircraft and deliver possession thereof to the Lessor, in accordance with the terms of this Deed, or upon the earlier termination or expiry of this Deed and upon the Lessor being ready to take possession of the Aircraft and refund the Security Deposit to the Lessee ....
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....against actual number of hours flown. When the aircraft itself had not been delivered, in accordance with the governance of the Lease Deed, Mr. Gautam Narayan submits that there could be no question of flying of the aircraft and, consequently, no question of any liability, of the petitioner, to pay Maintenance Reserves, either. 84. The fifth issue urged by Mr. Gautam Narayan relates to the non-fitment, in the Aircraft, of the CDSS. He drew attention to email, dated 16th February, 2020, from the respondent to the petitioner, in which the respondent had categorically acknowledged the requirement of installation of the CDSS, in order to have the Aircraft registered in India. The said communication reads as under: "Subject: INSTALLATION OF CDSS ON MSN 688 Good Afternoon Dharani, As part of induction into Indian DGCA registry we need to install the CDSS on the aircraft. The kit is ordered and is expected to be in hand by early-mid next week. I have looped Ms. Manish (Engineering Head) into this mail for discussion on the agreement for installation. Work will be carried out under fly big GTA. Deba & Raman will co-ordinate for the issuance o....
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....ing the respondents to alienate the corpus of the arbitral proceeding, i.e., the aircraft, would render the arbitral proceedings futile. The balance of convenience, too, he submits, would be in favour of grant of interim reliefs, as sought in the petition. 88. Responding to the submissions of Mr. Gautam Narayan, Mr. Arvind Kamath, learned Senior Counsel for the respondent submitted, initially, that the Lease Deed dated 9th December, 2019, was invalid and unenforceable, as it contained no Schedules. He disputes the submission, of Mr. Gautam Narayan, that there was an implicit agreement, between the petitioner and the respondent, to the effect that the Schedules, to the Lease Deed dated 12th November, 2019, were to be read as part of the Lease Deed dated 9th December, 2019 and submits that, in any case, this would be a matter of evidence, to be established during the arbitral proceedings, and could not be said to be established, prima facie, in favour of the petitioner. 89. Apropos the submission, of Mr. Gautam Narayan, that the petitioner had never terminated the contract, Mr. Kamath submits that, in email dated 5th March, 2020, addressed to the respondent, the petitioner had,....
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....gistration from the previous registering authority. Although the certificate of de-registration has to be obtained by the Respondent, the Respondent cannot apply for de-registration in another country, until the Petitioner completes the import process in India. The rest of the documents are already available with the Petitioner." (Emphasis supplied) 92. Mr. Kamath submits that the respondent had furnished, to the petitioner, all necessary documentation for operating the aircraft. There were, he submits, only two documents, necessary for this purpose, namely the CoR and the CoA. Both these documents had been provided, by the respondent to the petitioner. He points out that the petitioner had not sought, from the respondent, any other specific document, in its communications and that, even in the Notice of Dispute, dated 24thApril, 2020, the petitioner had not alleged failure, on the part of the respondent, to provide required documents. This allegation, he submits, figures for the first time in the present petition. 93. Apropos the requirement of installation of the CDSS, Mr. Kamath draws attention to Clause 6.3 of the Lease Deed, which stipulated that "the Aircraft to be l....
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....ery" of the aircraft, within the terms of the Lease Deed, by the respondent. He submits that, under Clause 6.2 of the Lease Deed, delivery of the Aircraft commenced with issuance of the Delivery Acceptance Certificate by the petitioner. Any delay, in delivery of the aircraft, he submits, was attributable only to insistence, by the petitioner, on compliance, by the respondent, with conditions, which the respondent was not obligated to perform in terms of the Lease Deed. Mr. Kamath has referred me to e-mail communications, dated 4th March, 2020 and 5th March, 2020, from the respondent to the petitioner, and the reply, of the petitioner, to the respondent, dated 5th March, 2020, to submit that the insistence, by the petitioner, was relating to requirements foreign to the Lease Deed. 95. In response to the submission, of Mr. Gautam Narayan, that the respondent had not provided, to the petitioner, all documents necessary for registration of the Aircraft, Mr. Kamath draws attention to Clause 3.5 of the CAR, dated 10th September, 1998, regarding "Airworthiness", which already stands extracted in para 77 supra. He submits that the very first document, in the list of documents necessary ....
