TaxTMI 
TaxTMI 
2020 (12) TMI 1417
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....r. Kunal Dutt and Mr. Shobhit Ahuja, Advocates for R-1 in RFA (OS) 21/2020 & RFA (OS) 22/2020 Mr. Kapil Sibal, Senior Advocate with Mr. Rishi Agarwala, Mr. Karan Luthra, Ms. Niyati Kohli, Ms. Aarushi Tiku, Mr. Pratham Vir Agarwal & Mr. Koshy John, Advocates for R-2 & 3 in RFA (OS) 21/2020 Mr. Mukul Rohatgi, Senior Advocate with Mr. Gyanendra Kumar, Ms. Amita Katragadda, Mr. Indranil Deshmukh, Ms. Shikha Tandon, Ms. Gathi Prakash, Mr. Nikhil Rohatgi, Mr. Robin Grover, Ms. Nivedita Aroa and Mr. Rishabh Malaviya, Advocates for R-2 in RFA (OS) 22/2020 JUDGMENT SIDDHARTH MRIDUL, J (via Video Conferencing) 1. These two Regular First Appeals ('Appeals'), instituted under the provisions of Section 96 read with Order XLI of the Code of Civil Procedure, 1908 ('CPC'), impugn the judgment and decree dated the 03.03.2020 ('impugned judgment'), whereby the learned Single Judge dismissed CS(OS) 84/2020, titled as 'Dr. Bina Modi vs. Lalit Modi & Ors.' and CS(OS) 85/2020, titled as 'Charu Modi & Anr. vs. Lalit Modi & Anr.', ('the Suits'), as not maintainable in-limine. 2. At the outset, it is relevant to observe that, the learned Single Judge did not issue summons in the Suits and proce....
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....ctober 2006 and all other understandings and minutes recorded prior to the date of this Deed (save and except the Deed of Adherence dated 10th February, 2006 and Deed of Adherence dated 13th December, 2006), and all actions taken pursuant to the said Deeds and prior-to the execution of this Deed shall be deemed to be actions taken under this Deed. It is further clarified that this Deed shall be absolute and final and shall be the only document to be relied upon and all other documents executed prior to the date of this Deed shall not have any validity." 8. The Settlor passed away on 02.11.2019. Upon the demise of the Settlor, Bina in accordance with Clause 3.2 of their Restated Trust Deed, forthwith and without further action assumed the role of the Managing Trustee of the Trust. 9. A dispute has emerged amongst the Trustees of the Trust. It is contended on behalf of Lalit that after the demise of the Settlor, in view of the lack of unanimity amongst the Trustees regarding sale of trust assets, a sale of all assets of the Trust has been triggered immediately. On the other hand, it is the appellant's position that, a) pursuant to the powers of the Managing Trustee under the Re....
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....orf Astoria, Dubai. (vii) The meeting of the Board of Trustees was held in Dubai on 30.11.2019 and was attended by the Appellants and Lalit in person, along with a representative of the Secretary to the Trust. During the meeting, Lalit placed a letter of even date addressed to his Co-Trustees before the Board of Trustees. In the said letter, Lalit expressed his desire to sell the whole of the Trust Fund comprising of various assets including Family Controlled Businesses in terms of Clause 11 of the Restated Trust Deed and to distribute the same in terms of Clause 6.2 of the Restated Trust Deed. Whereas, the Appellants signed a consent letter deciding to continue to own and manage all assets of the Trust Fund. (viii) Draft minutes of the meeting of the Board of Trustees held on 30.11.2019 were circulated to the Board of Trustees along with Lalit's aforementioned letter dated 30.11.2019, for comments ('Draft Minutes') on 06.12.2019. The Draft Minutes inter alia record that no unanimous decision could be reached regarding sale of assets of the Trust. (ix) In the spirit of exploring an amicable discussion, without prejudice, Bina requested Lalit to give a pro....
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.... with unanimous consent. (xvi) On 27.01.2020 and 28.01.2020, Lalit released on social media platforms inter alia: (a) statements imputing that the assets of KK Modi Group, including GPI, are up for sale; (b) copies of certain documents available to Lalit as a Trustee, such as the agenda and correspondence exchanged in relation to the meeting of Board of Trustees held on 30.11.2019 and the letters sent by the Secretary to merchant bankers; (c) confidential correspondence between GPI and Jupiter Asset Management, a shareholder in GPI, in relation to governance of GPI; and (d) the confidential scorecard prepared by IiAS on GPI corporate governance. (xvii) Bina addressed a letter dated 28.01.2020 to Lalit, Charu and Samir, inter alia stating that:- (i) It is her sole and exclusive prerogative as the Managing Trustee of the Trust to determine whether to continue the Trust or to dispose of the Trust's assets; (ii) Since she had decided to continue the Trust, there was no question of the Board of Trustees being empowered to take any decision to dispose of the Trust assets; (iii) After the meeting of the Trustees held on 30.11.2019, neither the ....
