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TMI Blog2017 (7) TMI 1471X X X X Extracts X X X X X X X X Extracts X X X X ..... t shall be conducted by an arbitral tribunal constituted by three arbitrators appointed in accordance with the ICC Rules; (d) the venue of the arbitration would be Singapore; and (e) that the arbitral award would be final and binding on the parties. The aforesaid constitutes the quintessential agreement between the parties. The invalidity or unworkability of the part of the clause that provides for the disputes to be submitted to SIAC would not render the entire arbitration agreement (arbitration clause) void. In Enercon (India) Ltd Ors. v. Enercon GMBH Anr [ 2014 (2) TMI 1170 - SUPREME COURT] , the Supreme Court had observed that when faced with a seemingly unworkable arbitration clause, it would be the duty of the court to make the same workable within the permissible limits of the law, without stretching it beyond the boundaries of recognition . The party against whom a foreign award is sought to be enforced is to be provided full opportunity to provide evidence to show that the arbitral tribunal lacked the jurisdiction to make the foreign award - In Shin-Etsu Chemical Co. Ltd. [ 2005 (8) TMI 622 - SUPREME COURT] , the Supreme Court held that a finding regarding an arbitration a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to accept the contention that the legal proceedings continued after the name of VAS was struck off the Register of Companies, should be held as void, notwithstanding, that its name had been restored on the Register of Companies subsequently - The existence of a company whose name has been removed from the Register of Companies would continue, at least to the extent of enabling it to have the same restored. This Court is unable to accept that ZTE has established, by sufficient proof, any of the grounds as set out in Section 48(1) of the Act to decline enforcement of the impugned awards - the objections raised by ZTE are rejected. List for further proceedings on 07.07.2017. - HON'BLE MR. JUSTICE VIBHU BAKHRU For the Decree Holder : Mr Jeevesh Nagrath, Mr Pratham Sharma and Mr Rohan Ganpathy. For the Judgment Debtor : Mr T. K Ganju, Senior Advocate with Mr Vijay Kaundal and Mr Rupesh Gupta. JUDGMENT VIBHU BAKHRU, J Introduction 1. Value Advisory Services (hereafter VAS ) has filed the present petition for enforcement of the partial award dated 09.11.2009 and the final award dated 23.07.2010 (hereafter the impugned awards ) under Sections 47 and 49 of the Arbitration and Conci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvance and commission of 4% of total value of the order on every new purchase order received from ITI/TCIL (exclusively limited to reservation quota). 6. Disputes arose between the parties in regard to the amounts payable to VAS under the Agreement; ZTE claimed that the Agreement was terminated prior to expiry of its term, that is, in July 2003. 7. The Agreement included an arbitration clause (Clause 8), which provided for disputes to be settled under the ICC Rules and by an arbitral tribunal of three arbitrators to be constituted under the said rules. However, the arbitration clause also provided that the disputes would be submitted to SIAC. 8. On 22.04.2005, VAS wrote to the SIAC and ICC for clarification in regard to Clause 8 of the Agreement. In response to the same, on 14.05.2005, SIAC replied that it will not be able to administer the arbitration case under the ICC Rules. ICC also sent a communication on 19.05.2005 inter alia stating that no other arbitration institution is permitted to administer arbitration cases under the ICC Rules. 9. In view of the response received from the SIAC and ICC, VAS sent a communication dated 27.05.2005 to ZTE, informing it that in view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wards and Ms Gao Fei entered a dissenting opinion. 17. After the partial award was delivered on 09.11.2009, VAS filed a petition (Co. Pet. 72/2009) before this Court for restoration of its name in the Register of Companies. This petition was rejected. Another petition (Co. Pet. 200/2011) was filed by the creditors of VAS on 20.04.2011 for restoration of the name of VAS on the Register of Companies. This petition was allowed by the Company Court on 08.02.2012. ZTE filed an appeal against the said decision (Co. App. 25/2012), which was dismissed by the Division Bench of this Court on 14.03.2013. ZTE preferred a Special Leave Petition before the Supreme Court, which was also dismissed. Impugned awards 18. The arbitral tribunal framed the following issues for adjudication, which are as hereunder:- (1) Whether under Clause 8 of the Agreement, this Arbitral Tribunal has jurisdiction to arbitrate the disputes. (2) Whether the Agreement was terminated by the Respondent by notice in July 2003. (3) The amount of monthly payments on account due to the Claimant. (4) The amount of commission which the Claimant is entitled to 19. ZTE had objected to the jurisdiction of the arbitral tribunal main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d payment of the aforesaid sum to VAS. 24. On the issue of commission to be paid for orders placed between 13.01.2003 to 12.01.2005 by ITI/TCIL as per the reservation quota assigned by ITI/TCIL to ZTE, the arbitral tribunal held that in terms of Clauses 3 and 7 of the Agreement, VAS was entitled to receive 4% commission on the total value of every new purchase order received from ITI/TCIL upto 12.01.2005, quantified at US$ 8,12,569/-. 