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TMI Blog2021 (3) TMI 245X X X X Extracts X X X X X X X X Extracts X X X X ..... as no legs to stand on. Indeed, an analysis of Section 2(1)(f) would show that whatever be the transaction between the parties, if it happens to be entered into between persons, at least one of whom is either a foreign national, or habitually resident in, any country other than India; or by a body corporate which is incorporated in any country other than India; or by the Government of a foreign country, the arbitration becomes an international commercial arbitration notwithstanding the fact that the individual, body corporate, or government of a foreign country referred to in Section 2(1)(f) carry on business in India through a business office in India. This being the case, it is clear that the Delhi High Court had no jurisdiction to appoint an arbitrator in the facts of this case. Appeal allowed - decided in favor of appellant. - CIVIL APPEAL NO. 810 OF 2021 (ARISING OUT OF SLP(CIVIL) NO.15982 OF 2020 - - - Dated:- 4-3-2021 - R. F. Nariman And B. R. Gavai , JJ. JUDGMENT R. F. Nariman, J. 1. Leave granted. 2. This appeal arises out of a petition filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 [ Arbitration Act ] by the respondents in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in December, 2016, which was mandatorily required to be accepted by all ADSs, by clicking on the By clicking here you agree to abide by the new Terms Conditions button, immediately upon logging in on the respondent s website, to proceed further to their account. According to the petitioner, this requirement was never communicated to the petitioners in the past, nor was any notice of termination issued by the respondent. This criterion is also in violation of the Direct Selling Guidelines dated September 09, 2016. 4. The petitioners made repeated requests to restore their ABO account. The petitioners attempted to resolve the aforesaid disputes and differences amicably by mutual discussions with the representatives of the respondent from April till December, 2019. However, the respondent has failed to consider the petitioners request for restoration of their ADS account. On June 26, 2020, the petitioners referred the matter for redressal and review to Mr. Jon Sherk, Vice President and Deputy General Counsel of Amway Global in January, 2020. The petitioners were communicated about the rejection of their request for restoration of their ADS account on June 26, 2020. Accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd., in the Delhi High Court was that a petition before the High Court is not maintainable as the dispute relates to an international commercial arbitration, being covered by Section 2(1)(f)(i) of the Arbitration Act inasmuch as the respondents are husband and wife who are both nationals of and habitually resident in the United States of America. This plea was turned down by the impugned judgment stating: 23. Even the judgment of the Supreme Court in the case of TDM Infrastructure (P) Ltd. v. UE Development India (P) Ltd., (2008) 14 SCC 271 is not applicable in the facts of this case, which have been noted above. Rather, the learned counsel for the petitioners is justified in relying upon the judgment in the case of Larsen Toubro Ltd. SCOMI Engineering Bhd v. MMRDA, (2019) 2 SCC 271, wherein the Supreme Court was concerned with a consortium consisting of an Indian company and a foreign company and the Court took note of the fact that the office of an unincorporated entity, i.e. the consortium, being in Mumbai, as one of the factors for arriving at the conclusion that the arbitration proceedings would not be international commercial arbitration. No doubt a sole propr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rightly contended by Ms. Arora, the documentary evidence in this case would be decisive of whether the requirements of sub-clause (i) to Section 2(1)(f) have been met, in which case it is unnecessary to go to sub-clause (iii), as under Section 2(1)(f), at least one of the parties must fall under sub-clauses (i) to (iv) of Section 2(1)(f). 8. In a document entitled Code of Ethics of Amway Direct Sellers , under Rules of Conduct , it is stipulated as follows: 2.1.17 Legal Entity Authorisation Form (LEAF) means the document that must, in addition to the Direct Seller Contract, be completed by a Direct Seller required to or electing to operate an Amway Business in the name of an applicable legal entity. xxx xxx xxx 3.1 Application and Starter Guide: In order to be considered for an Amway distributorship, an individual(s) must, in his/her/their own name(s) or on behalf of a legal entity, submit a signed, completed Direct Seller Application(in Form SA-88-ID), together with all required supporting documentation. A distributorship may be taken up in individual capacity or as a sole proprietorship concern, partnership firm or company. Amway reserves the righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of whether or not Amway is doing business in that country. For important legal reasons, including trade names and trademark protections; local laws on product registration, packaging, labelling ingredient content and formulation, product liability; customs and tax laws; and literature content or language requirements. Amway must limit the resale of Amway Products by Direct Sellers to only other Direct Sellers or retail customers located within country in which the Direct Seller legitimately buys the Amway Products and is authorised to do business. The term products includes, without limitation, all literature, sales aids, and any other items obtained by a Direct Seller from Amway or from his sponsor or Platinum. 