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.... claimed that Bina is duty bound under Section 57 of the Trusts Act to share the 'legal advice' mentioned by her in her letter dated 28.01.2020. (xxiii) On 18.02.2020, Lalit filed an Emergency Application before the International Court of Arbitration of the ICC. Bina was made Respondent No. 1 to the said Application. Charu and Samir were arrayed Respondent Nos. 2 and 3 to the Application. The following reliefs have been sought against Bina in the said application: - a) Direct and issue a restraining order injuncting B. Modi from holding herself out as the Managing Trustee of the K. K. Modi Family Trust; b) In the alternative to prayer clause (a) direct the suspension forthwith of the right, power and authority of B. Modi to hold the office of Managing Trustee of the K. K. Modi Family Trust; c) Appoint a suitable administrator, with requisite right, power and authority in relation to the Trust Fund and the K. K. Modi Family Controlled Businesses, including all matters of administration, execution and management of the assets held upon trust, with the specific mandate to implement clause 4.2 of the Restated Deed of Trust dated 9 April 2014; ....
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....ments, in law or otherwise, confirmed that she will attend the call with the Emergency Arbitrator scheduled on 22.02.2020. (xxvii) Pursuant to the call between the Advocates for the parties and the Emergency Arbitrator on 22.02.2020, the Emergency Arbitrator issued procedural timelines and directions for filing of pleadings/reply by Bina by 01.03.2020 and set a date for physical hearing of the Emergency Application on 07.03.2020. (xxviii) In the said Emergency Application filed on behalf of Lalit, he has relied upon Clause 36 of the Restated Trust Deed as the basis for moving the said application. The Clause 36 of the Trust Deed is reproduced below: - "Clause-36 - In the event of: (i) Any question arising as to the true import or interpretation of this Deed or otherwise in relation to their execution or implementation, or (ii) Any difference of opinion amongst the Trustees touching the execution and exercise of any of the Trustees' powers and provisions herein declared and contained or the true intent, meaning or construction of any of the clauses herein, or (iii) Or any dispute arising between the Settlor and the Trustees or be....
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...., at least before this Bench, cannot be sustained. It has been recently reiterated in Peerless General Finance and Investment Company Ltd. Vs. Commissioner of Income Tax 2019 SCC OnLine SC 851 that a pronouncement of the Supreme Court, "even if it cannot be strictly called the ratio decidendi of the judgment would certainly be binding on the High Court". Similarly, in Oriental Insurance Co. Ltd. Vs. Meena Variyal (2007) 5 SCC 428 it was held that even an observation or an obiter of the Supreme Court is binding on the High Court in the absence of a direct pronouncement on that question, of the Supreme Court and in Sanjay Dutt Vs. State (1994) 5 SCC 402 it was held that even the obiter dicta of the Supreme Court is binding on other Courts in the country. Of course, the counsels have the privilege to contend so, to build a case for finally arguing before the Supreme Court itself. (B) The aforesaid argument cannot also be accepted because of Kvaerner Cementation India Limited supra having been cited with approval in A. Ayyansamy supra and very recently in National Aluminium Company Limited supra. It is thus not as if Kvaerner Cementation India Limited supra running into less t....
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....king experience by the undersigned and inferred by the undersigned in other judgments. The Court is reluctant to denude itself of jurisdiction, especially when, in the facts before it, not opting to exercise jurisdiction. This is for the fear of such denudation of jurisdiction in future coming in the way of granting relief in a deserving case. Though I admit, the same to have governed my judicial decision making also, but find that the reluctance to return a finding of the Court having no jurisdiction, though for good reasons as aforesaid, results in the Courts being flooded with cases with each litigant taking a chance, that in the facts of his case, the Court which has not declined to be having jurisdiction, may grant the relief of injuncting arbitration. (F) The Division Bench of this Court in Mcdonald's India Pvt. Ltd. supra, though held that under the Arbitration Act, whether Part-I thereof or Part-II thereof is applicable, the focus seems to have shifted towards directing the parties to arbitration rather than deciding the same subject matter as a civil suit, by referring to Sections 8 and 45 of the Arbitration Act, thereafter noticing LMJ International Ltd. Vs. Slee....
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....ons 38 to 42 thereof. The grant of relief of declaration to any person entitled to any legal character or to any right as to any property, is discretionary, with the proviso that declaration shall not be granted where the plaintiff being able to seek further relief than a mere declaration of title, omits to do so. Section 41(h) bars grant of injunction when equally efficacious relief can certainly be obtained any other usual mode of proceeding. It has been held in Pushpa Saroha Vs. Mohinder Kumar 2009 SCC OnLine Del 57 and Roshan Lal Gupta supra that declaration with consequential relief shall not be granted if there is alternative efficacious remedy available by any other usual mode of proceeding to the person seeking such declaration and consequential relief. The Scheme of the Arbitration Act of the year 1996 as noticed by the Division Bench in Mcdonald's India Pvt. Ltd. supra also is to direct the parties to arbitration rather than deciding the same subject matter as a civil suit. The Arbitration Act, 1996 in a major change from the 1940 Act empowers the Arbitral Tribunal to rule on its own jurisdiction. It is not the contention of any of the senior counsels for the Bina, Charu ....
