AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1429
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.... 6 (iv) HSSAs executed between Petitioner and Respondent No. 3 ..................................... 6 (v) Respondent No. 1's invocation of Benin Arbitration ..................................................... 7 (vi) Petitioner's institution of Anti-Arbitration Injunction Suit ............................................. 8 (vii) Filing of the Present Petition ...................................................................................... 9 (viii) Culmination of Benin Arbitration: ............................................................................... 9 III. Submissions: ....................................................................................................... 9 (i) Submissions on behalf of the Petitioner ................................................................. 9 (ii) Submissions on behalf of Respondent No. 1 ....................................................... 11 (iii) Submissions on behalf of Respondent No. 2 ....................................................... 13 (iv) Submissions on behalf of Respondent No. 3 ..........................................
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....) the petitioner is barred by issue estoppel arising owing to dismissal of anti-arbitration injunction suit and also that, (iv) there is no compositeness of the transaction so as to attract group of companies doctrine. II. Facts: 3. The petitioner, Balaji Steel Trade, has approached this Court under Section 11(6) read with Section 11(12)(a) of the Act 1996 praying for appointment of sole arbitrator to adjudicate and decide upon dispute that has arisen between the parties owing to the alleged breach of Buyer and Seller Agreement (hereinafter, "BSA") dated 06.06.2019 executed between the present petitioner and respondent no. 1, Fludor Benin S.A. Petitioner prays for a composite reference to arbitration by seeking the inclusion of respondent no. 2, M/s Vink Corporations DMCC, a company incorporated in Dubai, UAE, and respondent no. 3, Tropical Industries International Pvt. Ltd., a private limited company registered in New Delhi, India. As per the petitioner, all three respondents are owned and controlled by Tropical General Investments Ltd. Group ("TGI Group") whereby TGI Group holds 100% shares in respondent no. 1, 51% shares in respondent no. 2 and 99.73% shares in respondent ....
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....Contracts providing for reference of dispute to sole arbitrator in accordance with the Act, 1996, with the place of arbitration at New Delhi. The relevant portion of the dispute resolution clause is as follows: "Dispute Resolution: Any dispute arising out of or relating to this agreement, including any question regarding its existence, validity, or termination, which cannot be amicably resolved by the Parties, shall be settled before a sole arbitrator in accordance with the Indian Arbitration and Conciliation Act, 1996. The sole arbitrator shall be appointed mutually by the parties. In the event the Parties fail to agree on a sole arbitrator within Thirty (30) days from the date of notice of arbitration, then appointment of such sole arbitrator shall take place as per the provisions of the Indian Arbitration and Conciliation Act, 1996. The place of arbitration should be New Delhi and language shall be English. The resulting arbitral award shall be final and binding without right of appeal, and judgment upon such award may be entered in any court having jurisdiction thereof. A dispute shall be deemed to have been arisen when either Party notifies the other Party in writing ....
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....nin as seat of arbitration. Further objection of the petitioner was with regard to the non-joinder of respondent no. 2 and respondent no. 3, who were, as per petitioner, proper and necessary parties. 12. Instead of submitting to the Benin arbitration, the petitioner issued its own notice invoking arbitration to all the three respondents purportedly in terms of Section 21 of the Act, 1996 referring the disputes arising out of the BSA, Sales Contract and HSSAs to arbitration and proposed the name of sole arbitrator. Respondent no. 1 however continued to proceed with Benin arbitration and filed an application before the Commercial Court of Cotonou, Benin ("Benin Court") seeking appointment of arbitrator which was allowed on 26.07.2023, whereby the Benin Court appointed one Dr. Gilbert Ahouandjinou as the sole arbitrator for determination of disputes between the petitioner and respondent no. 1. 13. Petitioner's institution of Anti-Arbitration Injunction Suit: Petitioner however proceeded to institute Anti-Arbitration Injunction Suit (CS (Comm) No. 544 of 2023) before the High Court of Delhi on 10.08.2023, inter alia praying for a decree of permanent injunction restraining the res....
