M/S SHIVNATH RAI HARNARAIN (INDIA) LTD.versusM/S. ABDUL GHAFFAR ABDUL REHMAN (DEAD) BY LRS.

                         [2008] 4 S.C.R. 594


A         MIS SHIVNATH RAI HARNARAIN (INDIA) LTD.
                                  v.
        MIS. ABDUL GHAFFAR ABDUL REHMAN (DEAD)
                             BY L.RS.
               (Arbitration Petition No. 4 of 2007)
B                        MARCH 10, 2008
                          [H.K. SEMA, J.)

        Arbitration and Conciliation Act, 1996: s. 11 (6) -
c Application under, when venue for resolution of dispute in
  Singapore and UNICITRAL Rules to apply - Maintainability
  of - Held: Application not maintainable and is misconceived
  - Parties had mutually agreed to refer the dispute to arbitrator
  at Singapore who passed award - It was set aside by High
D Court of Singapore with liberty to apply for fresh arbitration -
  Hence, the Court at Singapore alone has jurisdiction over
  arbitral proceedings and all applications arising out of that
  agreement are to be made only in that Court.
       The parties by a mutual agreement agreed to refer to
E the arbitrator SM for resolution of the dispute at
  Singapore. The UNCITRAL Rules were to apply, though
  the settlement agreement was governed by Indian Law.
  The arbitrator SM proceeded with the arbitration at
  Singapore and passed an award in favour of the applicant.
F The respondent challenged the award. The High Court of
  Singapore set aside the award with liberty to the parties
                                                                     .
  to apply for fresh arbitration. However, the applicant did
  not apply for fresh arbitration before the Arbitrator at
  Singapore but filed application u/s 11 (6) of the Arbitration
G and Conciliation Act, 1996, for appointment of arbitrator
  before this Court.
       The question which arose for consideration b~fore
  this Court was whether an application under section 11 (6)
  of the Act was maintainable.
H                           594
     \         I


                     MIS SHIVNATH RAI H. (I} LTD. v. MIS. A. GHAFFAR            595
                       A. REHMAN (DEAD) BY LRS. [H.K. SEMA, J.]
     <>-                Dismissing the application, the Court                         A
                         HELD: 1.1 In the instant case, the parties agreed to
                   refer to the Arbitrator, SM for resolution of the dispute at
                   Singapore. The Award of the Arbitrator was passed at
                   Singapore. The Award of the Arbitrator was set aside by
                   the High Court of Singapore and, therefore, the Court at           B
                   Singapore, which alone shall have jurisdiction over the
         ...       arbitral proceedings and all applications arising out of that
                   agreement shall be mad~ in that Court and no other Court.
'                  [Para 14] [598-F, G, HJ
~·                                                                                    c
                        1.2 Having mutually agreed to have the dispute
                   referred to an arbitrator at Singapore, the applicant is not
                   permitted to turn around and say that this Court could
                   appoint an arbitrator. In the facts and circumstances of
                   the case, filing of an application under Section 11(6) of
                                                                                D
                   the Act, before this Court, is misconceived. [Paras 19
                   and 20] [600-D, E]
                         National Agricultural Coop. Marketing Federation India
                   Ltd. vs. Gains Trading Ltd., 2007 (5) SCC 692-distinguished.
                        CIVIL ORIGINAL JURISDICTION : Arbitration Petition No.        E
                   4 of2007.
                        Dr. A.M. Singhvi, Vijay Hansaria, Pun it Dutt Tyagi for the
                   Applicant.
         ~

         T              Kailash Vasdev, M/s. Pradeep Sancheti, Rajiv Agnihotry        F
                   and Praveen Kumar for the Respondents.
                        The Judgment of the Court was delivered by
                         H.K. SEMA, J. (1) This is an application filed under Section
                   11 (6) of the Arbitration and Conciliation Act, 1996 (in short "the G
                   Act") for appointment of an Arbitrator.
                         (2) I have heard Dr.A.M. Singhvi, learned senior counsel
                   for the applicant and Mr. Kailash Vasdev, learned senior counsel
                   for the respondents at length.                                     H
    596        SUPREME COURT REPORTS                  [2008] 4 S.C.R.


A          (3) The sole question that arises for consideration in this   ... .
    petition is as to whether an application under Section 11 (6) of
    the Act is maintainable?
       (4) In view of the order that I propose to pass, it may not be
  necessary to recite the entire facts, leading to the filing of the
B present application.