25. For purchase orders received after 12.01.2005, VAS submitted that it is entitled to 4% commission on every new purchase order so received, if the purchase order was issued after 12.01.2005 but had been clarified during the period 13.01.2003 to 12.01.2005 by the execution of agreements/MoUs requiring ITI to place purchase orders with ZTE. It was held that Clause 7 clearly provides for the duration of the Agreement as two years from 13.01.2003 and if VAS's contention was correct, the said clause would have been worded differently. 26. VAS also submitted that in the alternative, it is entitled to receive 2% of the value of the Agreement and the MoU as per Clause 3 of the Agreement, as varied by the parties pursuant to the meeting held on 06.09.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Admittedly, the arbitral proceedings were not administered by SIAC and, therefore, the proceedings were contrary to the agreement between the parties. He relied on the decision of the Supreme Court in Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd. and Another: AIR 2005 SC 3766 and on the strength of the said decision contended that the question whether the arbitral tribunal had the jurisdiction to make the impugned awards would require a full trial and the decision of the arbitral tribunal or the Singapore High Court dismissing ZTE's appeal would not be binding on this Court while considering whether the enforcement of the impugned awards ought to be declined under Section 48(1)(d) of the Act. He also relied on the decisions of this Court in Japan Travel Services v. All Nippon Airways Company Ltd. and Ors.: 2009 SCC OnLine Del 3604; Marina World Shipping Corporation Ltd. v. Jindal Exports Imports Pvt. Ltd.: (2012) 188 DLT 482 and AM Rasool Const. Engg. Services Pvt. Ltd. v. National Bldgs. Const. Corpn. Ltd.:(1998) 71 DLT 298 (DB) in support of his contentions. 31. Mr Ganju further submitted that the premise that SIAC could not administer an ICC arbitration was also erron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anpatbhai Mahijibhai Solanki v. State of Gujarat Ors.: (2008) 12 SCC 353 and Ramesh Kumar and Anr. v. Furu Ram and Anr.: (2011) 8 SCC 613 in support of his aforesaid contention. 33. He also contended that the restoration of VAS's name on the Register of Companies did not automatically place VAS in a position as if its name had not been struck off as no directions/orders to that effect were passed by the Company Court while restoring VAS's name on Register of Companies. 34. Mr Jeevesh Nagrath, learned counsel appearing for VAS countered the submissions of Mr Ganju. He referred to the arbitration clause and contended that parties had agreed that the arbitration shall be conducted under the ICC Rules and by an arbitral tribunal of three members constituted in accordance with the said rules. Thus, the composition of the arbitral tribunal and the arbitral proceedings were in accordance with the arbitration agreement. 35. He relied upon the decision of the Supreme Court in Bharat Aluminium Company v. Kaiser Aluminium Technical Services Inc.: (2012) 9 SCC 552 and on the strength of the said decision submitted that the power of the Court while dealing with enforcement of foreign aw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with the Rules of Arbitration of the International Chamber of Commerce in effect at the time of applying for arbitration by three (3) Arbitrators appointed in accordance with the said Rules. The venue of arbitration shall be Singapore. The arbitration award shall be final and binding upon both parties. The arbitration fees shall be borne by the losing party except otherwise awarded by the arbitration commission. 39. A plain reading of the aforesaid clause indicates that the parties had agreed that (a) the disputes would be submitted to SIAC; (b) the arbitration would be in accordance with the ICC Rules; and (c) the arbitration shall be conducted by three arbitrators appointed in accordance with the ICC Rules. There is no dispute that arbitration was conducted in accordance with the ICC Rules. It is also apparent that the constitution of the arbitral tribunal was also in accordance with the ICC Rules. Sub-article 4 of Article 8 of the ICC Rules as applicable at the material time (ICC Rules, 1998) provides for constitution of the arbitral tribunal, in cases where the parties have agreed that their disputes shall be resolved by three arbitrators. The said sub-article rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esponded to VAS s request for clarification by stating that ICC Rules could only be administered by the ICC Court and no other institution such as SIAC could administer arbitration cases under the ICC Rules. 