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....een pleaded. (J) Coming back to the judgments, relied upon by senior counsel for plaintiffs, a reading of Vodafone Group PLC United Kingdom supra shows that the same was concerned with Bilateral Investment Treaty arbitration, outside the scope of Arbitration Act. What has been held therein, cannot apply to the present controversy which is fully covered by Kvaerner Cementation India Limited and other judgments supra. (K) As far as the contentions of the counsels on the merits of the objection to arbitrability are concerned, once I have held that this Court does not have jurisdiction to decide the said merits, it would not be proper for the undersigned to foray into the same. All that needs to be observed is that the senior counsels for Lalit have made out an arguable case qua the non-applicability of Vimal Kishor Shah and Vidya Drolia supra. (L) Reliance by Mr. Rajiv Nayar, Senior Advocate for Bina, Charu and Samir on Natraj Studios (P) Ltd. supra is not apposite. All that the same holds is that the Civil Court retains the jurisdiction to decide whether the Rent Act applies to the tenancy, notwithstanding the Rent Controller also being authorized to do so.....
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....s SAS supra which though records the argument qua Kvaerner Cementation India Ltd. supra, does not in the decision/discussion deal with the same and in any case concerned Arbitration Rules of the United Nations Commission on International Trade Law, 1976, on the basis of a Bilateral Treaty Agreement between Govt. of India and the Government of France, is also apposite. (O) With respect to Enercon (India) Limited supra, I may state that the same was referred to generally in the arguments, without even citing or relying on the same and the need thus to deal therewith is not felt. (P) With respect to the query posed by me qua the amendment to Section 8 of the Arbitration Act, I am satisfied with the contentions noticed above of Mr. C.A. Sundaram, senior counsel, that Section 8 or amendment thereto would have no application. The amendment to Section 8, does not change the bar to the jurisdiction of this Court vide Section 5 of the Act and which, notwithstanding the amendment to Section 8, remains unchanged. No window has been opened therein to permit a judicial authority to intervene, if finds no valid arbitration agreement existing, to injunct arbitration. It is only ....
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.... Rules of Arbitration of the ICC. The ICC does not have any rules which are referred to as Rules of Arbitration of the ICC, Singapore, as mentioned in Clause 36 of the Restated Trust Deed. 17. It is also submitted that Singapore can be considered a venue or geographical place of arbitration, even if one were to try and give meaning to Clause 36 of the Restated Trust Deed and construe it as manifesting an intention of the parties to arbitrate under the Rules of Arbitration of the ICC, the said Clause provides that the arbitral seat to be in India. This is for the following reasons: - (i) In concluding an arbitration agreement, there are four distinct considerations: (a) the arbitral seat, which will give rise to the lex arbitri (comprising the law governing the arbitration process) and the national courts that will supervise the arbitration; (b) the rules (if any) that will govern the process of the arbitration; (c) the physical / geographical venue where the arbitration will take place; and (d) the law that will be applied to the substantive issues that are in dispute. (ii) Here, each of the four considerations are provided for in Clause 36, as follows. (a) The....
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....t of India in the case of Vimal Kishor Shah and Others vs. Jayesh D. Shah and Others reported as (2016) 8 SCC 788 and hence cannot be resolved by way of arbitration. It is submitted on behalf of Bina that, the prayers sought by Lalit in the Emergency Application and the prayers that are likely to be sought by Lalit in the RFA can only be entertained, tried and disposed of by a Court under the provision of the Trusts Act. It is thus submitted that, Clause 36 of the Restated Trust Deed which provides for settlement of disputes by taking recourse to arbitration is null and void, unenforceable, inoperative and incapable of being performed. It is submitted that Lalit's attempt in his application to recharacterize his claim as one based in contract, is an attempt to circumvent the public policy principle enshrined in the case of Vimal Kishor Shah (supra) In any event, the said recharacterization is wholly erroneous, without merit and misconceived both in law and in fact. It is submitted that it does not matter whether the entitlement for reliefs set up by Lalit is based in contract or on the basis of trust principles, since the said entitlement depends on the correct interpretation of th....
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....y Lalit. Pursuant to the said FIR, a Criminal Case bearing No.507/2010 was registered against Lalit under Sections 409, 420, 468, 477A, 120B of the Indian Penal Code, 1860 ('IPC'). The Disciplinary Committee of the Board of Control for Cricket in India had also found Lalit guilty on eight different charges for various acts of indiscipline and misconduct during his tenure as the Vice President of the BCCI and as Chairman of the Indian Premier League's Governing Council. The charges relate to irregularities in various financial and administrative matters of the Indian Premier League. As a consequence, Lalit was expelled from the BCCI in 2013. Several investigations by the Directorate of Enforcement are also presently pending against Lalit, where warrants have been issued against him for failure to appear before the Directorate of Enforcement, pursuant to summons. 24. It is submitted that Lalit has been described time and again in Indian Parliamentary debates as being an "absconding businessman", "fugitive" and "financial fraudster", under criminal investigation for financial irregularities. For instance, on 04.01.2019, while discussing the subject "Defaulting Businessmen Fleeing A....
