2014 Supreme(SC) 106

SUPREME COURT OF INDIA
SURINDER SINGH NIJJAR, FAKKIR MOHAMED IBRAHIM KALIFULLA, JJ.
Enercon (India) Ltd. & Others – Appellants
Versus
Enercon GMBH & Another – Respondents
Civil Appeal No. 2086 of 2014 (Arising Out Of SLP (C) No. 10924 of 2013) with Civil Appeal No.2087 of 2014 (Arising out of SLP (C) No. 10906 of 2013)
Decided On : 14-02-2014

IMPORTANT POINTS
Issue of concluded contract should be left to the Arbitral tribunal.
Arbitration agreement is Independent of main contract.
Seat of arbitration and venue of arbitration are different and choice of Curial law decides the seat.
Anti-suit injunction: factors to be considered.

Headnote:(a) Indian Contracts Act, 1872 – Sections 14 to20 r/w section 44, Arbitration and Conciliation Act, 1996 – Contract can be declared nullity on grounds of coercion, fraud or misrepresentation – No pleadings to that effect – Issue of concluded contract should be left to the Arbitral tribunal. (Para 75)

       (1975) 1 SCC 199; [1953] 1 WLR 280; [1965] 1 W.L.R. 1025; [1976] 1 WLR 591; (1968) 3 SCR 387; (2006) 1 SCC 751 – Referred

       (b) Arbitration and Conciliation Act, 1996 – Section 16 – Arbitration agreement – Materials on record clearly showing parties’ intention and agreement for arbitration in case of dispute – Existence or otherwise of a concluded contract becomes irrelevant in such situation – Severability – Arbitration clause forming part of a contract is an agreement independent of the contract – Arbitration agreement will not perish on non-finalisation of IPLA – Parties must proceed with arbitration – All difficulties can be addressed by arbitrator. (Para 77 to 81)

       (2012) 2 SCC 93; 2013 (7) SCALE 327 – Relied upon

       (2013) 1 SCC 641 – Referred

       (c) Company law – A company and the person holding 100% share of that Company cannot be two independent licensors. (Para 82)

       (d) Arbitration and Conciliation Act, 1996 – Section 7 – Arbitration clause – Interpretation – seemingly unworkable clause – Duty of court – To make the same workable within permissible limits – Court ought to adopt the attitude of a reasonable business person – Arbitration clause cannot be construed with a purely legalistic mindset, as if construing a statutory provision. (Para 83)

       [1985] 1 AC 191; (2009) 2 SCC 55; (2009) 4 SCC 495 – Relied upon

       (2009) 1 SCC 267 – Referred

       (e) Arbitration and Conciliation Act, 1996 – Section 44 – Officious bystander principle – Arbitral agreement providing for each party to nominate its arbitrator – Provision for appointment of third and presiding arbitrator – omission is so obvious that Court should supply the missing line. (Para 85)

       1937 S. 1835; (2006) 2 SCC 628 – Relied upon

       (f) Arbitration and Conciliation Act, 1996 – Sections 7, 8, 10 and 11 – Machinery provision – Parties free to determine number of arbitrators, which should not be even – Intention to go to arbitration can be gathered from correspondence, e-mails, statement of claims pleadings etc. – Instantly parties can be permitted to proceed to arbitration. (Para 88)

       AIR 1997 SC 605 – Relied upon

       (2007) 5 SCC 719; (1980) 4 SCC 556 – Referred

       (g) Arbitration and Conciliation Act, 1996 – Section 7 – ‘Venue’ and ‘seat’ of arbitration – Parties agreeing that provisions of the Act contained in chapters IV to VI would apply – By choosing Part I of the Act, parties made a choice for seat of arbitration in India – Further, parties agreeing to applicability of Indian law of contract, law governing the arbitration agreement and the law of arbitration/Curial law – Venue cannot be read as seat. (Para 90, 95, 105)

       1988 (1) Lloyd’s Rep 116; (2012) 9 SCC 552; [1970] 1 Lloyd’s Rep. 269: [1970] A.C.583]; [1981] 2 Lloyd’s Rep. 446; [2008]EWHC 426 (TCC) – Relied upon

       (h) Arbitration and Conciliation Act, 1996 – Section 20(1) and 20(3) – Parties agreeing that curial law will be the Arbitration and Conciliation Act, 1996 – Provision of section 20(3) applies. (Para 96)

       (19993) 2 Lloyd’s Rep 48; Sulame Rica – Relied upon

       (2012) 9 SCC 552 – Distinguished

       [1984] AC 398 – Referred

       (i) Arbitration and Conciliation Act, 1996 – Section 7 – Seat of arbitration – Choice of Curial law decides the seat. (Para 110)

       [2007] EWCA Civ 1282 – Relied upon

       (2009) 2 LLR 376 – Referred

       (j) Arbitration and Conciliation Act, 1996 – Section 7 – Seat of arbitration – ‘Close and most intimate connection’ – Arbitrations are anchored to the seat/place/situs of arbitration – All proceedings of arbitration need not be held at the seat of arbitration – Can be held at a place convenient to the parties – Seat of arbitration remains in India although the venue may be in London. (Para 125)

       (2012) 9 SCC 552; (19993) 2 Lloyd’s Rep 48; [2008] EWHC 426 (TCC); 1988 (1) Lloyd’s Rep 116 – Relied upon

       (k) Arbitration Laws – Seat and jurisdiction – Once seat is fixed in India, it would have exclusive jurisdiction to exercise the supervisory powers over the arbitration – Courts in England cannot have concurrent jurisdiction. (Para 128, 130, 136)

       [1984] AC 398; (2012) EWHC 3711(Comm); (2012) 9 SCC 552; (2009) 2 LLR 376; [2007] 1 Lloyds Report 237 – Relied upon

       (2010) 1 SCC 83; (1995) 6 SCC 571; (2011) 6 SCC 179; (2011) 6 SCC 161; (2011) 9 SCC 735 – Referred

       (l) Anti suit Injunction – Appellant’s prayer for anti-suit injunction granted by Daman Trial court – Seat of arbitration is in India – Parties are Indian and German – They have agreed on applicability of India Laws – Parties have participated in proceedings in India – Assets are in India – Injunction rightly granted against suit in English courts. (Para 143)

       1987 SCR (1) 10241987 SCR (1) 1024; (2003) 4 SCC 341; (2006) 9 SCC 41; (2005) 7 SCC 791 – Relied upon

       Facts of the case:

       Appellants No.2 and 3 and the Respondent No.1 entered into a joint venture business by setting up the Appellant No. 1-Company –Enercon (India) Ltd. (“EIL”), in 1994 having its registered office at Daman, to manufacture and sell Wind Turbine Generators (“WTGs”) in India. In furtherance of their business venture, the parties entered into various agreements.

       The Appellants claim that Respondent No.1, in February, 2007, unilaterally decided to stop all shipments of supplies to India in order to pressurize them to sell the share holding as desired by Dr. Wobben. However in March, 2007, after discussions between the parties, Respondent No.1 resumed supplies. Thereafter, the supplies were stopped once again in July, 2007 resulting in litigation.

       Respondent company invoked arbitration clause contained in IPLA agreement and appointed an arbitrator. The appellants denied the agreement and the arbitration clause. The Appellant also filed a suit in Daman court for declaration that there is no valid arbitration clause between the parties. However Appellant no. 1 appointed an arbitrator but both the arbitrators failed to agree on the third and presiding arbitrator.

       The litigation ended with the appellants filing writ petitions which the High Court dismissed.

       Finding of the Court:

       Seat of arbitration is India.