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TMI Blog2012 (11) TMI 737X X X X Extracts X X X X X X X X Extracts X X X X ..... his Court under Section 34 of the Act to challenge the impugned Award. Consequently, the Court does not consider it necessary to examine the question whether the Award is opposed to the public policy of India. It leaves the said contention to be decided at the appropriate stage as and when Amaprop seeks enforcement of the Award in India under the Act. - O.M.P. 287 of 2011 - - - Dated:- 18-5-2012 - S. MURALIDHAR J. Petitioner: Mr. Rajiv Nayar, Senior Advocate with Ms. Mamta Tiwari, Ms. Veronica Mohan and Mr. Rishi Agarwala, Advocates. Respondents: Mr. T. R. Andhyarujina and Mr. Pradeep Sancheti, Senior Advocates with Mr. Vishal Maheshwari, Mr. Lokesh Bhola and Mr. Vishnu Anand, Advocates for R-1/Amaprop. JUDGMENT 1. Indiabulls Financial Services Limited (India) ( IFSL ) has filed this petition under Section 34 of the Arbitration and Conciliation Act, 1996 ( Act ), challenging an Award dated 21st March 2011 of the International Arbitral Tribunal (`Tribunal ) under the International Centre for Dispute Resolution in the dispute between IFSL and Respondent No. 1 Amaprop Limited (Cayman Islands) ( Amaprop ). Background Facts 2. The disputes between IFSL and Am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Agreement. 6. IFSL filed a suit in the Bombay High Court seeking to injunct the arbitral proceedings and an ad-interim stay was granted by Bombay High Court. However, Amaprop filed proceedings in the New York Court for a stay of legal proceedings in India. The Court of the Southern District of New York ( SDNY ) granted an injunction against the proceedings in India. Meanwhile the RBI rejected the application filed by IFSL which then withdrew the suit from the Bombay High Court and joined the arbitration proceedings. IFSL states that it took the position that the Put Option could be performed at the Put Price consistent with the FEMA regulations and no higher, and that the contractual price was not capable of being paid by IFSL. 7. Before the Tribunal it was contended by Amaprop that IFSL could have paid it the Put Price without seeking any permission of the RBI. Amaprop also contended that IFSL was in breach of the Representations and Warranties under the contract and had misrepresented that the put contract which was lawful and enforceable under the Indian law. Amaprop claimed, therefore, that IFSL was liable for damages for breach of Warranty. Award of the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 14% per annum for the period 18th February 2010 to 20th April 2011 as well as post-Award interest at 12% per annum. Sixthly, the fees and expenses were directed to be shared equally by the parties. IFSL was asked to reimburse Amaprop a sum of USD 11,645.99 within thirty days. In para 219, the Tribunal directed the parties to present a new application to the RBI pursuant to the Circular No. 49 and if the RBI authorized the sale of Put Shares at a price higher than Rs. 368 per share, then the directions in the earlier paragraphs of the dispositive conclusions were to be adjusted pro tanto. 10. After the Award, by a letter dated 13th April 2011 IFSL requested RBI to amend its earlier decision stating that the price of the shares of IFCPL was Rs. 225 per share as calculated by KPMG using the Discounted Free Cash Flow Method under A.P. (DIR Series) Circular No. 49 dated 4th May 2010 and that it should be permitted to remit Amaprop an amount of Rs. 2,18,88,24,148 towards the aggregate consideration for transfer of 32,33,696 equity shares of IFCPL at a price of Rs. 676.88 per equity share. Proceedings in the present petition 11. IFSL filed the present petition on 18th Apr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present petition on 23rd March 2011 Amaprop filed proceedings before the United States District Court, SDNY for confirmation of the Award. It was during the pendency of those proceedings for confirmation of the Award that the present petition was filed by IFSL on 18th April 2011. Simultaneous with the present petition, IFSL filed a suit, CS (OS) No. 899 of 2011 seeking an anti-suit injunction restraining Amaprop from continuing the aforementioned confirmation proceedings or seeking enforcement of the Award. An application for interim relief being IA No. 5913 of 2011 was also filed in the said suit. 15. Although notice was issued in the present petition on 19th April 2011 and notices were served on Amaprop on 3rd May 2011, the summons in the suit were not received on that date. Consequently on 13th May 2011 counsel for Amaprop wrote to the counsel for IFSL seeking clarification on the scope of the present petition. On 20th May 2011 counsel for IFSL informed the counsel for Amaprop that the present petition concerned only the enforcement of Award in India. 