2002 Supreme(MP) 321

2003(1) JLJ 264
SUPREME COURT
G.B. Pattanaik, S.N. Phukan and S.N. Variava, JJ.
Bhatia International
Versus
Bulk Trading S.A. and another
Civil Appeal No. 6527 of 2001; against order of the M.P. High Court passed in W.P. No. 453 of 2000;
Decided on 13.3.2002.

Headnote:(1) Arbitration and Conciliation Act, 1996 -- Ss. 9, 2(2) and Part I -- UNCITRAL Model Law -- Art. 1(2) -- arbitration taking place out side India -- S. 9 and Part I apply.

       The appellant entered into a contract with the 1st respondent on 9.5.1997. This contract contained an arbitration clause which provided that arbitration was to be as per the rules of the International Chamber of Commerce (for short "ICC"). On 23.10.1997, the 1st respondent filed a request for arbitration with ICC. Parties agreed that the arbitration be held in Paris, France. ICC has appointed a sole arbitrator.

       The 1st respondent filed an application under section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter called "the said Act") before the IIIrd Additional District Judge, Indore, M.P. against the appellant and the 2nd respondent. One of the interim reliefs sought was an order of injunction restraining these parties from alienating, transferring and/or creating third-party rights, disposing of, dealing with and/or selling their business assets and properties. The appellant raised the plea of maintainability of such an application. The appellant contended that Part I of the said Act would not apply to arbitrations where the place of arbitration is not in India. This application was dismissed by the IIIrd Additional District Judge on 1.2.2000. It was held that the Court at Indore had jurisdiction and the application was. maintainable. The appellant filed a writ petition before the High Court of Madhya Pradesh, Indore Bench. The said writ petition has been dismissed by the impugned judgment dated 10.10.2000.

       On behalf of the appellants, Mr. Sen submits that Part I of the said Act only applies to arbitrations where the place of arbitration is in India. He submits that if the place of arbitration is not in India then Part II of the said Act would apply. [Paras 2 to 4

       Mr. Sen had also relied upon Article 1(2) of the UNCITRAL Model Law and had submitted that India has purposely not adopted this article. He had submitted that the fact that India had not provided (like in the UNCITRAL Model Law) that section 9 would apply to arbitral proceedings which take place out of India, indicated the intention of the Legislature not to apply section 9 to such arbitrations.

       Held: We are unable to accept this submission. Article 1(2) of the UNCITRAL Model Law reads as follows :

       "(2) The provisions of this law, except Articles 8, 9, 35 and 36, apply only if the place of arbitration is in the territory of this State." (emphasis supplied)

       Thus, Article 1(2) of the UNCITRAL Model Law uses the word "only" to emphasize that the provisions of that law are to apply if the place of arbitration is in the territory of that State. Significantly, in section 2(2), the word "only" has been omitted. The omission of this word changes the whole complexion of the sentence. The omission of the word "only" in section 2(2) indicates that this sub-section is only an inclusive and clarificatory provision. As stated above, it is not providing that provisions of Part I do not apply to arbitrations which take place outside India. Thus, there was no necessity of separately providing that section 9 would apply. [Para 27

       In our view, a proper and conjoint reading of all the provisions indicates that Part I is to apply also to international commercial arbitrations which take place out of India, unless the parties by agreement, express or implied, exclude it or any of its provisions. Such an interpretation does not lead to any conflict between any of the provisions of the said Act. On this interpretation, there are no lacunae in the said Act. This interpretation also does not leave a party remediless. Thus, such an interpretation has to be preferred to the one adopted by the High Courts of Orissa, Bombay, Madras, Delhi and Calcutta. It will, therefore, have to be held that the contrary view taken by these High Courts is not good law. AIR 2000 Delhi 377, 1998 A.POs. No. 490, 499 of 1997, CS No. 592/97 (Cat.) overruled, order of M.P. High Court affirmed. [Para 35

       (2) Arbitration and Conciliation Act, 1996 -- Part. I and S. 2(1) (f) -- international com1nercial arbitration whether held in India or out of India -- provisions of the Act are applicable. [Para 16

       By omitting to provide that Part I will not apply to international commercial arbitrations which take place outside India, the effect would be that Part I would also apply to international commercial arbitrations held out of India. But by not specifically providing that the provisions of Part I apply to international commercial arbitrations held out of India, the intention of the Legislature appears to be to allow parties to provide by agreement that Part I or any provision therein will not apply. Thus, in respect of arbitrations which take place outside India, even the non-derogable provisions of Part I can be excluded. Such an agreement may be express or implied. [Para 21

       (3) Arbitration and Conciliation Act, 1996 -- S. 28 Part. I -- S. 28 -- does not provide for rules where place of arbitration is out of India -- where place of arbitration is in India, rules are applicable.