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....eat, since Article 11 merely states that arbitration "will take place in Benin." In contrast, the later contracts evince a clear intention to adopt Indian law as the governing law of arbitration. Relying on Mankastu Impex Pvt. Ltd. v. Airvisual Ltd. (2020) 5 SCC 399. (hereinafter, Mankastu Impex), it is argued that the seat must be inferred from the parties' conduct and the governing law, which unmistakably points to India as the seat. (iv) Arbitral proceedings in Benin and the consequent award are non-est in law, having been unilaterally invoked by respondent no. 1 to pre-empt petitioner's claims under Indian law. Benin is not a reciprocating territory under Section 44(b)^3 of the Act, 1996, and any award rendered there would be unenforceable in India. (v) Lastly, it is argued that the Delhi High Court's findings in the antiarbitration injunction suit have no bearing on these proceedings, as the inquiry under Section 45 (before the High Court) and Section 11 (before this Court) operate in distinct spheres. The limited scrutiny is only to enquire about the existence of a valid arbitration agreement, and all other questions can be raised and contested before the ar....
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....ep into respondent 1's contractual position, leaving no ground for a separate or parallel arbitration. In any event, all such issues fall within the jurisdiction of the arbitral tribunal constituted under the BSA. The respondents further rely on the Delhi High Court's findings in the petitioner's anti-arbitration injunction suit, which, having attained finality, bar re-litigation of identical issues. 19. Submissions on behalf of Respondent No. 2: Ld. Counsel for respondent no. 2, M/s. Vink Corporations DMCC, submitted that the multiple Sales Contracts that they have entered into with the petitioner were standalone limited term contracts concluding with the delivery of the goods. The arbitration clause is limited to, "any dispute arising out of or relating to this Agreement". 20. Submissions on behalf of Respondent No. 3: Similarly, Ld. Counsel for respondent no. 3 submits that it and petitioner entered into four HSSAs for delivering a specified quantity of the products detailed in each HSSAs. The arbitration clause in each HSSA provided that "Dispute if any, between the parties arising in relation to this agreement of HIGH SEAS SALE shall be referred to the arbitration under ....
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....Respondent no. 1 being a company incorporated under the laws of Benin, the present dispute squarely falls within the ambit of international commercial arbitration. Once this characterisation is made, Section 2(2) of the Act becomes immediately relevant, for it stipulates that Part I shall apply only where the place of arbitration is in India, thereby mandating that Part I stands excluded where the parties have chosen a foreign seat. This Court has consistently held, beginning with Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (2012) 9 SCC 552., (BALCO), that Part I of the 1996 Act has no application to arbitrations seated outside India. The seat has a juridical significance in arbitration law: it determines the courts that exercise supervisory jurisdiction over the arbitral proceedings. 25. Respondent no. 1 has urged that Part I, including Section 11 is not applicable to the BSA dated 06.06.2019. At the threshold, it is common ground that the relationship between the petitioner and respondent no. 1 was crystallised in the BSA and its Addendum dated 09.01.2021. These agreements constitute the principal arrangements between the two contracting entities. The arbi....
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....sk allocation, and a self-contained dispute resolution clause providing for arbitration "to take place in Benin" under Benin law. 28. No novation or supersession of BSA by Sales Contracts and HSSAs: By contrast, the Sales Contracts executed between the petitioner and respondent no. 2, and the HSSAs executed with respondent no. 3, were subsequent, limited-purpose instruments. They were entered into only to facilitate execution of individual shipments once respondent no. 1 assigned part of its performance to other group entities. Each Sales Contract and HSSA were confined to a specific consignment or transaction, contained its own commercial terms such as quantity, price and delivery schedule, and had separate arbitration clauses, one referring disputes to arbitration under the Act, 1996 (for Sales Contracts) and the other under the Indian Arbitration Act, 1940 (for HSSAs). None of these contracts incorporate or refer to the BSA or its arbitration clause, nor did they expressly substitute, novate, or supersede the BSA. Their scope ended upon completion of delivery and payment under the respective consignment. 29. The absence of cross-references or language of substitution makes....