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....n, till further hearing of the Appeal. 29. It has been further argued that during the pendency of the Appeal, Bina has been directed by the ICC to file her answer to Lalit's RFA, initiated in furtherance of the emergency arbitration ('Main Arbitration') by 14.05.2020. As on the date of the stay order by this Court on 05.03.2020 Bina was only faced with the imminent action of the Emergency Arbitration proceedings and the directions to her on Main Arbitration (filed by Lalit in furtherance of the Emergency Arbitration) were only received from the ICC on 14.03.2020. As the hearing scheduled on 27.03.2020 was adjourned to 24.04.2020 (due to the Covid-19 lockdown, and now further adjourned to 24.06.2020), Bina promptly filed an application being C.M. No.10921 of 2020 (on 07.04.2020) to seek stay on the Main Arbitration. 30. It has been argued that the Main Arbitration pertains to the same dispute and admittedly is in furtherance of the Emergency Arbitration. The Division Bench of this Court has already vide order dated 05.03.2020 stayed the Emergency Arbitration and the Hon'ble Supreme Court has dismissed the Special Leave Petition filed against the said order dated 05.03.2020....
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....itration Act will be applicable and will govern the grant of an antiarbitration injunction. In this respect, Sections 8 of the Arbitration Act does not differentiate between a 'substantive suit' (as held in the Impugned Judgement) and a suit for injunction and declaration. Declining an anti-arbitration injunction is tantamount to referring the parties to arbitration. It is submitted that the Main Arbitration is vexatious, unconscionable, oppressive, forum non-convenience, inequitable and an abuse of process. 36. It is further submitted that the principle of kompetenz-kompetenz, enshrined under Section 16 of the Arbitration Act presupposes that the Arbitral Tribunal has inherent jurisdiction to entertain the disputes. Further, in SBP & Co. v. Patel Engineering reported as (2005) 8 SCC 618 Constitution Bench of Hon'ble the Supreme Court has held that Section 16 of the Arbitration Act is only enabling in nature and does not confer exclusive jurisdiction on the Arbitral Tribunal to adjudicate upon its jurisdiction. In the instant case, the Arbitral Tribunal would lack inherent subject matter jurisdiction as the dispute is prima facie non-arbitrable, striking at the root of the A....
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....of the procedural rules adopted) but also irrelevant for the determination of arbitrability. (ii) Further, the arbitration proceedings would be governed by Part I of the Arbitration Act The assertion of a "foreign seated arbitration" by Lalit is only a red herring. Lalit does not state in his reply that the present arbitration is an 'international commercial arbitration', a prerequisite for the application of Part II. In any event, the dispute is not commercial and is in fact a dispute amongst trustees of a family trust who are family members. (iii) Lalit's contention that the curial law is the law of Singapore is also misconceived. Clause 36 of the Trust Deed expressly provides that "The arbitration will be governed in accordance with the laws of India" which shows that the parties have expressly chosen Indian law as the curial law and accordingly India as the place of the arbitration. A plain reading of Clause 36 will show that the parties have not expressly or impliedly agreed for Singapore to be the place of arbitration or even the venue of the arbitration. The acronym ("ICC") is placed after the words "International Chamber of Commerce" and "Singapore....
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....n of ICC required the Bina to take steps pursuant to the RFA which was served by the ICC upon the Bina only on 14.03.2020 and the hearing fixed on 27.03.2020 did not take place, on 07.04.2020 the present Application was filed by the Appellant seeking urgent stay on the Main Arbitration instituted by Lalit. 41. It is argued on behalf of Bina that the learned Single Judge was also wrong in holding that Section 41(h) of the Specific Relief Act 1963, ('Specific Relief Act') bars the relief requested for by the Appellant. Section 41(h) of the Specific Relief Act provides that an injunction cannot be granted when an equally efficacious relief can be obtained by any other usual mode of proceeding. Section 16 of the Arbitration Act does not provide an equally efficacious relief in the instant case. First, Section 16 of the Arbitration Act is inapplicable, as Section 2(3) of the Arbitration Act excludes the applicability of the Arbitration Act to non-arbitrable disputes. Second, and in the alternative, in case it is assumed that the remedy under Section 16 of the Arbitration Act is available to the parties, it does not provide an equally efficacious relief when the concerned dispute is n....
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....kshmi Family Trust reported as (2001) 4 CTC 449. (xxiii) Kvaerner Cementation Limited v. Bajranglal Agarwal reported as (2012) 5 SCC 214. (xxiv) Dhulabhai v. State of MP reported as (1968) 3 SCR 662. (xxv) Abdul Gafur v. State of Uttarakhand reported as (2008) 10 SCC 97. (xxvi) Natraj Studios (P) Ltd. v. Navrang Studios reported as (1981) 1 SCC 523. (xxvii) Siddhi Vinayak Industries Private Limited v. Virgoz Oils & Fats PTE, GA No. 1459 of 2009, High Court of Calcutta, dated 7 September 2009 (xxviii) Booz Allen and Hamilton INC. v. SBI Home Finance Limited and Ors. reported as (2011) 5 SCC 532. (xxix) Board of Trustees of the Port of Kolkata v. Louis Dreyfus Armatures SAS reported as 2014 SCC OnLine Cal 17695. (xxx) Himachal Sorang Power .Private Limited v. NCC Infrastructure Holdings Limited reported as 2019 SCC OnLine Del 7575. (xxxi) RRB Energy Limited v. Vestas Wind Systems reported as 2015 SCC OnLine Del 8734. ARGUMENTS ON BEHALF OF CHARU AND SAMIR: - 43. Mr. Kapil Sibal, learned Senior Advocate appearing on behalf of Charu and Samir, whilst adopting the detailed and extensive submissions ma....
