YOGRAJ INFRASTRUCTURE LTD.versusSSANG YONG ENGINEERING AND CONSTRUCTION CO. LTD.

               [2011] 14 (ADDL.) S.C.R. 301


            YOGRAJ INFRASTRUCTURE LTD.                           A
                              v.
SSANG YONG ENGINEERING AND CONSTRUCTION CO.
                        LTD.
          (Civil Appeal No. 7562 of 2011)
                  SEPTEMBER 01, 2011                             B

     [ALTAMAS KABIR AND CYRIAC JOSEPH, JJ.]

    International Arbitration Act, 2002:
                                                                 c
      International Commercial Arbitration - Held: Where the
arbitration agreement provides that the seat of arbitration is
Singapore and arbitration proceedings are to be conducted
in acco.rdance with the Singapore International Arbitration
Centre Rules (SIAC Rules) then the International Arbitration
                                                                 0
Act, 2002 of Singapore will be the law of arbitration as is
provided in rule 32 of S/AC Rules - Once the arbitrator is .
appointed and the arbitral proceedings are commenced, the
SIAC Rules become applicable shutting out the applicability
of s.42 of Arbitration and Conciliation Act, 1996 and for that
matter Part I of the 1996 Act, including the right of appeal u/ E
s.37 thereof.:... Arbitration and Conciliation Act, 1996 - ss.2,
9, 42 - Singapore International Arbitration Centre Rules -
r.32.

    Proper law and Curial law - Distinction between -            F
Discussed.

     Arbitral Tribunal - Applicable law - Held: While the
proper law is the law which governs the agreement itself, in
the absence of any other stipulation in the arbitration clause   G
as to which law would apply in respect of the arbitral
proceedings, it is the law governing the contract which would
a/so be the law applicable to the Arbitral Tribunal itself.
    On 12th April, 2006, the National Highways Authority
                           301                                   H
    302   SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.


A of India, New Delhi (NHAI) awarded a work contract to a
   Korean company (respondent) for upgrading the laning
  system. On 13th August, 2006, the respondent entered
  into a sub-contract with an Indian company (appellant)
  for carrying out the entire project. Clauses 27 and 28
8 provided for arbitration and the governing law agreed to
  was the Arbitration and Conciliation Act, 1996. The
  appellant furnished Bank Guarantees to the Respondent
  and it also invested huge amount in the project. On 22nd
  September, 2009, the respondent issued a notice of
C termination of the agreement, inter alia, on the ground of
  delay in performing the work under the agreement. The
  settlement talks between the parties failed and the
  respondent invoked arbitration clause in accordance with
  the Singapore International Arbitration Centre Rules
  (SIAC Rules). A sole arbitrator was appointed by SIAC.
D Before the arbitrator, the respondent filed a Statement of
  Claim. Both the parties filed applications before the
  arbitrator seeking interim relief under Rule 17 of the SIAC
  Rules. In their application for interim relief, the
  respondent prayed for release of plants, machineries and
E equipment belonging to the respondent; injunction
  against the appellant from removing all plants,
  machineries, equipment, materials, aggregates, etc.,
  owned by the respondent from the work site; a restraint
  order against the appellant from creating any third party
F interest or otherwise sell, lease, charge the plants,
  machineries, equipment, materials (PME)etc., at the work
  site and to permit the respondent to use the PMEs and
  materials, aggregates, etc.

G     The arbitrator directed the appellant to release all
  plants, machineries and equipment for use by the
  respondent. The appellant was also regtrained from
  creating any third party interest, or otherwise to deal with
  the properties at the work site and/or camp site. He also
H recorded that the interim orders were being made with the
     YOGRAJ INFRASTRUCTURE LTD. v. SSANG YONG           303
         ENGINEERING AND CONST. CO. LTD.

object of allowing the construction work on the project        A
to continue.

    Aggrieved, the appellant filed appeal before the
District Court under Section 37 of the Arbitration and
Conciliation Act, 1996 which was dismissed on the
                                                               B
ground of non-maintainability and lack 'of jurisdiction.

     The revision petition filed against the said order was
dismissed by the High Court. While dismissing the
revision petition, the High Court observed that under
Clause 27.1 of the Agreement, the parties had agreed to C
resolve their dispute under the provisions of SIAC Rules
which expressly or, in any case, impliedly also adopted
Rule 32 of the said Rules which categorically indicated
that the law of arbitration under the said Rules would be
the International Arbitration Act, 2002, of Singapore. As. D
far as applicability of Section 42 of the 1996 Act is
concerned, the High Court held that by express
agreement parties had ousted the jurisdiction of the
Indian Courts, while the arbitration proceedings were
subsisting. The instant appeal was filed challenging the E
order of the High Court.

    Dismissing the appeal, the Court

     HELD: 1. A perusal of Clause 27 .1 of the arbitration
agreement would show that the arbitration proceedings          F
were to be conducted in Singapore in accordance with
the SIAC Rules as in force at the time of signing of the
agreement. There was, therefore, no ambiguity that the
procedural law with regard to the arbitration proceedings
was the International Arbitration Law of Singapore.            G
Clause 27.2 made it clear that the seat of arbitration would
be Singapore. Clause 28 indicated that the governing law
of the agreement would be the law of India, i.e., the
Arbitration and Conciliation Act, 1996. While the proper
law is the law which governs the agreement itself, in the      H
     304   SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.


