Few would disagree that former Chief Justice of India Dipak Misra left his stamp on the judiciary. This can be viewed through the prism of some of his major judgments that show the breadth of legal dimensions a chief justice must tackle. India Legal runs a series on these judgments
By Justice Bhanwar Singh
Title: Roger Shashoua & Ors vs Mukesh Sharma & Ors
Bench: Justices Dipak Misra and R Banumathi
Case No: SLP (Civil) no. 22616-22618 of 2016
Date of judgment: July 4, 2017
Though the “lis” (present suit) in this case is limited, the significance it carries is global. At times, in arbitration cases, the issue of jurisdiction of the court is disputed by the parties—sometimes to delay the final decision during the pendency of the case or where the award of the arbitrator is questioned on different grounds. Section 34 of the Arbitration and Conciliation Act, 1996, deals with the seat of arbitration and venue thereof—of course, subject to the material terms and conditions of the arbitration agreement.
While interpreting the agreement and the relevant laws, conciliation between the two plays an important role. The same agreement and the same laws can be interpreted by two different courts in two different ways. Here is an example of one such conflict which arose in a case decided by former CJI Dipak Misra.
In the case, the shareholders had entered into an agreement which provided that any dispute arising between the parties would be decided by arbitration. The agreement further stated: “For the said purpose, each party shall nominate one arbitrator and in the event of any difference between the two arbitrators, a third arbitrator/umpire shall be appointed. The arbitration proceedings shall be in accordance with the rules of conciliation and arbitration of the International Chamber of Commerce, Paris. The seat of arbitration shall be London, UK, and the agreement and the issues arising therefrom shall be governed by and construed in accordance with the laws of India.”
This case related to territorial jurisdiction of a petition preferred under Section 34 (application for setting aside arbitral award) of the Act. The main issue involved was a pure question of law, i.e. the maintainability of the petition in the courts of India. The Supreme Court had to dwell on the applicability of Part I or Part II of the Act and determine the “seat of arbitration and venue of arbitration”. The High Court of Justice, Queen’s Bench Division (commercial court), London, had decided on May 7, 2009, that the anti-suit injunction was maintainable only in London. The validity of jurisdiction of the Delhi High Court was also addressed before the London court of Justice Cooke.
The history of the case began in district Gautam Budh Nagar (UP). A petition under Section 34 of the Act was filed before the district judge of Gautam Budh Nagar but he refused to entertain it on the ground of lack of jurisdiction and returned it to be filed before the appropriate court by an order dated July 6, 2011. The petitioner then filed an appeal before the Allahabad High Court which dismissed it on the ground of maintainability. Thereafter, another writ petition titled “International Trade Expo Centre Ltd vs Mukesh Sharma and others” was filed by another respondent before the Allahabad High Court, challenging the order dated July 6, 2011, passed by the district judge of Gautam Budh Nagar.
In the meantime, ITE India Pvt Limited filed an SLP before the Supreme Court, which by an order dated September 15, 2015, transferred the petition pending before the Allahabad High Court to the Delhi High Court where another writ petition was also pending. The Delhi High Court decided both petitions by a common order and held that the application under Section 34 of the Act was maintainable and that it had territorial jurisdiction to deal with the same.
The order passed by the Delhi High Court was set aside by the Supreme Court by an order dated July 4, 2017, in the above mentioned SLP. The Supreme Court held that the inescapable conclusion was that the courts in India had no jurisdiction to deal with the matter. It was a wonderful judgment by Justice Misra and a lucid interpretation of the complex question relating to the applicability of the Act.
The prayer of the appellants before the Supreme Court was that the application under Section 34 of the Act was not maintainable as Part I of the Act was not applicable. This was because, according to the arbitration clause in the agreement, it was discernible that only the courts in London had jurisdiction. The appellants, therefore, prayed that the order passed by the Delhi High Court be set aside in as much as the Court had committed a palpable error in its appreciation of the arbitration clause.
Part I of the Act clearly postulates that in case this part is applicable, Part II would not be attracted. If Part I is applicable, there is no doubt that the arbitration would be in India. In cases of international commercial arbitration held outside India, Part I of the Act would be applicable unless the parties excluded all or any of its provisions. In that eventuality, the laws or rules chosen by the parties would dominate the proceedings. The concept of seat of arbitration is analogous to the concept of exclusive jurisdiction of the courts of a particular place, as very intelligently and finely distinguished by Justice Misra. The venue means the substantive law and procedural law which will be made applicable by the court of territorial jurisdiction.
It has been clearly demonstrated by Justice Misra that while dealing with the issue of jurisdiction, courts must undertake a detailed examination to “discern from the agreement and surrounding circumstances the intention of the parties as to whether a particular place mentioned refers to the venue or seat of the arbitration”.
In other words, when a court finds there is prescription for jurisdiction, it has to be decided on the facts of each case to decipher the judicial seat, i.e. the place of arbitration. At the cost of repetition, it may be mentioned that the nature of the language used in the agreement will play a dominant role in the determination.
The Supreme Court allowed the appeals and set aside the judgment of the Delhi High Court which had held that courts in India have jurisdiction. Justice Misra pronounced the judgment for the court and finally said that they have already held that the agreement in question having been interpreted in a particular manner by the English court and the said interpretation having acquired approval of this court, the inescapable conclusion was that the courts in India had no jurisdiction. Thus, the impugned order passed by the Delhi High Court was set aside.
—The author is a former judge of the Allahabad HC and is at present D-G, Sunshine Educational Society, Noida