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....eded to adopt steps in implementation of the resolution of 30.11.2019, through issuing notices to merchant bankers for conflict checks on the anvil of sale of the Trust Fund. 48. It is submitted that on 28.01.2020, Bina in a volte face illegally cancelled the decision to sell the Trust Fund unilaterally, purporting to usurp powers of the Managing Trustee. 49. It is further submitted that, admittedly Bina agreed to the fact that the Resolution dated 30.11.2019 to sell the entire Trust Fund was passed, but belatedly sets up a defence, unknown in law, of 'common mistaken assumption', in aid of perpetuating illegality, the said defence adopted by Appellant in her reply to Emergency Application before the Emergency Arbitrator. The provisions of the Restated Trust Deed admit of no ambiguity. There is no mistake of fact-there is lack of unanimity, and there is no mistake of law, as the Restated Trust Deed provides that, if there is lack of unanimity, there shall be a sale. Bina, who is purporting to act as a Management Trustee under the Restated Trust Deed cannot question the legality, validity or efficacy of any of the provisions of the Restated Trust Deed. 50. It has been argue....
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.... 52. It has been submitted on behalf of Lalit that, the learned Single Judge has rightly dismissed the suit holding that all the contentions be raised before Arbitral Tribunal and these issues cannot be raised in a suit. 53. It is further submitted by Mr. Harish Salve, learned Senior Advocate that the Restated Trust Deed is not a Trust Deed within the meaning of the Trusts Act, but rather is in the nature of a family arrangement, not amenable to the Trusts Act. It has been argued on behalf of Lalit that, the Restated Trust Deed was executed by the Settlor and Trustees in London, and is governed by English Law, which permits arbitrability of trust disputes. Furthermore, as the parties have agreed for Singapore as the place of arbitration, the curial law being the law of Singapore, also permits arbitration of trust disputes. 54. It has been argued on behalf of Lalit that, Bina has also alleged in her Rejoinder that under Clause 6.1 of the Restated Trust Deed, the Trustees will hold and stand possessed of immovable properties only as and when such properties are received and/or are acquired and till date no such immovable property has ever been entrusted to Trust and is not pa....
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....icates London as the present residence of Lalit. As such, by mandate of law, the arbitration is an international commercial arbitration, and it is wrong to state that Lalit is evading the jurisdiction of this Hon'ble Court. 57. It has been further argued on behalf of Lalit that, this Hon'ble Court ought not to entertain a suit to injunct a foreign seated arbitration. Since ICC is the chosen forum, it is for the ICC to fix a venue as per the ICC Rules. 58. It has also been argued on behalf of Lalit that, by the common judgment dated 03.03.2020, the learned Single Judge dismissed the Suits of Appellants, as being not maintainable. The judgment clearly spells out the defences taken by Lalit and concludes that these defences of Lalit on arbitrability of disputes are arguable cases, which should be decided by the Arbitrator. 59. In the Appeal itself and in the prayer seeking interim relief, Bina prayed for restraining Lalit from taking further steps in the main arbitration. This has been admitted in paragraph 7 of Bina's rejoinder. Even though Bina was aware of the notice of arbitration, it did not press for stay, nor was any stay granted in the main arbitration. 60. It is a....
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....bitration and arbitrability of the dispute before the Emergency Arbitrator. It is, therefore, evident that Bina has approached this Hon'ble Court and also ICC (in the Main and Emergency Arbitration) urging identical grounds. It is submitted that this is an abuse of process of the Court and a case of forum shopping, as such the appeal ought to be dismissed. 67. In support of his submissions learned senior counsel appearing on behalf of Lalit has relied upon the following decisions: - 1. Vimal Kishor Shah v Jayesh Dinesh Shah reported as (2016) 8 SCC 788. 2. Aluminium Corporation of India v Workmen reported as (1964) 4 SCR 429. 3. Kaverner Cementation India Limited v Bajranglal Agarwal reported as (2012) 5 SCC 214. 4. A. Ayyasamy v A. Paramasivam reported as (2016) 10 SCC 386. 5. National Aluminium Company Limited v Subhash Infra reported as 2019 SCC Online SC 1091. 6. Union of India v Vodafone Group PLC, Delhi High Court reported as CS (OS) 383/2017. 7. Uttrakhand Purv Sainik v Northern Coal in [SLP(C) No. 11476/2018]. 8. Atlas Export Industries v. Kotak & Co. reported as (1999) 7 SCC 61. 9. GMR Ener....
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....ration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.; (2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof. [Provided that where the original arbitration agreement or a certified copy thereof is not available with the party applying for reference to arbitration under sub-section (1), and the said agreement or certified copy is retained by the other party to that agreement, then, the party so applying shall file such application along with a copy of the arbitration agreement and a petition praying the Court to call upon the other party to produce the original arbitration agreement or its duly certified copy before that Court.] (3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the ....