       Section 28 is in Part I. If Part I was not to apply to an arbitration which takes place outside India, there would be no necessity to specify that the rules are to apply ‘‘where the place of arbitration is situate in India". ... In international commercial arbitrations, parties are at liberty to choose, expressly or by necessary implication the law and the procedure to be made applicable. The procedure or the rules governing such arbitration may be of the country where the arbitration is being held or the body under whose aegis the arbitration is being held -- all bodies which conduct arbitrations and all countries which have rules and laws governing arbitrations. Thus section 28 does not provide for rules where the place of arbitration is out of India. (1992) 3 SCC 551 relied on. [Para 25]

       (4) Arbitration and Conciliation Act, 1996 -- Ss. 45 and 54 Parts I & II -- arbitration taking place outside India -- Part I also applies with Part II -- if not specifically excluded by putting non-obstante clause as under Ss. 45 and 54. [Para 26

       (5) Arbitration and Conciliation Act, 1996 -- object of -- is to establish a uniform legal framework for the fair and efficient settlement of disputes arising in international commercial arbitration. [Para 15

       (6) Interpretation of Statutes -- conventional way -- is to seek the intention of its maker -- provision open to more than one interpretation -- Court has to choose one which represents true intention of the Legislature. [Para 15

       (7) Courts -- interpreting a statute -- are held as ‘finishers‘, ‘refiners‘ and ‘polishers‘ of legislation which comes to them in a state requiring ‘varying degrees of further processing. (1968) 2 All ER 1059 and AIR 1975 se 1952 relied on. c. [Para 15

       (8) Interpretation of Statutes -- constructim resulting in hardship should be avoided -- Court would adopt the construction which is just, reasonable and sensible. (1978) 3 All ER 37, (1978) 1 All ER 948 and AIR 1961 SC 1549 relied on. [Para 15

       ¼1½ ek/;LFke~ vkSj lqyg vf/kfu;e] 1996 && /kkjk 9] 2¼2½ rFkk Hkkx 1 && ;w ,u lh vkb Vh vkj , ,y ekMy fof/k && vuq- 1¼2½ && ek/;LFke~ Hkkjr ls ckgj && /kkjk 9 rFkk Hkkx 1 ykxw gksrs gSaA

       vihykFkhZ us 9-5-1997 dks izFke izR;FkhZ ds lkFk lafonk dhA bl lafonk esa ,d e/;LFke~ [kaM varfoZ"V Fkk ftlesa micaf/kr Fkk fd e/;LFke~] baVjus‘kuy psacj vkQ dkelZ ¼la{ksi esa ^^vkb lh lh**½ ds fu;ekuqlkj gksxkA 23-10-1997 dks izFke izR;FkhZ us vkb lh lh ds le{k e/;LFke~ dk vuqjks/k Qkby fd;kA i{kdkjksa esa lgefr gqbZ fd e/;LFke~ isfjl] Ýkal esa fd;k tk,A vkb lh lh }kjk ,dek= e/;LFk fu;qDr fd;k x;k gSA

       izFke izR;FkhZ us vihykFkhZ rFkk f}rh; izR;FkhZ ds fo:) r`rh; vfrfjDr ftyk U;k;k/kh‘k] bankSj] e-iz- ds le{k e/;LFke~ vkSj lqyg vf/kfu;e] 1996 dh /kkjk 9 ds v/khu vkosnu Qkby fd;kA bZfIlr varfje vuqrks"kksa esa ls ,d] bu i{kdkjksa dks mudh dkjckjh vkfLr;ksa rFkk laifÙk dk vU;laØke.k djus] varj.k djus vkSj@vFkok ijO;fDr vf/kdkj l`ftr djus] O;;u djus] muds ckjs esa O;ogkj djus vkSj@vFkok foØ; djus ls vo:) djus dk vkns‘k FkkA vihykFkhZ us ,sls vkosnu ds pyus ;ksX; gksus ds ckjs esa vfHkokd~ fd;kA vihykFkhZ us ladFku fd;k fd mDr vf/kfu;e dk Hkkx 1 mu ek/;LFkeksa dks ykxw ugha gksxk tgk¡ ek/;LFke~ dk LFkku Hkkjr esa ugha gSA ;g vkosnu r`rh; vfrfjDr ftyk U;k;k/kh‘k }kjk 1-2-2000 dks [kkfjt dj fn;k x;kA vfHkfu/kkZfjr fd;k x;k fd bankSj ds U;k;ky; dks vf/kdkfjrk Fkh rFkk vkosnu pyk, tkus ;ksX; FkkA vihykFkhZ us e/; izns‘k mPp U;k;ky; dh bankSj U;k;ihB ds le{k fjV ;kfpdk Qkby dhA

       vihykFkhZx.k dh vksj ls Jh lsu us fuosnu fd;k gS fd mDr vf/kfu;e dk Hkkx 1 dsoy mu ek/;LFkeksa dks ykxw gksrk gS tgk¡ e/;LFke~ dk LFkku Hkkjr esa gSA mudk fuosnu gS fd ;fn e/;LFke~ dk LFkku Hkkjr esa ugha gS rc mDr vf/kfu;e dk Hkkx 2 ykxw gksxkA ¿ iSjk 2 ls 4

