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2011 Supreme(Mad) 2103
2011 (2) LW 654, 2011 (6) MLJ 432
High Court of Judicature at Madras
VINOD K. SHARMA
Secretary/General Manager, Central Cooperative Bank Ltd. & Another
Versus
S. Kamalaveni Sundaram
O.A.Nos.155 to 157 of 2011 & A.No.1002 of 2011
Decided on : 12-04-2011
For the Appellants:K.V. Viswanathan, Sr., Mary Mitzy, G.S. Chauhan, Shiv Prakash, Advocates.
For the Respondent:S. Aravindh, V. Balachandran, Advocates.
Headnote:
Arbitration and Conciliation Act, 1996 - Section 9 - Interim measures - Jurisdiction - Maintainability - Arbitration agreement - Validity - Exclusion of Part I of the Act - Proper law of contract - Procedural law of arbitration agreement - Curial law - Seat of arbitration.
Fact of the Case:
The applicant, a distributor of ACI's software products in India, moved three applications under Section 9 of the Arbitration and Conciliation Act, 1996 (the 'Act'), for grant of interim measures in relation to a Settlement and Release Agreement (SRA) entered into between the parties. The respondents, ACI Worldwide (Asia) Pvt. Ltd., Singapore, and others, contested the applications on merits and also raised a preliminary objection to the maintainability of the applications under Section 9 of the Act, arguing that the arbitration agreement between the parties excluded the jurisdiction of Indian Courts.
Finding of the Court:
The Court held that the arbitration agreement between the parties, Clause 14.6 of the SRA, was a valid and enforceable arbitration agreement. However, the Court also held that the provisions of Part I of the Act were excluded by the parties' agreement, as the proper law of the contract, the procedural law of the arbitration agreement, and the curial law were all foreign laws, and the seat of arbitration was Singapore. Therefore, the Court held that it had no jurisdiction to entertain and try the applications moved under Section 9.
Issues: 1. Whether Clause 14.6 of the SRA is a valid arbitration agreement? 2. Whether the provisions of Part I of the Act are excluded by the parties' agreement?
Ratio Decidendi: 1. The Court held that Clause 14.6 of the SRA is a valid arbitration agreement, as it satisfies the requirements of Section 7 of the Act and is an arbitration agreement within the meaning of Section 7(4)(c) of the Act. 2. The Court held that the provisions of Part I of the Act are excluded by the parties' agreement, as the proper law of the contract, the procedural law of the arbitration agreement, and the curial law were all foreign laws, and the seat of arbitration was Singapore. The Court relied on the judgment of the Supreme Court in Dozco India P.Ltd. v. Doosan Infracore Co. Ltd, where it was held that in case of international commercial arbitration, held out of India, provisions of part-1 of the Act would apply unless the parties by agreement, express or implied, excludes all or any of these provisions.
Final Decision: The Court dismissed all the applications moved under Section 9 of the Act, holding that it had no jurisdiction to entertain and try the applications.
1. The applicant M/s.Financial Software & Systems Pvt. Ltd. has moved three applications under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act'), for grant of interim measures.
2. In O.A.No.155 of 2011, the interim measures prayed for are for grant of ad-interim injunction restraining the respondents their affiliates, associates, agents, men, servants and / or any person/s claiming through or under the respondents either directly or indirectly from providing any support whatsoever nature to other System Integrators / Service Providers / Partners of the respondents, by whatever bane cakked, in violation of Clause 6 of the Settlement and Release Agreement (SRA) dated 17.02.2010.
3. In O.A.156 of 2011, the prayer made by the applicant is for grant of ad-interim injunction restraining the respondents their affiliates, associates, agents, men, servants and / or any person/s claiming through or under the respondents either directly or indirectly from invoicing the applicant's customer banks (listed in Schedule 1 of this application) without bifurcation of the applicant's intellectual properties and services and ACI's intellectual properties and services by the applicant and the respondents.
4. In O.A.No.157 of 2011, the prayer made is for appointment of receiver to raise AMC invoices for the period commencing from 01.04.2010 to 31.03.2011 on the existing customers (as listed in Schedule 1 of this application) of the applicant in the already existing format of the applicant and to receive the amounts so invoiced from the applicant's customers and to deposit the same in the bank account to be opened for this specific and exclusive purpose, pending disposal of the proposed arbitration proceedings.
5. Thereafter, another A.No.1022 of 2011 has been moved for grant of interim direction, directing the respondents to provide all required products, licenses, common development, environment and other support services including but not limited to product upgrades, version upgrades, fixes and release upgrades, etc as per the Purchase Order dated 7th January 2011 issued by Kotak Mahindra Bank, as agreed to between the applicant, Kotak Mahindra Bank and the respondents, to enable the applicant to meet the requirements of the RFP released by Kotak Mahindra Bank, on the basis the letter of support dated 2nd December 2010, issued by the 3rd respondent to Kotak Mahindra Bank.
6. In support of these applications, referred to above, in the affidavit, it is pleaded that the applicant was a distributor of ACI's software products, such as "BASE24" and "PRM" in India, under an International Distribution Agreement (IDA), executed on 29.04.1998, between the applicant and ACI Worldwide (Asia) Pvt. Ltd, Singapore, the 2nd respondent. In the year 2005, certain disputes and differences arose between the parties and to settle those disputes and differences, several rounds of discussions and consultations took place, which culminated into the Settlement and Release Agreement (SRA) dated 17.02.2010.
7. The very intention of SRA was to settle some of the disputes and differences, subject to fulfillment of the terms and conditions of the SRA. The pending disputes and differences were agreed to be settled in good faith by the parties. The applicant and ACI simultaneously entered into a letter agreement of even date agreeing to settle the pending disputes and differences in good faith, on or before 31.03.2010.
8. The disputes, which were agreed to be settled, read as under:
i. To modify the existing MCIND Agreement and transition the same to a new agreement to be called FSSNeT Processing Services Agreement on or before March 31, 2010.
ii. The Software Agreements / Customer Contracts identified in Exhibit C of the SRA included the Applicant's Intellectual Property and it was agreed that the parties will separate / bifurcate the Applicant's Intellectual Property from the Software Agreements and cause the customers to