A absence of any other stipulation in the arbitration clause
  as to which law Would apply in respect of the arbitral
  proceedings, it is the. law governing the contract which
  would also be the law applicable to the Arbitral Tribunal
  itself. Clause 27.1 made it quite clear that the Curial law
B which regulates the procedure to be adopted in
  conducting the arbitration would be the SIAC Rules.
  There is, therefore, no ambiguity that the SIAC Rules
  would be the Curial law of the arbitration proceedings.
  [paras 33-35] [321-A-G]
c      2. The parties had categorically agreed that the
  arbitration proceedings, if any, would be governed by the
  SIAC Rules as the Curial law, which included Rule 32.
  Having agreed to that it was no longer available to the
  appellant to contend that the "proper law" of the
D agreement would apply to the arbitration proceedings.
  Rule 32 of the SIAC Rules provides that the law of
  arbitration would be the International Arbitration Act,
  2002, where the seat of arbitration is in Singapore.
  Section 2(2) of the 1996 Act, in fact, indicates that Part I
E would apply only in cases where the seat of arbitration
  is in India. Section 42 of the Arbitration and Conciliation
  Act, 1996 was applicable at the pre-arbitral stage, when
  the Arbitrator had not also been appointed. Once the
  Arbitrator was appointed and the arbitral proceedings
F were commenced, the SIAC Rules became applicable
  shutting out the applicability of Section 42 and for that
  matter Part I of the 1996 Act, including the right of appeal
  under Section 37 thereof. [Paras 37-39) [322-C-D; 323-A-
  C-E-F]
G
        Bhatia International v. Bulk Trading S.A. (2002) 4 SCC
    105: 2002 (2) SCR 411; Venture Global Engg. v. Satyam
    Computer Services Ltd. (2008) 4 SCC 190: 2008 (1) SCR
    501; Citation lnfowares Ltd. v. Equinox Corporation (2009) 7
H SCC 220: 2009 (6) SCR 737 - held inapplicable.
     YOGRAJ INFRASTRUCTURE LTD. v. SSANG YONG                305
         ENGINEERING AND CONST. CO. LTD.

    Sumitomo Heavy Industries Ltd. v. ONGC (1998) 1 SCC             A
305: 1997(6) Suppl. SCR 186; NTPC v. Singer (1992) 3
SCC 551: 1992 (3) SCR 106 - referred to.

                       Case law reference:
 2002 (2) SCR 411         held inapplicable      Paras 12, 36,      B
38
  2008 (1) SCR ·501       held inapplicable      Paras 12, 38
  2009 (6) SCR 737        held inapplicable      Paras 12, 38
                                                                    c
  1997 (6) Suppl. SCR 186 referred to            Paras 16, 24
   1992 (3) SCR 106       referred to            Paras 16, 28

     CIVIL APPELLATE JURISDICTION : Civil Appeal No.                D
7562 of 2011.
    From the Judgment & Order dated 31.8.2010 of the High
Court of Madhya Pradesh, Principal Seat at Jabalpur in Civil
Revision No. 304 of 2010.
                                                                    E
    lndu Malhotra, Gagan Gupta, Sidharth Khattar, Mohit
Gupta for the Appellant.

     Meenakshi Arora, Dharmendra Rautray, Ankit Khushu for
the Respondent.
                                                                    F
    The Judgment of the Court was delivered by

    ALTAMAS KABIR, J. 1. Leave granted.

     2. The Appellant is a company incorporated under the           G
Companies Act, 1956, while the Respondent is a company
incorporated under the laws of the Republic of Korea with its
registered office at Seoul in Korea and its project office at New
Delhi.

    3. On 12th April, 2006, the National Highways Authority of      H
     306    SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.


A  India, New Delhi (NHAI) awarded a contract to the Respondent,
  SSang Yong Engineering and Construction Co. Ltd., hereinafter
  referred to as "SSY", for the National Highways, Sector II Project,
  Package: ABD-11/C-8, for upgradation to Four Laning of Jhansi-
  Lakhnadon Section, KM 297 to KM 351 of NH 26 in the State
B of Madhya Pradesh. The total contract amount was Rs.
  2, 19,01, 16,805/-. On 13th August, 2006, SSY entered into a
  Sub-Contract with the Appellant Company for carrying out the
  work in question. The Work Order of the entire project was
  granted to the Appellant by the Respondent on back-to-back
C basis. Clause 13 of the Agreement entered into between the
  Respondent and the Appellant provided that 92% of all
  payments for the work done received by the Respondent from
  NHAI, would be passed on to the Appellant. Clauses 27 and
  28 provided for arbitration and the governing law agreed to was
D the Arbitration and Conciliation Act, 1996. On 31st October,
  2006, the Appellant furnished a Performance Bank Guarantee
  for Rs. 6,05,00,000/- to the Respondent and it also invested
  about 88.15 crores in the project. Three more Bank
  Guarantees, totaling Rs. 5,00,00,000/-, for release of
  mobilization advance were also furnished by the Appellant on
E 29th May, 2009. On 22nd September. 2009, the Respondent
  Company issued a notice of termination of the Agreement, inter
  alia, on the ground of delay in performing the work under the
  Agreement.