16. On 25th May 2011 Amaprop s counsel in India received a copy of the plaint in CS (OS) No. 899 of 2011. Soon thereafter Ama ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicable arbitral rules of the New York Court, Amaprop served on IFSL restraining notices and information subpoenas dated 4th October 2011 issued by the New York Court. Amaprop also served a restraint notice and subpoena dated 14th October 2011 on IFSL s counsel in USA. Subsequently, with the confirmation order dated 18th October 2011 of the New York Court, Amaprop also served notices on IFSL through courier. At this stage, IFSL filed CCP No. 101 of 2011 against Amaprop in this Court in which on 19th October 2011 notice was directed to be issued. This resulted in Amaprop again moving the New York Court for an anti-suit injunction vis- -vis the contempt proceedings. The New York Court on 26th October 2011 granted a temporary injunction. By a stipulation dated 31st October 2011, IFSL s counsel in the USA consented to the restraint/injunction order continuing till the matter was heard by the New York Court on 7th /8th or 9th December 2011. 19. On 8th November 2011 IFSL stated before this Court that in view of Amaprop having instituted anti-suit proceedings in the New York Court, it was not pressing the contempt petition. Consequently, the contempt petition was disposed of as s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d emphasis on the expression non-exclusive jurisdiction in Article 12.11 of the Agreement and urged that the parties never intended to exclude the jurisdiction of Indian courts. He referred to the decisions in Dozco India Private Limited v. Doosan Infracore Company Limited (2011) 6 SCC 179; Videocon Industries Limited v. Union of India (2011) 6 SCC 161; Yograj Infrastructure Limited v. Ssang Yong Engineering Construction Company Limited (2011) 9 SCC 735 and a decision of this Court in Aitreya Limited v. Dans Energy Pvt. Ltd. 2012 (127) DRJ 565. 22. Mr. Nayar further submitted that the impugned Award is opposed to the public policy of India. While on the one hand the Award recognized that the transaction of transfer of shares of IFCPL would be subject to the FEMA as well as the RBI Circular, on the other hand the Tribunal proceeded to craft its Award which was totally opposed to that Circular. The impugned Award required IFCPL to apply before the Closing Date to the RBI for permission to transfer the shares in question at a price higher than that permitted by the RBI guidelines. Further the direction of the Tribunal to IFSL to pay Amaprop a further sum of Rs. 73 crores, i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Before the Supreme Court, learned Senior counsel for Bhatia International pointed out that Part-II of the Act would not apply to an international commercial arbitration which took place in a non-convention country. The Court then observed that the Act nowhere provided that its provisions were not to apply to international commercial arbitrations which took place in a non-convention country. Section 2 (1) (f) of the Act which defined an international commercial arbitration made no distinction between international arbitrations held in India or outside India. It was observed in para 21 of the judgment that by omitting to provide that Part I will not apply to international commercial arbitrations which take place outside India the effect would be that Part I would also apply to international commercial arbitrations held out of India. It was observed that in respect of arbitrations which took place outside India even the non-derogatory provisions of Part I would be applicable. However, the agreement to this effect by the parties could be either express or implied. It was clarified in Para 26 that the arbitration not having taken place in India, all or some of the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch was directed to transfer the shares to Respondent No. 1 Satyam Computer Services Ltd. ( Satyam ). Satyam had filed a petition to recognize and enforce the award before the United States District Court, Eastern District Court of Michigan ( US Court ) in which Venture appeared and had filed a cross petition. It was contended by Venture that the enforcement of the Award was in violation of the FEMA. Venture also filed a suit in the Court of the 1st Additional Chief Judge, City Civil Court, Secunderabad seeking a declaration that the award was illegal. The City Civil Court initially passed an ad-interim ex parte order restraining Satyam from seeking or effecting the transfer of shares either in terms of the Award or otherwise. The said interim order was challenged by Satyam in the High Court which admitted the appeal and directed interim suspension of the order of the City Civil Court. Thereafter the trial court allowed Satyam s application under Order VII Rule 11 CPC and rejected Venture s plaint. Venture s appeal was dismissed by the High Court which held that the Award could not be challenged even if it was against the public policy. Venture then appealed to the Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce to these procedures may seek a preliminary injunction or order provisional relief if , in its judgment, such action is deemed necessary to avoid irreparable damages or to preserve status quo. The costs and expenses of the arbitration, including the arbitrator s fees and expenses ( Arbitration Costs ), shall be borne by the parties as determined by the arbitrator to be fair and reasonable; provided, however, that each party shall pay for and bear the cost of its own experts, evidence and counsel. No award of punitive damages may be rendered by the arbitrator in such proceeding. (b) Arbitration Procedures. Any arbitration hereof shall be conducted in accordance with the following procedures: (i) Any party (the Requesting Party ) demanding arbitration hereunder shall give a written notice of