          (5) Suffice it to say that contract Nos.2001-Sl/25, 2001-      ..,.
    Sl/26 both dated 121h January 2001 and Contract No.2001-Sll/                It"~
    41 dated 281h February 2001 were amended/modifi~d by way
c   of a common addendum No.1 on 2.3.2001. By an addendum                       t--
    dated 2nd March, 2001 clause (ii) was introduced. It reads:
          "(ii) Settlement of disputes through Indian Arbitration
          Council, Delhi."
        (6) The dispute having arisen and as agreed to by both
D
  the parties the matter was referred to one Mr. Samuel J. Marshall,
  who was agent for both the parties in the transactions and who
  also agreed to mediate between the parties. With the
  intervention of Mr. Samuel J. Marshal, the parties arrived at an
  agreement to resolve the dispute between the parties. The
E settlement agreement was entered into on 18.1.2002. Clause
  18 of the settlement reads:
          "18. Should any dispute or non implementation arise this
          will be adjudicated solely by Mr. Samuel J. Marshall."
F        (7) It also appears from the letter dated 12.11.2002 and
                                                                         •
                                                                         T
    accepted on 21.11.2002 the parties have agreed to resolve the
    dispute under the following conditions:
          1.   That the venue for resolution of this dispute will take
               place in Singapore, assuming that Mr. Marshall is
G
               resident there, alternatively the UK;
          2.   That the Agreement dated 181h January 2002 is
               governed by India Law; and
          3.   UNCITRAL rules will apply.
H
  M/S SHIVNATH RA: H. (I) LTD. v. MIS. A. GHAFFAR                597
    A. REHMAN (DEAD) BY LRS. [H.K. SEMA, J.]

     (8) Pursuant to the aforesaid agreement, an application A
was filed sometime in January 2004, before the Arbitrator
namely Mr. Samuel J. Marshall. However, the respondents herein
did not participate in the arbitration proceedings. On 20.6.2005,
the Arbitrator proceeded with the arbitration at Singapore and
passed the Award in favour of the applicant.                      B
      (9) Aggrieved by the Award dated 20.6.2005, the
respondents herein challenged the said Award before the High
Court of Republic of Singapore in Originating Motion No.35/
2005/H inter alia on the ground of violation of principles of
natural justice. On 31.7.2006, the High Court of Singapore, set C
aside the Award with a liberty to the parties to apply for fresh
arbitration. This is undisputed that the applicant herein did not
apply for fresh arbitration before the Arbitrator at Singapore.
However. this application has been filed before this Court under
Section 11 (6) of the Act.                                        D
      (10) Dr.Singhvi, learned senior counsel for the applicant,
would submit that the agreement is governed by Indian Law and,
therefore, the law in India is applicable and thus, this Court can
appoint Arbitrator in exercise of power under Section 11 (6) of        E
the Act Per contra Mr. Kailash Vasdev, learned senior counsel
for the respondents, would content that this application under
Section 11 (6) is not maintainable inasmuch as the parties have
referred to the Arbitrator Mr. Samuel J. Marshall in Singapore.
The Award was passed by Mr. Marshall at Singapore and the
Award was set aside by the High Court of Singapore with liberty        F
to apply for fresh arbitration and, therefore, the appropriate Court
to apply is the Court at Singapore and this application is
misconceived.
      (11) The facts are not disputed that the parties by a mutual G
agreement referred the dispute to Mr. Samuel J. Marshall. Mr.
Samuel J. Marshall proceeded with the arbitration and passed
the Award on 20.6.2005, which was set aside by the High Court
of Singapore on 31.7.2006.
     (12) Section 2(1 )(e) of the Act defines Court. It reads:         H
                                                                          \   I


    598       SUPREME COURT REPORTS                   [2008] 4 S.C.R.


A         "(e) "Court" means the principal Civil Court of original
          jurisdiction in a 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-
B         matter of a suit, but does not include any civil court of a
          grade inferior to such principal Civil Court, or any Court of
          Small Causes"

          Further, Section 42 of the Act provides jurisdiction of the
          Court. It reads:
c
          "Jurisdiction.- Notwithstanding anything contained
          elsewhere in this Part or in any other law for the time being
          in force, where with respect to an arbitration agreement
          any application under this Part has been made in a Court,
          that Court alone shall have jurisdiction over the arbitral
D
          proceedings and all subsequent applications arising out
          of that agreement and the arbitral proceedings shall be
          made in that Court and in no other Court."