F         4. On account of the above, the Appellant filed an
     application before the District and Sessions Judge,
     Narsinghpur, Madhya Pradesh, under Section 9 of the
     Arbitration and Conciliation Act, 1996, praying for interim reliefs.
     A similar application under Section 9 of the above Act was filed
:::; by the Appellant before the same Court on 30th December,
     2009, also for interim reliefs. Ultimately, on 20th May, 2010, the
     dispute between the parties was referred to arbitration in terms
     of the Agreement and a Sole Arbitrator, Mr. G.R. Easton, was
     appointed by the Singapore International Arbitration Centre on
H 20th May, 2010. On 4th June, 2010, the Appellant filed an
   YOGRAJ INFRASTRUCTURE LTD. v. SSANG YONG         307
 ENGINEERING AND CONST CO. LTD. [ALTAMAS KABIR, J.]
application before the Sole Arbitrator under Section 17 of the         A
aforesaid Act being SIAC Arbitration No.37 of 2010, inter alia,
for the following reliefs :

      "a.    restrain the SSY from encashing Performance Bank
             Guarantee No.101 BGPG063040001 dated                      B
             31.10.06.of Syndicate Bank, Nehru Place, Delhi of
             Rs. 6.05 crores;

      b.      restrain the SSY from enchashing three Bank
            · Guarantees furnished towards the mobilization
              advance bearing numbers 101 BGFG 091490001 C
              of Rs. 1 Crore, 101 BGFG 091490002 of Rs. 1
              Crore and 101 BGFG 091490003 of Rs. 3 Crores,
              totaling to Rs. 5 Crores;

      c.     direct SSY to release a sum of Rs. 144,42,25,884/         D
             - along with the interest @ 36% till realization of
             nationalized bank of India for the aforesaid amount
             and keep it alive till passing of the final Award.
             l
      d.     restrain SSY from removing, shifting, alienating or
             transferring in any manner either itself or through any   E
             of its agents/employees, the plant, machineries,
             equipments, vehicles and materials, in other words
             maintain status-quo, till the passing of the final
             arbitral award;
                                                                    F
      e.     grant any other appropriate interim measures of
             protection in favour of the Cross-Claimant/applicant,
             which in the esteemed opinion of this Hon'ble
             Tribunal are iust and proper in the facts and
             circumstance of the case;"                            .G
     5. The Respondent also filed an application under Section
17 of the above Act before the Sole Arbitrator on 5th June,
2010, for interim reliefs. After considering both the applications,
the Arbitrator passed an interim order on 29th June, 2010, in
the following manner :                                                 H
    308     SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.


A         "1. The respondent is to immediately release, for use by
          the Claimant, the items of plant, machinery and equipment
          (PME) numbered 1,5,7,8,10,19,20,21,22,23 and 32, as
          listed in Annexure A (Machinery Details) of the Claimant's
          Application dated 5 June 2010.
B
          2. The respo.ndent is restrained from creating any thi.rd
          party interest in, or otherwise selling, leasing or charging,
          the PME or other assets presently located at the work site
          and/or the camp site and which are owned by the
          respondent, without the permission of this Tribunal.
c
          3(i). The claimant is permitted to use the aggregates, which
          have been identified in Annexure D (engineer's Statement
          of Materials at Site for September 2009) of the Claimant's
          Application dated 5 June 2010 as a total quantity of
D         274,580 cubic metres, for the carrying out of the works in
          accordance with the terms and conditions of the Main
          Agreement and the Agreement dated 13 August, 2006
          between the parties.

          3(ii) The respondent is to give the Claimant access to the
E
          aggregate stockpiles where the abovementioned quantity
          of material is currently held.

          The above interim orders are made with the objective of
          enabling the construction work on the project to continue
F         while the disputes between the parties are resolved in
          these arbitration proceedings (ref. Terms or Reference
          dated 23 June 2010).

          The parties have liberty at short notice, if any of the above
          directions require clarification or amendment in order to
G
          ensure proper implementation.
      The respondent has leave (until 6 July 2010) to make a
      further application for the provision of security by the
      claimant in relation to the PME and aggregates."
H
   YOGRAJ INFRASTRUCTURE LTD. v. SSANG YONG          309
 ENGINEERING AND CONST.
                    )
                        CO. LTD. [ALTAMAS KABIR, J.]

      6. Aggrieved by the aforesaid interim order passed by the A
learned Arbitrator, the Appellant herein, which was the
respondent before the learned Arbitrator, filed Appeal No.2 of
2010 on 2nd July, 2010 before the ·learned District Judge,
Narsinghpur, under Section 37(2)(b) of the Arbitration and
Conciliation Act, 1996, for setting aside the same. On behalf B
of the respondent it was contended in the said appeal that the
same was not maintainable before the learned District Judge,
Narsinghpur, since the seat of the arbitration proceedings was
in Singapore and the said proceedings were governed by the
laws of Singapore. Accepting the submissions advanced on        c
behalf of the respondent, the learned DistriCt Judge dismissed
the appeal as not maintainable on 23rd July, 2010, without
deciding the matter on merits.

    7. The appellant then moved Civil Revision No.304 of
2010, before the High Court on 26th July, 2010. The same was D
dismissed by the High Court on 31st August, 2010, against
which the Special Leave Petition (now appeal) has been filed.

       8. Appearing for the Company, Ms. lndu Malhotra, learned
 Senior Advocate, submitted that the stand taken on behalf of E
 the respondent that the PMEs had to remain on site even in
 case of termination of the Agreement, was without any basis,
 since after the Agreement dated 13th August, 2006, the parties
 had agreed in the Meeting held on 23rd September, 2006 that
 in case of termination of the Agreement between the parties, F
 the respondent would transfer the PMEs to the appellant. Ms.
 Malhotra further clarified that Clause 4 of the Agreement related
 only to the PMEs and not to the aggregates, since it had been
 admitted by the respondent that in case the aggregates were
 not made available to them, they could buy the same from the G
 open market. It was further clarified that there were only two
 machines out of 35 machines which formed the subject matter
.of the interim application, i.e., Hotmix Plant and Crusher, which
were in the possession of the appellant and the value thereof
would be approximately Rs. 7 crores and a sum of Rs. 7.20 H
    310    SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.