such arbitration demand ( Arbitration Notice ) to the other parties which Arbitration Notice shall describe in reasonable detail in the nature of the claim, dispute or controversy and any relief or remedy sought. (ii) Within fifteen (15) calendar days after the receipt of an Arbitration Notice, the Requesting Party, on the one hand, and the other parties (the Requesting Party ) on the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dee Howard Co [1993] 1 Lloyd s Rep 368, 376 and Ace Insurance SA-NV v Zurich Insurance Co [2001] EWCA Civ 173, [2001] 1 Lloyd s Rep 618, para 62. On the other hand, a non-exclusive jurisdiction clause self-evidently leaves open the possibility that there may be another appropriate jurisdiction. The degree of appropriateness of an alternative jurisdiction must depend on all the circumstances of the case. In addition to the usual factors, the wording of the nonexclusive jurisdiction clause may be relevant, because of the light which it may throw on the parties intentions .. .......... ......... 86.Cheshire North and Fawcett on Private International Law (14th Ed, 2008) adopt a similarly cautious approach to Sabah. They say at 474: Where the agreement provides for the non-exclusive jurisdiction of the English courts there is no breach of agreement in bringing proceedings abroad and therefore an injunction will not be granted on the basis of breach of an agreement. However, if one party (A) by way of a pre-emptive strike seeks an injunction abroad whereby the other party (B) will be permanently restrained from making any demand under a contract (containing a non-exclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parties that at the next hearing of CS (OS) No. 899 of 2011 the said suit would be permanently withdrawn by IFSL. The fact that parties did not require the present petition under Section 34 to be dismissed did not mean that Amaprop had conceded to the jurisdiction of this Court to entertain the petition. On the other hand, IFSL appears to have accepted the continuation of the confirmation proceedings in the New York Court. In Clause 4(b) of the consent order it was clarified that the said consent order would not have any effect on the rights, claims and defenses of any party to that proceeding with respect to the enforceability of the Award within the Republic of India . 32. The proceedings for confirmation i.e., for recognition of the Award under the laws of New York were akin to the procedure that was prevailing under the Arbitration Act, 1940. This was also consistent with what was stated in Article V (2) (b) of the New York Convention which is incorporated as such in the Schedule to the 1996 Act. IFSL was aware of the consequence of permitting the proceedings for recognition/ confirmation of the Award to continue in the New York Court. With IFSL having withdrawn the anti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerning the recognition of the Award may be entered by any state or federal court of competent jurisdiction. The seat of arbitration being New York also had a bearing on the issue as is seen from the following passages from the treatise Dicey Morris Collins on The Conflict of Laws : Prior to the entry into force of the 1996 Act there were potential problems concerning the borderline between issues of substance determined by the law governing the arbitration agreement and issues of procedure governed by the procedural law of the arbitration. Such problems are avoided under the 1996 Act, which clearly determines the scope of each of the various provisions of Part I. Although the general rule is that Part I applies in cases where England is the seat of the arbitration, it is also expressly provided that, where the seat is outside England or where the seat has not been determined or designated, Section 7 (which provides, subject to the parties contrary agreement, that an arbitration agreement is to be treated as distinct from any contract of which it forms a part) and Section 8 (which provides that, unless the parties agree otherwise, an arbitration agreement is not disch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , there was an express exclusion of the Indian courts in view of Rule 32 of the Singapore International Arbitration Centre ( SIAC ) Rules which was made applicable to all arbitrations which took place in Singapore. Therefore, applying the law explained both in Bhatia International as well as Venture Global Engineering, it was held that the Indian courts do not have jurisdiction. In Videocon Industries Limited v. Union of India, the Court came to the definite conclusion in para 33 that the parties had in terms of the arbitration agreement in that case impliedly agreed to exclude the provisions of Part I of the Act. Consequently, it was held that the Indian courts did not have the jurisdiction. In Dozco India Pvt. Ltd. v. Doosan Infracore Co. Ltd. it was held that the language of the clauses of the Agreement in that case were clearly indicative of the express exclusion of Part-I of the Act. Following the dictum in Bhatia International, it was held that the Indian courts had no jurisdiction. In Aitreya Limited v. Dans Energy Pvt. Ltd., it was held that there was no implied exclusion of Indian law inasmuch as Clause 14.8 of the Investment Agreement in that case stated that the par ..... 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