          (13) Section 42 read thus, provides that notwithstanding
E   anything contained elsewhere in this part or in any other law for
    the time being in force, where with respect to an arbitrator
    agreement any application under this part has been made in a
    court, that court alone shall have jurisdiction over the arbitral
    proceedings and all subsequent applications arising out of that
F   agreement and the arbitral proceedings shall be made in that
    court and in no other court.
                                                                                  ...,
        (14) In the present case, as already adumbrated, the
  parties agreed to refer to the Arbitrator, Mr. Samuel J. Marshall
  for resolution of the dispute at Singapore. The Award of the
G Arbitrator was passed at Singapore. The Award of the Arbitrator
  was set aside by the High Court of Singapore and, therefore, in
  my view, the Court at Singapore, which alone shall have
  jurisdiction over the arbitral proceedings and all applications
  arising out of that agreement shall be made in that Court and no
H other  Court.
     (
           '     M/S SHIVNATH RAI H. (I) LTD. v. MIS. A. GHAFFAR
                   A. REHMAN (DEAD) BY LRS. [H.K. SEMA, J.]
                                                                           599


     ·).             (15) In support of his contention, Dr. Singhvi referred to A
               the judgment of this Court, rendered in National Agricultural
               Coop. iVlarketing Federation India Ltd. Vs. Gains Trading.
               Ltd., (2007) 5 sec 692. In that case Clause 17 of the agreement
               deals with arbitration and it provides that the dispute be settled
               amicably by negotiation and mutual agreement and if no B
               settlement can be reached the matter in dispute shall then be
               referred to and finally resolved by an arbitration in Hong Kong
      T        in accordance with the provisions of the Arbitration and
               Conciliation Act, 1996.
                     (16) The question raised in that case was that whether c
               Section 11 of the Act is inapplicable in regard to the arbitrations,
               which are to take place outside India? The argument in that case
               was that as the venue of arbitration was outside India, Section
               11 would not apply and, therefore, neither the Chief Justice of
               India nor his designate will have the jurisdiction t9 appoint an D
               arbitrator.
      •             (17) The aforesaid contention has been repelled in
               paragraph 9 of the judgment as under:-
                    "9. The rules of interpretation require the clause to be E
                    read in the ordinary and natural sense, except where that
                    would lead to an absurdity. No part of a term or clause
                    should be considered as a meaningless surplusage, when
                    it is in consonance with the other parts of the clause and
                    expresses the specific intention of parties. When read .F
      •             normally, the arbitration clause makes it clear that the
      T
                    matter in dispute shall be referred to and finally resolved
                    by arbitration in accordance with the provisions of the
                    Arbitration and Conciliation Act, 1996 (or any statutory
                    modification, enactment or amendment thereof) and the
                                                                                 G
                    venue of arbitration shall be Hong Kong. This interpretation
                    does not render any part of the arbitration clause
                    meaningless or redundant. Merely because the parties
      -t
                    have agreed that the venue of arbitration shall be Hong
."                  Kong, it does not follow that laws in force in Hong Kong
                                                                                 H
                                                                            ~ J
    600        SUPREME COURT REPORTS                    [2008] 4 S.C.R.


A          will apply. The arbitration clause states that the Arbitration    "'(-
           and Conciliation Act, 1996 (an Indian statute) will apply.
           Therefore, the said Act will govern the appointment of
           arbitrator, the reference of disputes and the entire process
           and procedure of arbitration from the stage of appointment
B          of arbitrator till the award is made and executed/given
           effect to.
          (18) In my view, the facts of that case are not squarely
                                                                             ;.
    applicable in the present case. The facts of the case at hand,
    as already adumqrated, the parties to the agreement agreed to
c   refer the dispute to the Arbitrator Mr.Samuel J.Marshall. The
    Award was passed by the said Arbitrator at Singapore. The
    Award was also set aside by the High Court of Singapore with
    liberty to apply for fresh arbitration.
          (19) Having mutually agreed to have the dispute referred
D
    to an arbitrator at Singapore, the applicant is not permitted to
    turn around and say that this Court be appointed an arbitrator.
                                                                             ..
       (20) In the facts and circumstances of the case, as recited
  above, filing of an application under Section 11 (6) of the Act,
E before this Court, is misconceived. The application is,
  accordingly dismissed. No costs.                                                  l·


    N.J.                                       Application dismissed.


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