A   crores had already been deducted by the respondent towards
    the repaymerit of the Arab Bank Loan for the said PMEs. Ms.
    Malhotra submitted that it was incorrect to say that the Project
    was stopped because of the Stay Order passed by this Court
    as the respondent had further subcontracted the work to Khara
B   and Tarakunde Infrastructure Pvt. Ltd., Ramdin Ultratech Pvt. Ltd.
    and others. Ms. Malhotra contended that apart from the Hotmix
    Plant and Crusher all the remaining PMEs had been removed
    by the respondent after the passing of the order 29th June,
    2010.
c       9. On the question of the applicable law in respect of the
  arbitral proceedings, Ms. Malhotra contended that the
  Arbitration and Conciliation Act, 1996, enacted in India is the
  applicable law of arbitration. Ms. Malhotra submitted that in
  terms of the Agreement arrived at between the parties, it is only
D the Indian laws to which the Agreement would be subjected. She
  pointed out that Clause 28 of the Agreement provides that the
  Agreement would be subject to the laws of India and that during
  the period of arbitration, the performance of the Agreement
  would be carried out without interruption and in accordance with
E its terms and provisions. Accordingly, having explicitly agreed
  that the Agreement would be subject to the laws of India, from
  the very commencement of the arbitration till its conclusion, the
  law applicable to the arbitration would be the Indian law. In other
  words, all interim measures sought to be enforced would
F necessarily have to be in accordance with Sections 9 and
  :>1(2)(b) of the 1996 Act.

       10. Ms. Malhotra submitted that Clause 27.1, which forms
  part of Clause 27 of the agreement, which is the arbit(ation
G clause, provides that the proceedings of arbitration shall be
  conducted in accordance with the SIAC Rules. In other words,
  the provisions of SIAC Rules would apply only to the arbitration
  proceedings, but not to appeals from such proceedings. Ms.
  Malhotra submitted that the right to appeal from an interim order
H under Section 37(2)(b) is a substantive right provided under the
  1996 Act and was not governed by the SIAC Rules.
                                                                      ...
   YOGRAJ INFRASTRUCTURE LTD. v. SSANG YONG                   311
 ENGINEERING AND CONST. CO. LTD. [ALTAMAS KABIR, J.]

      11. Ms. Malhotra also urged that Rule 1.1 of the SIAC          A
Rules, which, inter alia, provides "that where the parties agreed
to refer their disputes to the SIAC for arbitration, it would be
deemed that the parties had agreed that such arbitration would
be conducted in accordance with the SIAC Rules. If, however,
any of the SIAC Rules was in conflict with a mandatory provision     B
of the applicable law of arbitration from which the parties could
not derogate, that provision from the applicable law of the
arbitration shall prevail. Ms. Malhotra submitted that Rule 32
of the SIAC Rules is one of such Rules which provides that if
the seat of arbitration is Singapore, then the applicable law of     c
arbitration under the Rules would be the International Arbitration
Act, 2002, of Singapore. However, Section 37(2)(b) of the 1996
Act being a substantive and non-derogable provisiqn, providing
a right of appeal to parties from a denial of an interim measure,
such a provision protects the, interest of parties during the        0
continuance of arbitration and as a consequence, Rule 32 of
the SIAC Rules which does not provide for an appeal, is in
direct conflict with a mandatory non-derogable provision
contained in Section 37(2)(b) of the 1996 Act.

      12. Ms. Malhotra then went on to submit that Part I of the     E
 1996 Act had not been excluded by Clause 27 of the
Agreement and the 1996 Act would, therefore. apply to the said
Agreement. Ms. Malhotra submitted that in the decision of this
Court in Bhatia International Vs. Bulk Trading S.A. [(2002) 4
sec 105], which was reiterated in Venture Global Engg. Vs.           F
Satyam Computer Services Ltd. [(2008) 4 SCC 190] and
Citation lnfowares Ltd. Vs. Equinox Corporation [(2009) 7 SCC
220], it has been clearly held that where the operation of Part
I of the 1996 Act is not expressly excluded by the arbitration
clause, the said Act would apply. In any event, in the instant       G
case, Clause 28 of the Agreement expressly provides that the
Agreement would be subject to the laws of India and that during
the· period of arbitration the parties to the Agreement would
carry on in accordance with the terms and conditions contained
therein. Accordingly, on account of the application of Part I of     H
    312     SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.


A the 1996 Act, the International Arbitration Act, 2002 of
  Singapore would have no application to the facts of this case,
  though, the conduct of the proceedings of arbitration would be
  governed by the SIAC Rules.

          13. Ms. Malhotra urged that the High Court had erred in
8
    coming to t~e conclusion that since under Clause 2~ of the
    Agreement, the parties had agreed that the arbitral
    proceedings would be conducted in accordance with the SIAC
    Rules and by virtue of Rule 32 thereof, the jurisdiction of the
     Indian Courts stood ousted. Ms. Malhotra urged that the High
C   Court had failed to appreciate the provisions of Clause 28 of
    the Agreement while arriving at such a conclusion. Ms. Malhotra
    reiterated her earlier submissions that Rule 32 of the SIAC
    Rules is subject to Rule 1.1 thereof which provides that if any
    of the said Rules was in conflict with the mandatory provision
D   of the applicable law of the arbitration, from which the parties
    could not derogate, that provision shall prevail. Ms. Malhotra
    submitted that the finding of the. High Court being contrary to
    the provisions agreed upon by the parties, such finding was
    liable to be set aside. Ms. Malhotra submitted that the very fact
E   that the respondents had approached the District Court,
    Narsinghpur, in India and had fried an application under Section
    9 of the 1996 Act therein, indicated that the respondent also
    accepted the applicability of the 1996 Act. Ms. Malhotra pointed
    out that in the application the respondent has indicated as
F   follows:

          "That, the work of Contract, which was executed between
          the petitioner and respondent is well within the jurisdiction
          of this Hon'ble Court at Narsinghpur. Thus, this Hon'ble
          Court has jurisdiction to pass an order on this application
G
          under Section 9 of the Arbitration and Conciliation Act,
          1996."