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....ted 4th March, 2020, 5th March 2020, 2nd April, 2020 and 29th April, 2020, from the respondent, Mr. Gautam Narayan points out that the issue of Customs clearance had never been raised by the respondent, in any of these communications. The plea that there was failure, on the part of the petitioner, to file a Bill of Entry, therefore, he submits, was by way of a red herring, raised for the first time before this Court, in order to divert attention from the failure, on the part of the respondent, to perform its obligations under the CAR and the Lease Deed. 100. Non-furnishing of the Certificate of Deregistration, from the IOMAR, Mr. Gautam Narayan reiterates, was fatal to the contention, of the respondent, that delivery of the Aircraft, in terms of the Lease Deed, had taken place. Mr. Gautam Narayan invited my attention, in this context, to Appendix 'D' to the CAR, dated 25th November, 2014, dealing with "Airworthiness", titled "Delivery of Aircraft", Clause II whereof read thus: "The aircraft which is being exported to India other than via flyaway, the following documents should accompany the Aircraft and be delivered to DGCA: a. Standard Certificate of A....
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....is for this reason that, apart from the aforesaid three criteria, of prima facie case, balance of convenience and irreparable loss, a Section 9 petitioner is also required to demonstrate that, were urgent interim reliefs not granted, there is a chance of the arbitral proceedings being frustrated, even before they take off, and of the award, if any, which may come to be passed, being rendered futile. For this reason, the principles governing Order XXXVIII Rule 5 CPC have, for that reason, also been held to be applicable, while directing the furnishing of security, under Section 9(1)(ii)(b). 107. A Section 9 court has also to be circumspect and should not take care not to entrench on the jurisdiction vested in the arbitrator by Section 17. The 1996 Act, it has to be remembered, is an Act dealing with arbitration and conciliation, and not with proceedings before a civil court. The base provision, for seeking interim relief in arbitral proceedings, is, therefore, Section 17, and not Section 9. Section 9 is, in fact, in the nature of an emergency clause, inserted to circumvent the possibility of either party, to the proposed arbitral proceedings, taking steps to render the proceeding....
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.... grant "interim measures of protection". 111. For a comprehensive discussion of this aspect, reference may be made to the recent decisions of this Court in CRSC Research and Design Institute Group Co. Ltd. v. Dedicated Freight Corridor Corporation of India Ltd. MANU/DE/1803/2020 and Avantha Holdings Limited v. Vistra ITCL India Limited MANU/DE/1548/2020, which have considered most of the earlier decisions on the point. 112. In this backdrop, as learned counsel have proceeded systematically, point by point, it would be advantageous to deal with the rival contentions in seriatim. Re: Contention of petitioner that no delivery of the aircraft, within the meaning of the Lease Deed, as taken place 113. Mr. Gautam Narayan, arguing for the petitioner, has submitted that there has been no delivery of the aircraft, as contemplated by the Lease Deed. He submits that the aircraft was required to be delivered accompanied by all requisite documentation, so as to ensure that it could be registered with the DGCA in India, and could be utilised, in commercial operations, by the petitioner. He has emphasised the fact that both parties were aware, throughout, that the petitioner intended ....
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....ara 84 hereinabove, also acknowledges that the certificate of de-registration, from the previous registering authority, was one of the documents required, for obtaining registration of the aircraft with the DGCA. 122. The only response of Mr. Kamath, to this contention of Mr. Gautam Narayan, is that the respondent was unable to obtain a certificate of de-registration from the IOMAR, till filing of the Bill of Entry by the petitioner. Much, in fact, has been made, by Mr. Kamath, on the fact that filing of the Bill of Entry was also a mandatory requirement for registering the aircraft with the DGCA and that the petitioner has not, till date, filed the Bill of Entry. 123. I am not inclined to agree, prima facie, with Mr. Kamath. 124. No material, whatsoever, was placed on record, or even adverted to, by Mr. Kamath, to support his submission that, till a Bill of Entry was filed in India, no certificate of de-registration could be obtained from IOMAR. The written submissions, filed by the respondent, after conclusion of hearing, too, do not refer to any material, to support this submission. The record does not disclose, either, a single communication, from the respondent, to th....