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....reement is null and void, inoperative or incapable of being performed." 70. On a conjoint reading and harmonious interpretation of the above extracted provisions, considered in the backdrop of relevant, applicable and binding decisions, elucidated hereinafter, the following legal position emerges: - (a) A judicial authority, before whom an action or suit is brought in a matter, which is stated to be the subject of an arbitration agreement shall, if a party to the said arbitration agreement applies not later than the date of submitting his first Written Statement on the subject of the dispute, refer the parties to arbitration, unless it finds that prima facie no valid arbitration agreement exists. [Ref: Section 8 of Arbitration Act] (b) In matters governed by Part I of the Arbitration Act, no Court shall intervene except where so provided in that Part. [Ref: Section 5 of the Arbitration Act] (c) No provision contained in Part I of the Arbitration Act shall affect any other law for the time being in force by virtue of which certain disputes may not be submitted to arbitration. [Ref: Section 2(3) of the Arbitration Act] (d) The Arbitral Tribunal ....
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....nt of claim and the counterclaim filed before the Arbitral Tribunal. A dispute, even if it is capable of being decided by arbitration and falling within the scope of arbitration agreement, will not be "arbitrable" if it is not enumerated in the joint list of disputes referred to arbitration, or in the absence of such joint list of disputes, does not form part of the disputes raised in the pleadings before the Arbitral Tribunal. 35. The Arbitral Tribunals are private fora chosen voluntarily by the parties to the dispute, to adjudicate their disputes in place of courts and tribunals which are public fora constituted under the laws of the country. Every civil or commercial dispute, either contractual or noncontractual, which can be decided by a court, is in principle capable of being adjudicated and resolved by arbitration unless the jurisdiction of the Arbitral Tribunals is excluded either expressly or by necessary implication. Adjudication of certain categories of proceedings are reserved by the legislature exclusively for public fora as a matter of public policy. Certain other categories of cases, though not expressly reserved for adjudication by public fora (courts and tr....
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....dered to be arbitrable. 39. The Act does not specifically exclude any category of disputes as being not arbitrable. Sections 34(2)(b) and 48(2) of the Act however make it clear that an arbitral award will be set aside if the court finds that "the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force". 40. Russell on Arbitration (22nd Edn.) observed thus (p. 28, Para 2.007): "Not all matters are capable of being referred to arbitration. As a matter of English law certain matters are reserved for the court alone and if a tribunal purports to deal with them the resulting award will be unenforceable. These include matters where the type of remedy required is not one which an Arbitral Tribunal is empowered to give." The subsequent edition of Russell (23rd Edn., p. 470, Para 8.043) merely observes that English law does recognise that there are matters which cannot be decided by means of arbitration. 41. Mustill and Boyd in their Law and Practice of Commercial Arbitration in England (2nd Edn., 1989), have observed thus: "In practice therefore, the question has not been wheth....
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....[Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532 : (2011) 2 SCC (Civ) 781] which as held above cannot be decided by the arbitrator(s)." C. Vidya Drolia (supra) 30. In Vimal Kishor Shah v. Jayesh Dinesh Shah, (2016) 8 SCC 788, this Court, after referring to Dhulabhai v. State of M.P., (1968) 3 SCR 662, came to the conclusion that disputes which arose under the Indian Trusts Act, 1882, which applies only to private trusts, were also not arbitrable as this was excluded by necessary implication. This was so stated as follows: "49. So far as the question involved in the case at hand is concerned, it is governed by Condition 2 of Dhulabhai case [Dhulabhai v. State of M.P., AIR 1969 SC 78] which reads as under: (AIR p. 89, para 32) "32. (2) Where there is an express bar of the jurisdiction of the court, an examination of the scheme of the particular Act to find the adequacy or the sufficiency of the remedies provided may be relevant but is not decisive to sustain the jurisdiction of the civil court. Where there is no express exclusion the examination of the remedies and the scheme of the particular Act to find out the inte....
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.... principle here because, as held above, the Trusts Act, 1882 creates an obligation and further specifies the rights and duties of the settlor, trustees and the beneficiaries apart from several conditions specified in the trust deed and further provides a specific remedy for its enforcement by filing applications in civil court. It is for this reason, we are of the view that since sufficient and adequate remedy is provided under the Trusts Act, 1882 for deciding the disputes in relation to trust deed, trustees and beneficiaries, the remedy provided under the Arbitration Act for deciding such disputes is barred by implication." 31. Dhulabhai (supra) refers to and relies upon the three famous categories that are contained in Wolverhampton New Waterworks Co. v. Hawkesford, 141 ER 486. Willes, J. had set out these three categories as follows: "There are three classes of cases in which a liability may be established founded upon a statute. One is, where there was a liability existing at common law, and that liability is affirmed by a statute which gives a special and peculiar form of remedy different from the remedy which existed at common law: there, unless the statute....
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.... certain circumstances, a beneficiary may apply by petition to a principal Civil Court of original jurisdiction for the appointment of a trustee or a new trustee, and the Court may appoint such trustee accordingly. Here again, such appointment cannot possibly be by a consensual adjudicator. It can only be done by a petition to a principal Civil Court of original jurisdiction. Also, it is important to note that it is not any civil court that has jurisdiction, but only one designated court, namely, a principal Civil Court of original jurisdiction. All this goes to show that by necessary implication, disputes arising under the Indian Trusts Act cannot possibly be referred to arbitration. xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx 35. We may only indicate that Vimal Kishor Shah (supra) has, in a Consumer Protection Act situation, been recently followed by a Division Bench of this Court in Emaar MGF Land Limited v. Aftab Singh, 2018 SCC OnLine SC 2771. D. Emaar MGF Land Limited (supra) "36. Two more provisions of the 1996 Act need to be noted before we proceed further to consider the issues. The 1996 Act contains two Parts - Part I and Part II. ....