       14. Ms. Malhotra urged that having regard to Section 42
  of the 1996 Act, it is in the District Court of Narsinghpur where
H the application under Section 9 of the Arbitration and
       YOGRAJ INFRASTRUCTURE LTD. v. SSANG YONG          313
     ENGINEERING AND CONST. CO. LTD. [ALTAMAS KABIR, J.]

    Conciliation Act, has been filed which has jurisdiction over the    A
    arbitral proceedings at all stages. Ms. Malhotra pointed out that
    the High Court had erroneously held that Section 42 was not
    applicable to an appeal and was applicable only for filing an
    application, without appreciating the wordings of Section 42
    which provides that Courts shall have jurisdiction over the         B
    arbitral proceedings also. Ms. Malhotra urged that with regard
    to the said findings of the High Court, the order impugned was
    liable to be set aside.
I
          15. Ms. Malhotra submitted that the stand of the respondent
    that in view of clause 27 of the Agreement, the ·law governing C
    the arbitral proceedings would be the SIAC Rules, was not
    tenable, in view of Clause 28 which without any ambiguity.
    provides that the Agreement would be subject to the laws of
    India and that during the period of arbitration the parties to the
    Agreement would carry on, in accordance with the terms and D
    conditions contained therein. Accordingly, it is the Arbitration
    and Conciliation Act, 1996, which would be the proper law or
    the law governing the arbitration.

          16. Ms. Malhotra submitted that apparently there was a        E
    misconception in the minds of the learned Judges of the High
    Court as to the concept of the 'proper law', of the Arbitration
    Agreement and the 'Curial Law' governing the conduct and
    procedure of the reference. Ms. Malhotra submitted that while
    the proper law of the Arbitration Agreement governs the law         F
    which would be applicable in deciding the disputes referred to
    arbitration, the Curial law is the law which governs the
    procedural aspect of the conduct of the arbitration proceedings.
    It was urged that in the instant case while the proper law of the
    arbitration would be the Arbitration and Conciliation Act, 1996,    G
    the Curial law would be the SIAC Rules of Singapore. Ms.
    Malhotra submitted that thb said difference in the two concepts
    had been considered by this Court in Sumitomo Heavy
    Industries Ltd. Vs. ONGC [(1998) 1 ·scc 305] and NTPC Vs.
    Singer [(1992) 3 SCC 551], in which the question for decision
    was what would be the law aovernina the arbitration when the        H
    314    SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.


A proper law of the contract and the Curial law were agreed upon
  between the parties. In the said cases this Court observed that
  in many circumstances the applicable law would be the same
  as that of the proper law of contract and the Curial law, but it
  was not uncommon to encounter the incumbent Curial law in
B cases where the parties had made an express choice of
  arbitration in a jurisdiction which was different from the
  jurisdiction with which the contract had the closest real
  connection.

        17. Ms. Malhotra submitted that in the absence of any
C express choice, the proper law of the contract would be the
  proper law of the Arbitration Agreement. Ms. Malhotra
  submitted that in the instant case, admittedly the proper law of
  contract is the law of India and since the parties have not
  expressly made any choice regarding the law governing the
D Arbitration Agreement, the proper law of contract, namely, the
  Arbitration and Conciliation Act, 1996, would be the proper law
  of the Arbitration Agreement. Ms. Malhotra urged that ultimately
  the right to appeal which is a substantive right under the 1996
  Act would be governed by the said Act and the instant appeal,
E is therefore, liable to be allowed, and the order of the High .
  Court, impugned in the appeal, was liable to be set aside.

       18. Within the fact situation indicated on behalf of the
  appellant, Mr. Dharmendra Rautray, learned Advocate,
F appearing for the respondent Company, submitted that the
  issues involved in the present appeal were (i) whether the Indian
  Courts would have jurisdiction to entertain an appeal under
  Section 37 of the Arbitration and Conciliation Act, 1996,
  against an interim order passed by the Arbitral Tribunal with its
  seat in Singapore; (ii) Whether the "law of arbitration" would be
G the International Arbitration Act, 2002, of Singapore; and (iii)
  whether the "Curial law" would be the laws of Singapore?
        19. Mr. Rautray submitted that apparently on the alleged
  failure of the appellant to complete the work awarded under the
H contract within the stipulated period of 30 months from the date
    YOGRAJ INFRASTRUCTURE LTD. v. SSANG YONG         315
  ENGINEERING AND CONST CO. LTD. [ALTAMAS KABIR, J.]

