2014 Supreme(SC) 52

Supreme Court of India
A.K. PATNAIK & FAKKIR MOHAMED IBRAHIM KALIFULLA, JJ.
World Sport Group (Mauritius) Ltd.
Versus
MSM Satellite (Singapore) Pte. Ltd.
Civil Appeal No. 895 of 2014 (Arising out of S.L.P. (C) No. 34978 of 2010)
Decided On : 24-01-2014

IMPORTANT POINTS
Judicial comity arises not out of obligation but out of difference and mutual respect.
Request does not mean application, may be inferred from affidavit also.
Main agreement and arbitration agreement contained therein are separable.
Allegation of fraud which has to be enquired into is not a ground to refuse reference to arbitration.

Headnote:(a) Words and Phrases - Principle of Comity of Courts - Judicial comity - Courts of one state or jurisdiction will give effect to the laws and judicial decisions of another state or jurisdiction - Not as a matter of obligation but out of deference and mutual respect. (Para 20)

       (b) Code of Civil Procedure, 1908 - Section 9 and 20 r/w clause 9 of Facilitation Deed- Appropriate court in India has jurisdiction - Facilitation deed executed in Mumbai - Fraudulent inducement made in Mumbai - Recession of Deed issued at Mumbai - Cause of action arising in Mumbai - Mumbai High Court has jurisdiction. (Para 20)

       (1969) 3 SCC 562; (1987) 1 SCC 496 - Referred

       (c) Arbitration and Conciliation Act, 1996 - Section 45 - At the request of - Does not mean application - In reply of motion by the respondent, applicant filing affidavit - Informing the Court that he had invoked arbitration clause and proceedings had commenced - Amounts to making request to refer the parties to arbitration at Singapore. (Para 21)

       (d) Arbitration and Conciliation Act, 1996 - Section 45 - Arbitration agreement null and void - Court will refuse to refer the parties to arbitration. (Para 22)

       (e) Arbitration and Conciliation Act, 1996 - Section 45 - Separability - Arbitration agreement can be separated from the main agreement - Even if main agreement is null and void, arbitration agreement stands apart and is not null and void - Rescinding of the Facilitation deed on ground of fraud does not affect the arbitration agreement contained therein - High Court could not have refused to refer the partiers to arbitration. (Para 23 and 25)

       [2007] UKHL 40 - Relied upon

       (2011) 14 SCC 66 - Referred

       (f) Arbitration and Conciliation Act, 1996 - Section 45 - "Inoperative or incapable of being performed" - Arbitration agreement does not become "inoperative or incapable of being performed" on allegation of fraud being enquired - Court cannot refuse to refer the parties to arbitration. (Para 29)

       (2010) 1 SCC 72; AIR 1962 SC 406 - Distinguished

       (g) Arbitration and Conciliation Act, 1996 - Section 45 - Clause 9 of Facilitation deed - Linked with finances, funds and rights of the BCCI - Not opposed to public policy - Agreement covered by New York Convention - High Court had only to consider whether arbitration agreement was null and void - Court ought to have referred parties to arbitration (Para 30)

       (h) Arbitration and Conciliation Act, 1996 - Section 45 and sections 23 and 28, Contract Act - Clause 9 of Facilitation Deed restricting right of parties to move the courts for appropriate relief - Also barring right to trial by a jury - Exception 1 to section 28 saving contract to refer to arbitration from being rendered illegal - High Court declaring Clause 9 opposed to public policy and therefore null and void - Erroneous. (Para 31)

       (i) Arbitration and Conciliation Act, 1996 - Section 45 - Court can refuse reference to arbitration only when arbitration agreement is null and void, inoperative or incapable of being performed - Need to enquire into allegation of fraud is not a ground for refusing reference to arbitration. (Para 32)

       (2013) 1 SCC 641; (2009) 1 SCC 267; (2012) 2 SCC 93; 546 US 440 (2006); (2009) 10 SCC 103 - Referred

       (j) Arbitration and Conciliation Act, 1996 - `Section 45 - Pendency of another suit on the same issue - Not a ground to refuse reference to arbitration. (Para 33)

       Facts of the case:

       In connection with the media rights for IPL in the Indian sub-continent the appellant and the respondent executed a Deed for Provision of Facilitation Services (facilitation deed) whereunder the respondent was to pay a sum of Rs.425 crores to the appellant as facilitation fees.

       The respondent made three payments totaling Rs.125 crores to the appellant under the Facilitation Deed during 2009 and did not make the balance payment. Instead, on 25.06.2010, the respondent wrote to the appellant rescinding the Facilitation Deed on the ground that it was voidable on account of misrepresentation and fraud. On 25.06.2010, the respondent also filed a Suit for inter alia a declaration that the Facilitation Deed was void and for recovery of Rs.125 crores already paid to the appellant.

       On 28.06.2010, the appellant, under Clause 9 of the Facilitation Deed, sent a request for arbitration to ICC Singapore and the ICC issued a notice to the respondent to file its answer to the request for arbitration.

       The respondent filed a second suit before the High Court against the appellant for inter alia a declaration that as the Facilitation Deed stood rescinded, and the appellant was not entitled to invoke the arbitration clause in the Facilitation Deed. The respondent also filed an application for temporary injunction against the appellant from continuing with the arbitration proceedings commenced by the appellant under the aegis of ICC.

       Division Bench of the High Court passed an order of temporary injunction restraining the arbitration by ICC.

       Aggrieved, the appellant has filed this appeal.

       Finding of the Court:

       Impugned judgment is not sustainable. High Copurt ought to have referred the parties to arbitration.

       Result: Appeal allowed.