4.16.1 Exporting Rule: Personal Use Globally, Amway s Rules and Commercial Principles include prohibitions on exporting and importing Amway products from one market to another. Amway Direct Sellers may, however, take Amway products across borders for personal use, with the following limitations: The Amway Direct Seller is visiting another country and personally places the product order in that country. The Amway Direct Seller physically pick ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Entity to own and operate more than one Amway business. Neither the Entity nor the Sole Proprietor will own or operate any other business or business interest. xxx xxx xxx C. Any NRI, PIO or OCl investment in the Entity, if and as applicable, has been made on a non-repatriatable basis in accordance with applicable foreign exchange laws of India. xxx xxx xxx G. The Entity shall, in accordance with the laws of India and for all matters connected to the Amway Business, exclusively use a duly authorised Indian rupee bank account which, if applicable, operates on a non-repatriatable basis. H. The Sole Proprietor shall be responsible for his or her, and the Entity s, compliance with the Amway Rules of Conduct and the applicable laws with respect to the operation of the Amway Business by the Entity, including foreign exchange laws. Any violation of the aforesaid entitles AIE to terminate the ABO Contract and the Entity Agreement. xxx xxx xxx 10. Under authorised signature , the entity s name was filled in as Sindhia Enterprises and the proprietor was filled in as Ravindranath Rao Sindhia (respondent no. 1 herein). This was done pursuant to an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... important to notice is that the contract was signed by the employer viz. MMRDA and by the contractor under the head sub-clauses (A) and (B) in which L T India signed as A and Scomi Engineering Bhd has signed as B . When we come to the consortium agreement that is entered into between the Indian company and the Malaysian company as aforestated, we find in the definition clause that Consortium shall mean L T and Scomi Engineering Bhd, acting in collaboration, for the purpose of this agreement and shall be called the L T-SEB Consortium unincorporated . The contract is defined in Sub- Clause 6 as meaning, the contract to be entered by the Consortium with the employer for the execution of the Project . Under Sub-Clause 7, the lead Member of the Consortium or Consortium Leader shall mean L T, that is, the Indian Company. Under Sub-Clause 8, the Supervisory Board (hereinafter referred to as the SB ) shall mean a Board constituted under Clause 11 of the GCC. When we come to Clause 11.2, it is clear that the Members of this Supervisory Board will consist of four members, two appointed by each Member. One of the Members nominated by the Consortium leader and agreed to by all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear that the unincorporated association referred to in Section 2(1)(f)(iii) would be attracted on the facts of this case and not Section 2(1)(f)(ii) as the Malaysian body cannot be referred to as an independent entity following the judgment [L T Ltd. v. MMRDA, 2016 SCC OnLine Bom 13348] of the High Court of Bombay. xxx xxx xxx 18. This being the case, coupled with the fact, as correctly argued by Shri Divan, that the Indian company is the lead partner, and that the Supervisory Board constituted under the consortium agreement makes it clear that the lead partner really has the determining voice in that it appoints the Chairman of the said Board (undoubtedly, with the consent of other members); and the fact that the Consortium's office is in Wadala, Mumbai as also that the lead member shall lead the arbitration proceedings, would all point to the fact that the central management and control of this Consortium appears to be exercised in India and not in any foreign nation. 14. This case is distinguishable on facts, inasmuch as a final judgment between the parties made it clear that it would not be open for the consortium to rely upon their status as independe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w the nature of the case. 7. In the present case A.C. Basu, Proprietor of Ashok Transport Agency, had died before the date of the institution of the suit and on the date of the institution of the suit, the proprietary concern was not in existence. Only the legal representatives of A.C. Basu could be sued with regard to any cause of action arising against A.C. Basu in connection with the proprietary business. We find it difficult to understand how the provisions of Rule 4 Order XXX CPC, could be extended to such a case. 16. In this view of the matter, the argument that there is no international flavour to the transaction between the parties has no legs to stand on. Indeed, an analysis of Section 2(1)(f) would show that whatever be the transaction between the parties, if it happens to be entered into between persons, at least one of whom is either a foreign national, or habitually resident in, any country other than India; or by a body corporate which is incorporated in any country other than India; or by the Government of a foreign country, the arbitration becomes an international commercial arbitration notwithstanding the fact that the individual, body corporate, or gov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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