of commencement of the work, the respondent had to give an            A
undertaking to the National Highways Authority of India by way
of a Supplementary Agreement dated 11th February, 2009, to
achieve a monthly rate of progress of work, failing which the
aforesaid authority would be entitled to exercise all its rights
under the main agreement and even to terminate the same with          B
immediate effect. Mr. Routray submitted that on account of the
failure of the appellant to live up to its commitments, the
respondent who had suffered heavy financial loss ~nd damages
on account of such breach, issued notice of termination on 22nd
September, 2009, pursuant to Clause 23.2 of the Agreement.            c
      20. Thereafter, the parties entered into settlement talks, as
 provided for in Clause 26 of the Agreement and signed the
 minutes of the meeting dated 28th September, 2009. The
 settlement talks between the parties having failed, the
 respondent/claimant, invoked Clause 27 of the Agreement for          D
 reference of the disputes. to arbitration in accordance with the
 Singapore International Arbitration Centre Rules (SIAC Rules).
The respondent/claimant filed a Statement of Claim on 16th
August, 2010, before the Sole Arbitrator, Mr. Graham Easton,
claiming a sum of Rs. 221,36,91,097/- crores from the                 E
 appellant. Both the parties filed applications before the learned
Arbitrator seeking interim relief under Rule 24 of the SIAC Rules
on 5th June, 2010. In their application for interim relief under
Rule 24 of the SIAC Rules, the respondent, inter alia, prayed
for release of all plants, machineries and equipment belonging        F
to the .respondent; injunction against the appellant from
removing all plants, machineries, equipment, materials,
aggregates, etc~. owned by the respondent from the work site
and/or camp site; a restraint order against the appellant from
creating any third party interest or otherwise sell, lease, charge    G
the plants, machineries, equipment, materials, etc., at the work
site and/or camp site and to permit the respondent to use the
PMEs and materials, aggregates, etc., for carrying .out the
works in accordance with the terms and conditions of the main
Agreement and the Supplementary Agreement dated 13th                  H
August, 2006.
    316    SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.


A      21. The Sole Arbitrator appointed by the SIAC by its order
  dated 29th June, 2010, directed the appellant to, inter alia,
  release for use by the respondent all plants and equipment. The
  appellant was also restrained from creating any third party
  interest, or otherwise to deal with the properties at the work site
B and/or camp site and permit the respondent to use the
  aggregates of a total quantity of 27,580 cubic metres for
  carrying out the works. The Sole Arbitrator, while dealing with
  the applications filed by both the parties under Rule 24 of the
  SIAC Rules, also recorded that the interim orders were being
c made with the object of allowing the construction work on the
  project to continue while the dispute between the parties were
  resolved in these arbitration proceedings and in order to ensure
  that the progress of the project was not hampered, while the
  parties waited for the outcome of the arbitration proceedings.

D       22. Mr. Routray submitted that the appeal filed by the
  appellant before the District Court, N~rasinghpur, under Section
  37 of the Arbitration and Conciliation Act, 1996, against the
  abovementioned order of the learned Arbitrator dated 29th
  June, 2010, was dismissed on 23rd July, 2010, on the ground
E of maintainability and lack of jurisdiction. The Civil Revision filed
  against the said order was dismissed by the Madhya Pradesh
  High Court by its order dated 31st August, 2010. While
  dismissing the Revision, the High Court, inter alia, ob§erved
  that under Clause 27.1 of the Agreement, the parties had
F agreed to resolve their dispute under the provisions of SIAC
  Rules which expressly or, in any case, impliedly also adopted
  Rule 32 of the said Rules.which categorically indicates that the
  law of arbitration under the said Rules would be the International
  Arbitration Act, 2002, of Singapore. The Special Leave
G Petition, out of which the present appeal arises, has been filed
  by the appellant against the said order dated 31st August, 2010.
        23. Mr. Routray further submitted that the parties had, inter
  alia, agreed that the seat of arbitration would be Singapore and
  that the arbitration proceedings would be continued in
H accordance with the SIAC Rules, as per Clause 27.1 of the
      YOGRAJ INFRASTRUCTURE LTD. v. SSANG YONG            317
   ENGINEERING AND CONST. CO. LTD. [ALTAMf'..S KABIR, J.]

 Agreement. It was also agreed that the proper law of the A
 agreemenUcontract dated 13th August, 2006, between the
 appellant and the respondent would be the Indian law and the
 proper law of the arbitratio9 would be the Singapore law.
        24. Mr. Routray submitted that an application under Section
   9 of the 1996 Act was filed before the District Court on 30th
                                                                         8
   December, 2009, prior to ttie date of invocation of the arbitration
   proceedings and before the Curial law, i.e., the Singapore law,
   became operative. On the said application, the District Judge
   by his order dated 10th March, 2010, directed the applicant to
 . submit its case before the Arbitrator at Singapore. Mr. Routray       C
   pointed out that in the present case, the parties had expressly
   chosen the applicable laws to each legal disposition while
   entering into the Agreement dated 13th August, 2006. Mr.
   Routray submitted that the parties had expressly agreed that
  lhe proper' law of the contract would be the Indian Law, the           D
   proper law of the arbitration would be the Singapore
   International Arbitration Act, 2002 and the Curial law would be
   Singapore law, since the seat of arbitration was in Singapore.
   Mr. Routray submitted that as observed by this Court in
   Sumitomo Heavy Industries Ltd. Vs. ONGC Ltd. & Ors. [(1998)           E
   1 SCC 305], the Curial law, besides determining the procedural
   powers and duties of the Arbitrators, would also determine what
  judicial remedies are available to the parties, who wished to
   apply for security for costs or for discovery or who wished to
   challenge the Award once it had been rendered and before it           F
  was enforced.
       25. As to the filing of Application under Section 9 by. the
  appellant before the District Court at Narsinghpur, Mr. Routray
  submitted that the High Court had correctly held that the
I proceedings had been initiated by the parties in the Court of G
  District Judge, Narasinghpur, before the matter was referred
  to the Arbitrator and the same was decided 'taking into
  consideration such circumstances. However, once the dispute
  was referred to the Arbitrator, the parties could not be permitted
  to deviate from the express terms of the Agreement under which H
    318    SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.


A   the SIAC Rules came into operation.