44. Mr Ganju has earnestly contended that SIAC could also administer arbitrations under the ICC Rules with the SIAC Secretariat, Registrar and Board of Directors of SIAC performing the roles of the ICC Secretariat, Secretary General and the ICC Court respectively, and by suitably adapting the ICC Rules in this regard. This Court is not persuaded to accept the same essentially for two reasons. First, that the parties had expressly agreed that arbitration shall be conducted under the ICC Rules by three arbitrators to be appointed in accordance with the said rules. Admittedly, the ICC Court plays a significant role under the ICC Rules. In terms of Article 1(2) of the ICC Rules, the ICC Court does not resolve the disputes but administers the resolution of disputes by the arbitral tribunals. Article 1(2) (as subsequently amended) now expressly provides that the Court is the only body authorized to administer arbitration under the Rules, including the scrutiny and approval of awards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irectors would perform the roles of the ICC Secretariat, Secretary General and the ICC Court respectively. In the present case, SIAC had declined to administer arbitration under the ICC Rules and thus there was no possibility of an arbitration conducted under the ICC Rules, to be administered by SIAC, assuming that this was at all possible in the first place. This Court is of the view that on a plain reading of the ICC Rules, it would not be possible to administer any arbitration case to be conducted under the said rules by any other body performing the role of the ICC Court. This is also the clarification furnished by ICC to VAS and the ICC Rules (as subsequently amended) now expressly clarify the same. Secondly, the ICC Court itself has to function under the set of rules as specified (Appendix II to the ICC Rules); SIAC would function in accordance with its rules and not in conformity with the rules adopted by the ICC Court for its functioning. 50. The arbitral tribunal had considered the rival contentions and had observed as under: 24. Under Singapore Law, any ambiguity in an agreement has to be interpreted in a manner so as to give effect to it rather than in a manner that rend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n clause) void. In Enercon (India) Ltd Ors. v. Enercon GMBH Anr: 2014 (5) SCC 1, the Supreme Court had observed that when faced with a seemingly unworkable arbitration clause, it would be the duty of the court to make the same workable within the permissible limits of the law, without stretching it beyond the boundaries of recognition . 54. It is also necessary to observe that the parties had indisputably agreed that the conclusions of this agreement, its validity, construction, performance and settlement of the disputes shall be governed by the Laws of Singapore . Thus, the question as to the interpretation of the arbitration clause would have to be addressed in accordance with the laws applicable in Singapore. Thus, if according to Singapore Law, the arbitration clause was required to be interpreted in a manner so as to sustain the arbitration clause (as has been held by the arbitral tribunal), the decision of the arbitral tribunal to sever the part of the arbitration clause that provided for disputes to be submitted to SIAC and to ignore the same, cannot be faulted. In the present case, ZTE has not produced any material to dispute the proposition that under the Singapore Law, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Clause. There shall be a sole arbitrator to be appointed by the Director of the Arbitration Office . However, the disputes were submitted to Japan Commercial Arbitration Association (JCAA) and the subject arbitral awards were delivered by an arbitrator appointed by JCAA. This was (a) plainly not in terms of the arbitration clause and (b) there was no evidence produced either before the arbitral tribunal or before this Court to establish that the arbitration clause as agreed was unworkable. On the contrary, the respondents (who were seeking to sustain and enforce the arbitral awards delivered by the arbitrator appointed by the JCAA), sought to rely on the correspondence between the parties to submit that the arbitration under JCAA was agreed to between the parties. This Court observed that the submissions made on behalf of the respondents indicated that their contention was that a new arbitration agreement had been executed between the parties superseding the dispute resolution mechanism provided under the arbitration clause. Accordingly, this Court examined the correspondence between the parties and found that the said submission was unmerited. In the present case, VAS had produce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alleged fraud committed by VAS. The fulcrum of the contention rests on the failure of VAS to disclose that its name was struck off the Register of Companies by the ROC. 60. Admittedly, VAS did not disclose to the arbitral tribunal that its name had been struck off the Register of Companies and it stood dissolved on 03.02.2007. VAS had fairly conceded that its Board of Directors had acted on an erroneous understanding, as on one hand, VAS was pursuing the arbitration proceedings, and on the other hand, VAS had also applied for its name to be struck off the Register of Companies. Mr Jeevesh Nagrath contended that the Directors of VAS had proceeded on the basis that they could pursue the arbitral proceedings, which had already commenced. 