IMPORTANT POINTS
Seat of arbitration remains at the place agreed to in the agreement irrespective of the place of proceeding, delivery of award etc.
Parties can expressly or by necessary implication exclude application of a part I of the Act, 1996.

Headnote:(a) English Arbitration Act, 1996 – Sections 3 and 53 r/w section 11(6), Arbitration and Conciliation Act, 1996 – Agreement fixing seat of Arbitration at Kuala Lumpur – Procedure for amending the clause detailed in the agreement – Mere fact that the parties to the particular arbitration had agreed for shifting of the seat of arbitration to London because of epidemic at Kuala Lumpur cannot be interpreted as anything except physical change of the venue of arbitration from Kuala Lumpur to London – Seat of arbitration remains at the place agreed to in the agreement irrespective of the place of proceeding, delivery of award etc. (Para 12)
        2010 (9) UJ 4521 (SC) – Relied upon
        (b) Arbitration and Conciliation Act, 1996 – Section 9 – Parties agreeing to exclude applicability of Part I of the Act to their arbitral proceedings – Therefore Delhi High Court did not have jurisdiction to entertain application u/s 9 of the Act. (Para 19)
        (2002) 4 SCC 105; (2008) 4 SCC 190; (2003) 9 SCC 79; (1992) 3 SCC 551 – Relied upon
        (2006) 1 GLR 658 – Cited with approval
        (1968) 3 SCR 214; (1984) 3 SCR 715 – Referred
       Facts of the case:
        The question arising in this appeal is whether the Delhi High Court could entertain the petition filed by the respondents under Section 9 of the Arbitration and Conciliation Act, 1996 for grant of a declaration that Kuala Lumpur (Malaysia) is contractual and juridical seat of arbitration and for issue of a direction to the arbitral tribunal to continue the hearing at Kuala Lumpur in terms of clause 34 of Production Sharing Contract (PSC).
       Finding of the Court:
        Part I of the Act 1996 is not applicable in the instant case.
       Result : Appeal allowed.

JUDGMENT

G.S. Singhvi, J. —

1. Leave granted.

2. Whether the Delhi High Court could entertain the petition filed by the respondents under Section 9 of the Arbitration and Conciliation Act, 1996 (for short, “the Act”) for grant of a declaration that Kuala Lumpur (Malaysia) is contractual and juridical seat of arbitration and for issue of a direction to the arbitral tribunal to continue the hearing at Kuala Lumpur in terms of clause 34 of Production Sharing Contract (PSC) is the question which arises for consideration in this appeal.

3. Respondent No.1 - Government of India owns petroleum resources within the area of India’s territorial waters and exclusive economic zones. Respondent No.2 is an arm of the Ministry of Petroleum and Natural Gas. On 28.10.1994, a PSC was executed between respondent No.1 on the one hand and a consortium of four companies consisting of Oil and Natural Gas Corporation Limited, Videocon Petroleum Limited, Command Petroleum (India) Private Limited and Ravva Oil (Singapore) Private Limited (hereinafter referred to as “the Contractor”) in terms of which the latter was granted an exploration licence and mining lease to explore and produce the hydro carbon resources owned by respondent No.1. Subsequently, Cairn Energy U.K. was substituted in place of Command Petroleum (India) Private Limited and the name of the Videocon Petroleum Limited was changed to Petrocon India Limited, which merged the appellant - Videocon Industries Limited. For the sake of convenience, the relevant clauses of Articles 33, 34 and 35 of the PSC are extracted below:

“33.1 Indian Law to Govern

Subject to the provisions of Article 34.12, this Contract shall be governed and interpreted in accordance with the laws of India.

33.2 Laws of India Not to be Contravened

Subject to Article 17.1 nothing in this Contract shall entitle the Contractor to exercise the rights, privileges and powers conferred upon it by this Contract in a manner which will contravene the laws of India.

34.3 Unresolved Disputes

Subject to the provisions of this Contract, the Parties agree that any matter, unresolved dispute, difference or claim which cannot be agreed or settled amicably within twenty one (21) days may be submitted to a sole expert (where Article 34.2 applies) or otherwise to an arbitral tribunal for final decision as hereinafter provided.

34.12. Venue and Law of Arbitration Agreement

The venue of sole expert, conciliation or arbitration proceedings pursuant to this Article, unless the Parties otherwise agree, shall be Kuala Lumpur, Malaysia, and shall be conducted in the English language. Insofar as practicable, the Parties shall continue to implement the terms of this Contract notwithstanding the initiation of arbitral proceedings and any pending claim or dispute. Notwithstanding the provisions of Article 33.1, the arbitration agreement contained in this Article 34 shall be governed by the laws of England.

35.2 Amendment

This Contract shall not be amended, modified, varied or supplemented in any respect except by an instrument in writing signed by all the Parties, which shall state the date upon which the amendment or modification shall become effective.”

4. In 2000, disputes arose between the respondents and the contractor with respect to correctness of certain cost recoveries and profit. Since the parties could not resolve their disputes amicably, the same were referred to the arbitral tribunal under clause 34.3 of the PSC. The arbitral tribunal fixed 28.3.2003 as the date of hearing at Kuala Lumpur (Malaysia), but due to outbreak of epidemic SARS, the arbitral tribunal shifted the venue of its sittings to Amsterdam in the first instance and, thereafter, to London. In its meeting held on 29.6.2003 at Amsterdam, the arbitral tribunal issued various directions in Arbitration Case No.1 of 2003. On the next day, the arbitral tribunal issued similar directions in Arbitration Case Nos.2 and 3 of 2003. On 19.8.2003, the arbitral tribunal issued revised time schedule

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2011 Supreme(SC) 514

2011 (4) Supreme 35SUPREME COURT OF INDIAR.V. Raveendran and G.S. Singhvi, JJ. Videocon Industries Limited — AppellantversusUnion of India and another — RespondentsCivil Appeal No.4269 ___ of 2011(Arising out of SLP(C) No.16371 of 2008)Decided on : 11-5-2011

IMPORTANT POINTS Seat of arbitration remains at the place agreed to in the agreement irrespective of the place of proceeding, delivery of award etc. Parties can expressly or by necessary implication exclude application of a part I of the Act, 1996.

Cases Referred (8)

2011 (4) Supreme 35
SUPREME COURT OF INDIA
R.V. Raveendran and G.S. Singhvi, JJ.
Videocon Industries Limited — Appellant
versus
Union of India and another — Respondents
Civil Appeal No.4269 ___ of 2011
(Arising out of SLP(C) No.16371 of 2008)
Decided on : 11-5-2011

IMPORTANT POINTS
Seat of arbitration remains at the place agreed to in the agreement irrespective of the place of proceeding, delivery of award etc.
Parties can expressly or by necessary implication exclude application of a part I of the Act, 1996.