        26. Mr. Routray submitted that the Section 9 application
    had been filed before the Curial law became operative and in
    view of the agreement between the parties the Indian Arbitration
    and Conciliation Act, 1996, would not apply to the arbitration
8
    proceedings and the same would be governed by the
    Singapore laws.        ·

         27. Mr. Routray then proceeded to the next important
    question as to whether choice of the "seat of arbitration" by the
c   parties confers exclusive jurisdiction on the Courts of the seat
    of arbitration to entertain matters arising out of the contract.
    Learned counsel submitted that choice of the seat of arbitration
    empowered the courts within the seat of arbitration to have
    supervisory jurisdiction over such arbitration. Mr. Routray has
0   referred to various decisions of English Courts which had laid
    down the proposition that even if the arbitration was governed
    by the law of another country, it would not entitle the objector to
    mount a challenge to the Award in a country other than the seat
    of arbitration. It is not necessary to refer to the said judgments
E   for a decision in this case.

         28. Mr. Routray submitted that the decision of this Court in
    NTPC Vs. Singer (supra) relates to the applicability of the Indian
    Arbitration Act, 1940, and the Foreign Awards (Recognition and
    Enforcement) Act, 1961, to a foreign award sought to be set
F   aside in India under the provisions of the 1940 Act. It was
    submitted that the said decisions have no relevance to the
    question raised in the present case which raises the question
    as to whether the Indian Courts would have jurisdiction to
    entertain an appeal under Section 37 of the 1996 Act against
3   an interim order of the Arbitral Tribunal, despite the parties
    having expressly agreed that the seat of arbitration would be in
    Singapore .and the Curial law of the arbitration proceedings
    would be the laws of Singapore. Once again referring to the
    decision in the NTPC case, Mr. Routray submitted that in
H   paragraph 46 of the judgment, this Court had, inter· alia,
   YOGRAJ INFRASTRUCTURE LTD. v. SSANG YONG         319
 ENGINEERING AND CONST CO. LTD. [ALTAMAS KABIR, J.]
observed that Courts would give effect to the choice of a A
procedural law other than the proper law of contract only where
the parties had agreed that the matters of procedure should be
governed by a different system of law. Mr. Routray submitte.d
that in the above-mentioned case, this Court was dealing with
a challenge to a "domestic award" and not a "foreign award.". B
Se.ction 9(b) of the Foreign Awards (Recognition and
Enforcement) Act, 1961, provides that the said Act would not
apply to an award, although, made outside India, but which is
governed by the laws of India. Accordingly, all such awards were
treated as d.omestic awards by the 1961 Act and any challenge c
to the said award; could, therefore, be brought only under the
provisions of the 1940 Act. Mr. Routray further SlJbmitted that
the law of arbitration in the NTPC case (supra) was Indian law
as opposed to the facts of the present case, where the parties
had agreed that the law of arbitration would be the International
                                                                  0
Arbitration Act, 2002, of Singapore.

     29. Mr. Routray urged that by virtue of Clause 27 of the
Agreement dated 13th August, 2006, and by accepting the
 SIAC Rules, the parties had agreed that Part I of the Arbitration
 and Conciliation Act, 1996, would not apply to the arbitration E
 proceedings taking place in Singapore. According to Mr.
 Routray, the said decision was reiterated in the Terms of
Reference that the arbitration proceedings would be governed
by the laws of Singapore. Mr. Routray further urged that even
in the decision relied upon by the appellant in the case of F
Bhatia International, this Court had held that parties by
agreement, express or implied, could exclude all or any of the
provisions of Part I of the 1996 Act. Consequently, in Bhatia
International this Court had held that exclusion of Part I of the
1996 Act could be by virtue of the Rules chosen by the parties G
to govern the arbitration proceedings.

     30. As far as applicability of Section 42 of the 1996 Act is
concerned, the Jabalpur Bench of the Madhya ·Pradesh High
Court had held that by express agreement parties had ousted ·
the jurisdiction of the Indian Courts, while the arbitration H
    320    SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.

A   proceedings were subsisting. Accordingly, the jurisdiction of the
    Indian Courts stood ousted during the subsistence of the
    arbitration proceedings and, accordingly, it is only the laws of
    arbitration as governed by the SIAC Rules which would govern
    the arbitration proceedings along with the procedural law, which
B   is the law of Singapore.
         31. In order to appreciate the controversy that has arisen
    regarding the applicability of the provisions of Part I of the
    Arbitration and Conciliation Act, 1996, to the proceedings being
    conducted by the Arbitrator in Singapore in accordance with
C   the SIAC Rules, it would be necessary to look at the arbitration
    clause contained in the agreement entered into between the
    parties on 13th August, 2006. Clause 27 of the Agreement
    provides for arbitration and reads as follows :

D         "27. Arbitration.
       27.1 All disputes, differences arising out of or in connection
       with the Agreement shall be referred to arbitration. The
       arbitration proceedings shall be conducted in English in
       Singapore in accordance with the Singapore International
E    _ Arbitration Centre (SIAC) Rules as in force at the time of
       signing of this Agreement. The arbitration shall be final and
       binding.
          27.2 The arbitration shall take place in Singapore and be
F         conducted in English language.
          27.3 None of the Party shall be entitled to suspend the
          performance of the Agreement merely by reason of a
          dispute and/or a dispute referred to arbitration."