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....constitute the mother agreement, containing a clear and deliberate choice of Benin as the juridical seat of arbitration and Benin law as the governing and curial law. The subsequent Sales Contracts and HSSAs are merely ancillary, facilitating performance of isolated shipments, and cannot override the dispute resolution framework of the BSA. Thus, both in principle and in the factual circumstances of the case, the arbitration agreement in the BSA prevails. The disputes raised by the petitioner arise squarely from the BSA, and the parties' chosen forum for their adjudication is arbitration in Benin. Accordingly, the invocation of Part I and the present request under Section 11(6) of the 1996 Act is fundamentally misconceived, legally untenable, and contrary to the statutory scheme as well as the autonomy of the parties' contractual design. 31. Initiation and Culmination of Benin Arbitration: It is significant to note, even prior to the institution of the present proceedings, respondent no. 1 had already invoked arbitration in terms of Article 11 of the BSA in Benin. As already indicated, the Benin Commercial Court, vide order dated 26.07.2023, appointed a sole arbitrator, Dr. Gilb....
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....lution. It held that the Sales Contracts and HSSAs, being independent and self-contained arrangements with respondent nos. 2 and 3 respectively, do not, and cannot, supersede, modify, or dilute the arbitration agreement in the BSA, nor do they create a composite dispute capable of attracting a unified arbitral mechanism under Indian law. To this effect, it was observed: "52. Defendant No. 1 is not a party to either the Sales Contracts or HSSAs. Thus, there is no question of it being bound by the arbitration clause contained in the Sales Contracts and/or HSSAs. It is an admitted fact that Plaintiff and Defendant No. 1 signed the BSA and Addendum. If Defendant No. 1 assigned its obligation to Defendant No. 2 & 3 and Plaintiff agreed to the same, it would result in Defendant No. 2 & 3 stepping into the shoes of Defendant No. 1 for the purposes of the BSA and addendum. Defendants No. 2 & 3 would then be bound by the BSA and Addendum, including Article 11 and Article 5, respectively, but it cannot be vice-versa. Hence, Articles 11 and article 5 would continue to remain the binding arbitration agreement between the parties. The arbitration clause/Article 11 of BSA and Article 5 ....
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....en adjudicatory forum, i.e., under Article 11 of the BSA and the arbitration clause provided under Article 11 of the BSA. Clearly Plaintiff has never questioned the validity of BSA and Addendum, which means that the Agreements are not null, void, inoperative or incapable of being performed." (emphasis supplied) In terms of the above, the High Court of Delhi allowed respondent no. 1's application under Section 45 and dismissed the suit filed by the petitioner. 35. Findings of High Court of Delhi as 'Issue Estoppel': Importantly, these findings relating to (i) the autonomy and separateness of the contractual frameworks, (ii) the absence of any common arbitration agreement across respondents, and (iii) the impossibility of construing the BSA as having been novated by the later consignment-based contracts, are findings of jurisdictional fact. Once such jurisdictional facts have been adjudicated by a competent court, they cannot be reopened in subsequent proceedings between the same parties. The petitioner, having unsuccessfully canvassed the very same assertions before the High Court, is now barred by issue estoppel from reagitating those issues in a slightly altered sta....
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....under Section 11(6) as the earlier refusal under Section 8 amounts to issue estoppel. It was observed that; "15.......Thus, once the judicial authority takes a decision not to refer the parties to arbitration, and the said decision having become final, thereafter Section 11(6) route before the Chief Justice is not available to either party." 38. In the totality of circumstances, therefore, the findings of the High Court of Delhi furnish a cogent and authoritative factual foundation against which the present petition must be tested. When those findings are read conjointly with the statutory framework under Sections 2(1)(f) and 2(2) of the 1996 Act and the jurisprudence laid down in above referred judicial pronouncements, the legal position becomes unequivocal: (i) the BSA constitutes the mother agreement; (ii) the juridical seat of arbitration is Benin; (iii) the governing and curial law is the law of Benin; (iv) Part I of the Act stands excluded by operation of law; (v) Indian courts lack jurisdiction to appoint an arbitrator for a foreign-seated arbitration; (vi) after the commencement and during the subsistence of ....