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.... of a public nature, disputes arising out of illegal agreements and disputes relating to status, such as divorce, cannot be referred to arbitration. The following categories of disputes are generally treated as non-arbitrable: (i) patent, trade marks and copyright; (ii) anti-trust/competition laws; (iii) insolvency/winding up; (iv) bribery/corruption; (v) fraud; (vi) criminal matters. Fraud is one such category spelled out by the decisions of this Court where disputes would be considered as nonarbitrable." 39. Dr D.Y. Chandrachud, J. in his concurring opinion has referred to Booz Allen & Hamilton Inc. [Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532 : (2011) 2 SCC (Civ) 781] and noticed the categories of cases, which are not arbitrable. Para 35 of the judgment is quoted as below: (A. Ayyasamy case [A. Ayyasamy v. A. Paramasivam, (2016) 10 SCC 386 : (2017) 1 SCC (Civ) 79], SCC pp. 409-10) "35. Ordinarily every civil or commercial dispute whether based on contract or otherwise which is capable of being decided by a civil court is in principle capable of being adjudicated upon and re....
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....aries arising out of a trust deed and the Trust Act." 40. Another section, which needs to be noted is Section 5, which is as follows: "5. Extent of judicial intervention.- Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part." 41. Section 5 contains an injunction to judicial authority from intervening except where so provided in this part. Section 2(3), Section 8, Section 11 and Section 34 are some of the provisions, which provide for judicial intervention in matters. Here, we are concerned with power of judicial authority under Section 8, hence Section 5 is not much relevant in the present case. xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx 60. Reference is also made to the judgment of this Court in Vimal Kishor Shah v. Jayesh Dinesh Shah [Vimal Kishor Shah v. Jayesh Dinesh Shah, (2016) 8 SCC 788 : (2016) 4 SCC (Civ) 303] . This Court in the above case had occasion to consider the provisions of Section 8 of the 1996 Act in reference to special remedy provided under the Trusts Act, 1882. This Court ....
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....through the law, was adopted by this Court in Premier Automobiles Ltd. v. Kamlekar Shantaram Wadke [Premier Automobiles Ltd. v. Kamlekar Shantaram Wadke, (1976) 1 SCC 496 : 1976 SCC (L&S) 70] while examining the question of bar in filing civil suit in the context of remedies provided under the Industrial Disputes Act (see G.P. Singh, Principles of Statutory Interpretation, 12th Edn., pp. 763-64). We apply this principle here because, as held above, the Trusts Act, 1882 creates an obligation and further specifies the rights and duties of the settlor, trustees and the beneficiaries apart from several conditions specified in the trust deed and further provides a specific remedy for its enforcement by filing applications in civil court. It is for this reason, we are of the view that since sufficient and adequate remedy is provided under the Trusts Act, 1882 for deciding the disputes in relation to trust deed, trustees and beneficiaries, the remedy provided under the Arbitration Act for deciding such disputes is barred by implication. * * * 53. We, accordingly, hold that the disputes relating to trust, trustees and beneficiaries arising out of the trust deed and the Tr....
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....udge has applied the Division Bench Judgment in Spentex as also the Single Judge decision in Roshan Lal Gupta v. Parasram Holdings Pvt. Ltd., 2009 (157) DLT 712. The first feature to be noted is that Roshan Lal deals with a domestic arbitration and, therefore, Section 45 of the A & C Act was not in contemplation. The learned Single Judge, inter alia, concluded that the word 'party' in Section 8 of the A & C Act refers to a party to the suit in contradistinction to a party to the arbitration agreement. The learned Single Judge, in the impugned Judgment, has dismissed the applications seeking interim relief but inexplicably has kept the Suit alive for further consideration. The learned Single Judge was statutorily bound to return a finding with regard to whether or not the action or suit was the subject, matter of an arbitration agreement. In the facts of the case before us, since we are dealing with an international commercial arbitration, Section 45 of the A & C Act comes into play. After considering all the complexities in the case, one of us had concluded in Bharti that a formal application under Section 45 of the A & C Act was not necessary, since it is incumbent for a Court sei....
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....ability would be governed by Singaporean law and not Indian law. In other words, it was submitted that any limitations on arbitration of such disputes under Indian law were thus irrelevant. In this regard, we must comment on Lalit's conduct, inasmuch as, by sagaciously not filing any pleading in response to the averments made by the Appellants in the plaint, he has achieved indirectly, what he could not have achieved directly, namely, making it inevitable for the Appellants to join the arbitral proceedings, without any consideration or adjudication of its plea that no valid arbitration agreement exists between the parties and the disputes between them arising out of the Trusts Act are incapable of being submitted to arbitration. At this juncture, it would also be pertinent to observe that, the above submission is evidently in the teeth of Clause 36 of the Restated Trust Deed, which provides as follows:- ".....The Arbitration will be governed in accordance with the laws of India and ICC will follow India law as the substantive law for deciding the dispute arising between the parties under pursuant to this Deed". 75. Assuming arguendo, we accept the abovesaid submission m....
