2017 (12) TMI 94 - HC - Indian Laws

Interim measures, etc. by Court - Foreign arbitral award - petitioner seeks interim reliefs pending enforcement and execution of a foreign arbitral award - whether the court as referred to in Section 9 of the Act in the case of international commercial arbitrations which take place outside India, is a court as defined under Section 2(1)(e) or as defined in the Explanation to Section 47 of the Act? - Held that - If the interpretation of the provisions of Section2(1)(e)(ii) of the Act as sought to be placed on behalf of the respondent is accepted, it would bring about an anomalous situation defeating the intent of the legislative provisions, as derived from a cumulative reading of the amending provisions as noted above. The purpose and object of the amended provisions of the 2015 Act must certainly prevail over a narrow interpretation which would defeat the purpose and object of the 2015 Amendment Act. The petitioner who holds monetary awards against the respondent would be prevented from approaching the court for interim reliefs where the assets of the respondent are available within the jurisdiction of this Court. The Court would have territorial jurisdiction if the monies/the bank accounts are located within the jurisdiction of the Court. The legislature would not envisage a situation that a party can invoke jurisdiction of the Court to enforce a monetary award under Section 47 and 49 of the Act, however, for any relief of the nature Section 9 interalia contemplates the jurisdiction of the same Court would not be available. This would create a complete incongruity in giving effect to the provisions of Section 9 in a situation as in the present case and defeat the legislative intent. In the above circumstances, the submissions as urged on behalf of the respondent that the petitioner cannot seek a relief in respect of the bank account at Pune, also cannot be accepted, as the definition of Court under Explanation to Section 47 would confer jurisdiction on this High Court as the assets/bank accounts of the respondent are situated within the jurisdiction of this Court and not the principal Civil Court of original jurisdiction, as provided in the pre-amended provisions. Significantly now both the amended provisions namely Section 2(1)(e) and Explanation to Section 47 respectively confer jurisdiction only on the concerned High Court. Thus in the present case it would be the Court as defined in Explanation to Section 47 which would be the Court having jurisdiction to entertain the Section 9 petition, and this Court would accordingly have jurisdiction to entertain this petition.

Issues Involved:
1. Territorial jurisdiction of the High Court to entertain the petition under Section 9 of the Arbitration and Conciliation Act, 1996.
2. Applicability of the amended provisions of the Arbitration and Conciliation Act, 1996, particularly the definition of "Court" under Section 2(1)(e) and the proviso to Section 2(2).
3. Interpretation of the term "Court" in the context of international commercial arbitration and enforcement of foreign awards.
4. Legislative intent and the purpose of the amendments introduced by the 2015 Amendment Act.

Detailed Analysis:

1. Territorial Jurisdiction of the High Court:
The petitioner sought interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, pending enforcement and execution of a foreign arbitral award. The respondent objected to the territorial jurisdiction of the Bombay High Court, arguing that the "Court" as defined under Section 2(1)(e)(ii) of the Act, in relation to international commercial arbitration, would be the High Court having jurisdiction to decide the questions forming the "subject matter of the arbitration" if the same had been the subject matter of a suit. They contended that no part of the cause of action arose within Maharashtra, and the respondent's principal office was in Hyderabad, outside the jurisdiction of the Bombay High Court.

2. Applicability of Amended Provisions:
The petitioner argued that by virtue of the proviso to subsection (2) of Section 2 of the 2015 Amendment Act, the provisions of Section 9 of the Act had become applicable to international commercial arbitrations even if the place of arbitration was outside India. The petitioner emphasized that the legislative intent behind the 2015 amendments was to aid the effective enforcement of foreign awards by extending the applicability of Section 9 to such awards.

3. Interpretation of the Term "Court":
The court examined whether the "Court" referred to in Section 9 of the Act, in the case of international commercial arbitrations taking place outside India, should be interpreted as the "Court" defined under Section 2(1)(e) or as defined in the Explanation to Section 47 of the Act. The court noted that the definition of "Court" under Section 2(1)(e) would create an unworkable effect, as it would preclude a party holding an award from approaching the court for interim measures if the court lacked jurisdiction based on the subject matter of the arbitration.

4. Legislative Intent and Purpose of Amendments:
The court referred to the 246th Report of the Law Commission and the legislative background of the 2015 Amendment Act, which aimed to provide an efficacious remedy to parties seeking interim reliefs to avoid the dissipation of assets by the other party. The court emphasized the principle of harmonious construction to ascertain the object and intention of the legislation and the mischief it sought to obviate. The court concluded that the legislative intent was to enable Indian courts to exercise jurisdiction under Section 9, even when the seat of international commercial arbitration was outside India, to ensure that foreign awards did not become mere paper awards.

Conclusion:
The court held that the definition of "Court" under the Explanation to Section 47, which refers to the High Court having original jurisdiction to decide the questions forming the subject matter of the arbitral award, would be applicable in the context of Section 9 proceedings for interim measures pending enforcement of foreign awards. The court rejected the respondent's contentions and concluded that the Bombay High Court had jurisdiction to entertain the petition under Section 9 of the Act, as the respondent had assets within the territorial jurisdiction of the court. The court emphasized that any interpretation that would defeat the legislative intent and purpose of the 2015 amendments should be avoided.

← Previous Next →