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.... stand, of the respondent, that there had been a "unilateral" termination of the Lease Deed, by the petitioner, and, on this aspect, too, I am inclined to agree with him. There is no e-mail, from the petitioner, to the respondent, terminating the Lease Deed. Rather, it was the respondent who, in its e-mail dated 5th March, 2020, to the petitioner, stated that it was "fine to terminate the agreement right away". Thereafter, commencing the email dated 9th March, 2020, addressed to the petitioner, the respondent consistently adopted a stance that the petitioner had unilaterally terminated the Lease Deed. 132. I do not find this stance to be supported by any of the communications addressed by the petitioner to the respondent. 133. The oblique reliance, by Mr. Kamath, on the concluding remark, in the email dated 5th March, 2020, from the petitioner to the respondent, stating "demand full refund and close", can hardly amount to a "unilateral termination" of the Lease Deed by the petitioner. 134. This contention of the respondent is, in fact, in the teeth of Clause 7 of the Lease Deed, read with Clause 26.1 thereof. 135. All circumstances, in which the Lease Deed could be term....
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....nstalled on the aircraft, in order for the aircraft to be registered with the DGCA in India, stands recognized and acknowledged by the respondent itself, in its email dated 16th February, 2020, to the petitioner (reproduced in para 84 supra). Clause 32.1 of the Lease Deed cannot wish away this acknowledgement, or reduce the effect thereof. Having accepted, in the email dated 16th February, 2020, that installation of the CDSS was mandatory for registration of the aircraft by the DGCA in India, it can hardly lie in the mouth of the respondent to contend, now, that the CDSS was not required to be installed on the aircraft. 141. Even otherwise, Clause 13.2.3(b) of the CAR dated 30th October, 2018, dealing with "aircraft operations" specifically stated that all new aircrafts, imported after 1st January, 2008, were required to have CDSS installed at the time of import. The requirement of having CDSS installed also stands expressly spelt out in EASA Standard ORO.SEC.100. A(a) and (c)(2), which stands reproduced in para 84 supra. The respondent had, in its email dated 6th December, 2019, specifically undertaken to supply the aircraft duly compliant with EASA standards. 142. The relia....
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.... also, prima facie, substance in the contention, of Mr. Gautam Narayan, that no liability on the petitioner, to pay maintenance reserves, existed. Clause 10.6 of the Lease Deed specifically obligated the lessee, to pay to the lessor, maintenance reserves on a monthly basis, "for every flight hour or flight cycle, as the case may be of usage". The Clause also stipulated that the maintenance reserves were to be paid in accordance with Schedule III to the Lease Deed, which specifically stipulated that maintenance reserves were payable "in respect of hours flown on the aircraft", and were "payable on the 10th day of each month in respect of hours flown in the previous calendar month". As the aircraft had never been flown, there could be no question of the petitioner being required to pay any maintenance reserves. The fallout 146. As a result, I am of the opinion that a prima facie case, meriting consideration and resolution by the arbitral process, has been made out by the petitioner. It remains to be considered, then, whether, in order to secure the corpus of the arbitration, any interim measure of protection, under Section 9 of the 1996 Act, deserves to be granted. 147. The ....
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.... orders were reserved, prayers (a) and (b) in the petition do not survive for consideration. 150. Prayer (c) in the petition is for directing the respondent to deposit Rs. 4,01,05,736/-, being the amount paid by the petitioner to the respondent under the Lease Deed, in an escrow account, to be administered by this Court. This Court has been alive to the fact that, during the currency of arguments in this petition, and even after orders were reserved thereon, the respondent has shipped, out of the country, various parts of the aircraft. That apart, Respondent No. 1 is a private limited company, registered in Australia, and Mr. Chenna Reddy, who is the director of Respondent No. 1 as well as Respondent No. 2, is also residing in Australia. In case the respondent is allowed to withdraw, from the Registry of this Court, the amount of Rs. 4,30,00,000/-, deposited as per the direction of the Division Bench, there is every likelihood of recovery of the said amount, from the respondents, being rendered a formidably uphill task, in the event of an award being returned, in arbitration, in favour of the petitioner. 151. Drawing analogy from the judgment of the Supreme Court in Raman Tec....