61. The questions to be addressed is (i) whether such conduct would amount to fraud, which would vitiate the arbitral proceedings and the impugned awards?; and (ii) whether the enforcement of the impugned awards rendered in favour of VAS should be declined on the ground that VAS stood dissolved at the material time when the awards were rendered? 62. The Supreme Court has considered the meaning of fraud in several cases. In Bhaurao Dagdu Paralkar v. St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCC 797, the Supreme Court had held that a mere concealment or non-disclosure without intent to deceive or a bald allegation of fraud without proof and intent to deceive would not render a decree obtained by a party as fraudulent. To conclude in a blanket manner that in every case where relevant facts are not disclosed, the decree obtained would be fraudulent, is stretching the principle to a vanishing point. 67. Any allegation of deceit and fraud must necessarily be considered in the context of the factual matrix of the disputes. A clear distinction must be drawn between cases where a party acts erroneously or otherwise proceeds on an erroneous assumption and cases where a party deliberately and wilfully practices deception to acquire a benefit, which is not legitimately due to it, at the cost of the other party and but for the deception, it would not be able to secure the same. The latter would be a case of fraud and not the former. In the oft-cited decision in S. P. Chengalvaraya Naidu (supra) (also relied upon by ZTE), the Supreme Court considered a case where one Jagannath, who was working as a clerk with one Chunilal Sowcar, purchased on behalf of his employer (Chunilal Sowca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, pursuant to removal of its name from the Register of Companies. Mr Ganju submitted that although the name of VAS had been restored on the Register of Companies, no directions were issued by the Company Court under Section 560(6) of the Companies Act, for placing VAS in the same position as if its name had not been struck off; therefore, VAS could not enforce the impugned awards delivered when it was not in existence. 72. In my view, the aforesaid contention is wholly bereft of any merit. The provisions of Section 560(7) of the Companies Act and the orders passed by this Court are unambiguous and clear. 73. By an order dated 08.02.2012 passed by this Court in Co. Pet. 200/2011 captioned Siddhant Garg and Anr v. Registrar of Companies and Ors., this Court had allowed the petition for restoring VAS s name in the Register of Companies. In its order, this Court had observed as under: if the respondent no.2 company is today restored, it would be in a position to prosecute its execution petition for recovery of the Foreign Award and if it is successful in its endeavour, then not only would the company revive, but also society would gain as a defunct company would stand restored as a he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd all other persons in the same position as nearly as may be as if the name of the company had not been struck off. (7) Upon a certified copy of the order under sub- section (6) being delivered to the Registrar for registration, the company shall be deemed to have continued in existence as if its name had not been struck off. 78. Section 560(7) of the Companies Act makes it amply clear that once the name of the company is restored on the Register of Companies, its position would be the same as if the name had not been struck off. Thus, by virtue of order dated 08.02.2012 passed in Co. Pet. 200/2011, VAS would continue to be in existence as if its name had never been struck off. Hence, for all purposes, the act of the ROC striking off the name of VAS from the Register of Companies was undone by the order dated 08.02.2012. 79. Section 560(6) of the Companies Act only enables the Court to pass certain directions and make provisions for placing the company and other persons in the same position, as nearly as possible, as if the name of the company had not been struck off. Clearly, there may be myriad of situations where such orders may be necessary. However, this is not one such case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion such fiction should be carried to its logical end. There should not be any hesitation in giving full effect to it . Thus, legal fiction as contained in Section 560(7) of the Companies Act must be carried to its logical purpose. The effect of the said provision is that once the company whose name had been removed from the Register of Companies, is restored, it must be deemed to be in existence as if it had never been struck off. Thus, after the company is restored, there is no scope to consider that it was not in existence in the intervening period. It plainly follows that the transactions entered into by the company in that period cannot be held to be a nullity on the ground that the company was not in existence during the said period. 83. In this context, it is also relevant to refer to the oft-quoted opinion of Lord Asquith in East End Dwellings Co. Ltd. Finsbury Borough Council: [1952] AC 109 at p. 132., which reads as under:- If you are bidden to treat an imaginary state of affairs as real, you must surely unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs, had in fact existed, must inevitably have f ..... 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