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2017 (7) TMI 1446 - SC - Indian LawsMaintainability of petition - application not entertained on the ground of lack of territorial jurisdiction - Section 34 of the Arbitration and Conciliation Act, 1996 - doctrine of ratio decidendi (reason/rational for the decision) - HELD THAT - The two-Judge Bench has opined that a precedent is a judicial decision containing a principle which forms an authoritative element termed as ratio decidendi and any reasons assigned in support of such interim order containing prima facie findings are only tentative. There cannot be any quarrel over the aforesaid proposition of law. However, the controversy involved in this case has its distinctive characteristics. The Commercial Court in London, interpreting the same agreement adverted to earlier judgments (may be in anti-suit injunction) and held that in such a situation the Courts in London will have jurisdiction. The analysis made therein, as has been stated earlier, has been appreciated in BALCO and Enercon (India) Ltd. 2014 (2) TMI 1170 - SUPREME COURT and this Court has approved the principle set forth in the said case. Once this Court has accepted the principle, the principle governs as it holds the field and it becomes a binding precedent. It will be an anathema to law to conceive a situation where this Court is obligated to accept that the decisions in BALCO and Enercon (India) Ltd. 2014 (2) TMI 1170 - SUPREME COURT which approve Shashoua principle are binding precedents, yet with some innate sense of creativity will dwell upon and pronounce, as canvassed by the learned senior Counsel for the Respondent, that inter-party dispute arose in the context of an anti-suit injunction and, therefore, the same having not attained finality, would not bind the parties. This will give rise to a total incompatible situation and certainly lead to violation of judicial discipline - such submission is rejected. There cannot be any trace of doubt that any filing of an application by the Appellant in the courts in India can clothe such courts with jurisdiction unless the law vests the same in them. The agreement in question having been interpreted in a particular manner by the English courts and the said interpretation having gained acceptation by this Court, the inescapable conclusion is that the courts in India have no jurisdiction - Appeal allowed.
Issues Involved:
1. Applicability of Part I or Part II of the Arbitration and Conciliation Act, 1996. 2. Territorial jurisdiction of Indian courts. 3. Interpretation of the arbitration clause and the designation of the seat of arbitration. 4. Impact of prior judgments and principles on the current case. 5. Waiver of jurisdictional objections by conduct. Detailed Analysis: 1. Applicability of Part I or Part II of the Arbitration and Conciliation Act, 1996: The core issue was whether Part I or Part II of the Arbitration and Conciliation Act, 1996, applied to the arbitration agreement. The court noted that if Part I applied, the issue of territorial jurisdiction of Indian courts would arise. If Part II applied, this issue would not warrant deliberation. The court referred to the precedent set in Bhatia International v. Bulk Trading S.A., which held that Part I would apply to international commercial arbitrations held outside India unless expressly or impliedly excluded by the parties. 2. Territorial Jurisdiction of Indian Courts: The court examined whether the application under Section 34 of the Act was maintainable in India, focusing on whether the courts in Delhi or Gautam Budh Nagar had jurisdiction. The High Court had determined that the Delhi High Court had territorial jurisdiction. However, the Supreme Court found that the arbitration agreement designated London as the seat of arbitration, which implied that English courts had jurisdiction, thereby excluding the jurisdiction of Indian courts. 3. Interpretation of the Arbitration Clause and the Designation of the Seat of Arbitration: The arbitration clause specified London as the "venue" of arbitration, and the proceedings were to be conducted according to the ICC Rules. The court analyzed whether "venue" implied "seat" of arbitration. Referring to the Shashoua principle and the BALCO judgment, the court concluded that the designation of London as the venue, combined with the ICC Rules, indicated that London was the juridical seat of arbitration. This meant that English law governed the arbitration proceedings, and Indian courts did not have jurisdiction. 4. Impact of Prior Judgments and Principles on the Current Case: The court extensively referred to prior judgments, including Shashoua v. Sharma, Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (BALCO), and Enercon (India) Ltd. v. Enercon GmbH. The court confirmed that the principles laid down in these cases were applicable and binding. It rejected the argument that the Shashoua principle was not a binding precedent, affirming that it had been accepted in BALCO and Enercon. 5. Waiver of Jurisdictional Objections by Conduct: The respondent argued that the appellants had waived their right to contest jurisdiction by approaching Indian courts. The court held that mere filing of an application under Section 34 in Indian courts does not confer jurisdiction if it does not inherently exist. Consent or conduct cannot confer jurisdiction where the law does not vest it. Conclusion: The Supreme Court allowed the appeals, setting aside the Delhi High Court's judgment that held Indian courts had jurisdiction. The court concluded that the arbitration agreement designated London as the seat of arbitration, thus conferring exclusive jurisdiction on English courts. Consequently, the courts in India did not have jurisdiction to entertain the petition under Section 34 of the Arbitration and Conciliation Act, 1996.
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