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.... Hon'ble Supreme Court was not addressing the issue of validity of an arbitration agreement, nor was it a case relating to the principles governing disputes, that may not be referred to arbitration. Further, the decision in Kvaerner (supra) did not deal with the exceptions carved out of Section 5 of the Arbitration Act by the provision of Section 2(3) thereof, which provides for judicial intervention in matters, in relation to disputes which may not be submitted to arbitration, on account of any other law for the time being in force. 78. We further observe here that the decisions of the Supreme Court in Booz Allen and Hamilton INC. (supra), Vidya Drolia, Vimal Kishor Shah (supra) and Emaar MGF Land Limited (supra) are axiomatically "law in force" within the meaning of the provisions of Section 2(3) of the Arbitration Act. 79. The learned Single Judge further failed to appreciate that even in the decision in A. Ayyasamy (supra), cited in the impugned judgement, the Supreme Court having noticed the decision in Kvaerner (supra), clearly enunciated and expressly confirmed in paragraph 13 thereof, that the Civil Courts have jurisdiction to "pronounce upon arbitrability or non-arbi....
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....es i.e. Category (vii), namely, cases arising out of trust deed and the Trusts Act, 1882, in the list of six categories of cases specified by this Court in para 36 at pp. 546-47 of the decision rendered in Booz Allen & Hamilton Inc. [Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532 : (2011) 2 SCC (Civ) 781] which as held above cannot be decided by the arbitrator(s)." 82. We are constrained to observe that, although the learned Single Judge's attention was invited to the decisions of the Hon'ble Supreme Court in Vimal Kishor Shah (supra) and Vidya Drolia (supra), he skirted the binding effect of the ratio clearly and unequivocally enunciated therein, qua the disputes under the Trust Act being 'nonarbitrable', in a cavalier manner, by dismissing their applicability, merely by observing "that the Senior Counsel for Lalit have made out an arguable case qua the non-applicability of Vimal Kishor Shah and Vidya Drolia (supra)'. 83. A plain reading of the above decisions in conjunction with each other leaves no manner of doubt that disputes arising under the Trusts Act, are not arbitrable, by necessary implication. Our expression of the legal position that obtain....
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.... note that it is not any civil court that has jurisdiction, but only one designated court, namely, a principal Civil Court of original jurisdiction. All this goes to show that by necessary implication, disputes arising under the Indian Trusts Act cannot possibly be referred to arbitration. xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx 35. We may only indicate that Vimal Kishor Shah (supra) has, in a Consumer Protection Act situation, been recently followed by a Division Bench of this Court in Emaar MGF Land Limited v. Aftab Singh, 2018 SCC OnLine SC 2771." 84. We may further observe that, the impugned judgement eschews reliance on McDonald's India Private Limited (supra) and Vodafone Group PLC United Kingdom (supra), on the specious ground that, although being a dicta of the Division Bench of this Court, it would be binding, but holding the same to be per incuriam qua Kvaerner (supra). In Mcdonald's India Private Limited (supra) a Division Bench of this Court held as follows: - "44. In another decision referred to by the respondents, which was of a learned single Judge of the High Court in Calcutta in the case of the Board of Trustees of the Port of Kol....
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...., passed an interim injunction against ESPL from proceeding with the U.K. action to the extent the U.K. action contained allegations against BCCI or that the adjudication of that action overlapped the pending suit in India. It goes without saying that the said decision of the Division Bench in ESSL Sports Pvt. Ltd. (supra) was also a case of an anti-suit injunction and was not concerned with an anti-arbitration injunction. It applied the principles for an anti-suit injunction laid down in Modi Entertainment Network (supra). xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx 52. It is also important to note that although the competence-competence principle was applicable and the arbitral tribunal had the requisite competence to determine its own jurisdiction, the courts in England retained the jurisdiction to determine the issue as to whether there was ever an agreement to arbitrate. In our view, the same principle would apply insofar as the courts in India are concerned. The courts in India would certainly have the jurisdiction to determine the question as to whether an arbitration agreement was void or a nullity. xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx 63. Court....
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....tor in a foreign land." [Ref: Devinder Kumar Gupta (supra)]. Moreover, the subject dispute ought to have been prima facie adjudicated by the learned Single Judge, who had to exercise the jurisdiction vested in the Court, as a) all parties are Indian citizens; b) situs of immovable assets of the Trust is in India; and c) in the Restated Trust Deed itself, it is categorically stipulated that the same will be governed, in accordance with the laws in India, as the substantive law for deciding the disputes, arising between the parties, under the Trust Deed. In our view, therefore, the principles of autonomy of arbitration and kompetenz-kompetenz did not prima facie arise in the present case, since the disputes themselves are not be capable of being submitted to arbitration. A fortiori the impugned judgement is erroneous for its misplaced reliance on the principles enunciated in the provisions of Section 16 of the Arbitration Act- which in view of the Constitution Bench decision in SBP & Co. vs. Patel Engineering (supra), is only an enabling provision and does not confer exclusive jurisdiction on the Arbitration Tribunal-without rendering a decision on the issue of 'non-arbitrability' of....