G        32. Clause 28 of the Agreement describes the governing
    law and provides as follows :
          "This agreement shall be subject to the laws of India.
          During the period of arbitration, the performance of this
          agreement shall be carried on without interruption and in
H
          accordance with its terms and provisions."
      YOGRAJ INFRASTRUCTURE LTD. v. SSANG YONG          321
    ENGINEERING AND CONST. CO. LTD. [ALTAMAS KABIR, J.]
     33. As will be seen from Clause 27.1, the arbitration                    A
proceedings are to be conducted in Singapore in accordance
with the SIAC Rules as in force at the time of signing of the
agreement. There is, therefore, no ambiguity that the procedural
law with regard to the arbitration proceedings, is the SIAC
Ru~s.                                                                         B

    34. Clause 27.2 makes it clear that the seat of arbitration
would be Singapore.

       35. What we are, therefore, left with to consider is the
 question as to what would be the law on the basis whereof the C
 arbitral proceedings were to be decided. In our view, Clause
 28 of the Agreement provides the answer. As indicated
  hereinabove, Clause 28 indicates that the governing law of the
 agreement would be the law of India, i.e., the Arbitration and
 Conciliation Act, 1996. The learned counsel for the parties have · D
 quite correctly spelt out the distinction between the "proper law"
 of the contract and the "curial law" to determine the law which
 is to govern the arbitration itself. While the proper law is the
 law which governs the agreement itself, in the absence of any
 other stipulation in the arbitration clause as to which law would E
 apply in respect of the arbitral proceedings, it is now well-settled
 that it is the law governing the contract which would also be the
 law applicable to the Arbitral Tribunal itself. Clause 27.1 makes
 it quite clear that the Curial law which regulates the procedure
to be adopted in conducting the arbitration would be the SIAC F
Rules. *There is, therefqre, no ambiguity thatthe SIAC Rules
would be the Curial law of the arbitration proceedings*. It also
happens that the parties had agreed to make Singapore the
seat of arbitration. Clause 27.1 indicates that the arbitration
proceedings are to be conducted in accordance with the SIAC
Rules. The immediate question which, therefore, arises is G
whether in such a case the provisions of Section 2(2), which
indicates that Part I of the above Act would apply, where the
place of arbitration is in India, would be a bar to the invocation
•    See clarificatory order dated December 15, 2011 reported at page 324 .   H.
    322     SUPREME COURT REPORTS [2011) 14 (ADDL.) S.C.R.


A   of the provisions of Sections 34 and 37 of the Act, as far as
    the present arbitral proceedings, which are being conducted
    in Singapore, are concerned.

         36. In Bhatia International (supra), wherein while
8   considering the applicability of Part I of the 1996 Act to arbitral
    proceedings where the seat of arbitration was in India, this
    Court was of the view that Part I of the Act did not automatically
    exclude all foreign arbitral proceedings or awards, unless the
    parties specifically agreed to exclude the same.

C         37. As has been pointed out.by the learned Single Judge
    in the order impugned, the decision in the aforesaid case
    would not have any application to the facts of this case,
    inasmuch as, the parties have categorically agreed that the
    arbitration proceedings, if any, would be governed by the SIAC
D   Rules as the Curial law, which included Rule 32, which
    categorically provides as follows :

          "Where the seat of arbitration is Singapore, the law of the
          arbitration under these Rules shall be the International
          Arbitration Act (Cap. 143A, 2002 Ed, Statutes of the
E
          Republic of Singapore) or its modification or re-enactment
          thereof."

       38. Having agreed. to the above, it was no longer available
  to the appellant to contend that the "proper law" of the
F agreement would apply to the arbitration proceedings. The
  decision in Bhatia International Vs. Bulk Trading S.A. [(2002)
  4 sec 105), which was applied subsequently in the case of
   Venture Global Engg. Vs. Satyam Computer Services Ltd.
  [(2008) 4 SCC 190] and Citation lnfowares Ltd. Vs. Equinox
G Corporation [(2009) 7 sec 220), would have no application
  once the parties agreed by virtue of Clause 27.1 of the
  Agreement that the arbitration proceedings would be conducted
  in Singapore, i.e., the seat of arbitration would be in Singapore,
  in accordance with the Singapore International Arbitration
H Centre Rules as in force at the time of signing of the
   YOGRAJ INFRASTRUCTURE LTD. v. SSANG YONG          323
 ENGINEERING AND CONST. CO. LTD. [ALTAMAS KABIR, J.]
 Agreement. As noticed hereinabove, Rule 32 of the SIAC Rules A
 provides .that the law of arbitration would be the International
Arbitration Act, 2002, where the seat of arbitration is in
 Singapore. Although, it was pointed out on behalf of the
appellant that in Rule 1.1 it had been stated that if any of the
SIAC Rules was in conflict with the mandatory provision of the B
applicable law of the arbitration, from which the parties could
 not derogate, the said mandatory provision would prevail, such
 is not the case as far as the present proceedings are
concerned. In the instant case, Section 2(2) of the 1996 Act, in
fact, indicates that Part I would apply only in cases where the     c
seat of arbitration is in India. This Court in Bhatia lntemational
(supra), while considering the said provision, held that in certain
situations the provision of Part I of the aforesaid Act would
apply even when th,e seat of arbitration was not in India. In the
instant case, once the parties had specifically agreed that the D
arbitration proceedings would be conducted in accordance with
the SIAC Rules, which includes Rule 32, the decision in Bhatia
International and the subsequent decisions on the same lines,
would no longer apply in the instant case where the parties had
willingly agreed to be governed by the SIAC Rules.
                                                                     E
      39. With regard to the effect of Section 42 of the Arbitration
and Conciliation Act, 1996, the same, in our view was
applicable at the pre-arbitral stage, when the Arbitrator had not
also been appointed. Once the Arbitrator was appointed and
the arbitral proceedings were commenced, the SIAC Rules F
became applicable shutting out the applicability of Section 42
and for that matter Part I of the 1996 Act, including the right of
appeal under Section 37 thereof.

    40. We are not, therefore, inclined to interfere with the G
judgment under appeal and the appeal is according.ly
dismissed and all interim orders are vacated.
       41. There will be no order as to costs.

D.G.                                         Appeal dismissed.
                                                                    H