       Jh lsu ;w ,u lh vkb Vh vkj , ,y ekMy fof/k ds vuqPNsn 1¼2½ dk Hkh voyac fy;k rFkk fuosnu fd;k fd Hkkjr esa ;g vuqPNsn iz;kstuiwoZd vaxhd`r ugha fd;k x;k gSA mUgkaus fuosnu fd;k fd bl rF; ls fd Hkkjr esa ¼;w ,u lh vkb Vh vkj , ,y ekMy fof/k ds leku½ ;g micaf/kr ugha fd;k x;k Fkk fd /kkjk 9 mu ek/;LFke~ dk;Zokfg;ksa dks ykxw gksxh tks Hkkjr ls ckgj gksa] /kkjk 9 ,sls e/;LFkeksa dks ykxw ugha djus dk fo/kku eaMy dk vk‘k; minf‘kZr gksrk gSA

       vfHkfu/kkZfjr % ge ;g fuosnu Lohdkj djus ea vleFkZ gSaA ;w ,u lh vkb Vh vkj , ,y ekMy fof/k ds vuqPNsn 1¼2½ dk ikB fuEukuqlkj gS %

       ^^¼2½ bl fof/k ds mica/k] vuqPNsn 8] 9] 35 rFkk 36 ds flok;] dsoy rc ykxw gksaxs ;fn e/;LFke~ dk LFkku bl jkT; ds {ks= esa gksaA** ¼ckyk?kkr iznÙk½

       vr%] ;w ,u lh vkb Vh vkj , ,y ekMy fof/k ds vuqPNsn 1¼2½ esa ‘‘kCn ^^dsoy** bl ij cy nsus ds fy, iz;qDr gS fd ml fof/k ds mica/k rc ykxw gksaxs tc ek/;LFke~ dk LFkku ml jkT; ds {ks= esa gksA egRoiw.kZ gS fd /kkjk 2¼2½ esa ‘‘kCn ^^dsoy** yqIr fd;k x;k gSA bl ‘‘kCn dk yksi ls okD; dk iw.kZ Lo:i cny tkrk gSA /kkjk 2¼2½ esa ‘‘kCn ^^dsoy** ds yksi ls minf‘kZr gksrk gS fd ;g mi/kkjk dsoy lekos‘kh vkSj Li"Vhdj.k mica/k gSA Åij ;Fkk dfFkr] blesa ;g micaf/kr ugha gS fd Hkkx 1 ds mica/k mu ek/;LFkeksa dks ykxw ugha gksrs tks Hkkjr ls ckgj gksaA vr% i`Fkd~r% ;g micaf/kr djus dh vko‘;drk ugha Fkh fd /kkjk 9 ykxw gksxhA ¿ iSjk 27

       gekjh jk; esa] lc mica/kksa ds mfpr rFkk la;qDr ikB ls minf‘kZr gksrk gS fd Hkkjr ls ckgj gksus okys varjkZ"Vªh; okf.kfT;d e/;LFkeksa dks Hkh Hkkx 1 ykxw gksxk] tc rd i{kdkj lqO;Dr vFkok foof{krdjkj }kjk mls ;k mlds fdUgha mica/kksa dks vioftZr ugha djrsA ,sls fuoZpu ls mDr vf/kfu;e ds fdUgha Hkh mica/kksa esa fojks/k mRiUu ugha gksrkA ,slk fuoZpu djus ij mDr vf/kfu;e esa dksbZ deh ugha jgrhA bl fuoZpu ls dksbZ Hkh i{k mipkjjfgr Hkh ugha jgrkA vr%] mM+hlk] cacbZ] enzkl] fnYyh rFkk dydÙkk ds mPp U;k;ky;ksa }kjk vaxhd`r fuoZpu ds ctk; ,sls fuoZpu dks vf/keku fn;k tkuk gksxkA vr%] vfHkfu/kkZfjr fd;k tkuk gksxk fd mu mPp U;k;ky;ksa }kjk viuk;k x;k izfrdwy n`f"Vdks.k ekU; fof/k ugha gSA , vkb vkj 2000 fnYyh 377] 1998 , ih vks Ø- 490] 499 lu~ 1997] flfoy okn Ø- 592@97 ¼dy-½ myVs x,A e/; izns‘k mPp U;k;ky; dk vkns‘k vfHkiq"VA ¿ iSjk 35

       ¼2½ ek/;LFke~ vkSj lqyg vf/kfu;e] 1996 && Hkkx 1 rFkk /kkjk 2¼1½¼p½ && varjkZ"Vªh; okf.kfT;d ek/;LFke~ pkgs Hkkjr esa gks ;k Hkkjr ls ckgj && vf/kfu;e ds mica/k ykxw gksrs gSaA ¿ iSjk 16

       bl mica/k ds yksi dk] fd Hkkx 1 mu varjkZ"Vªh; okf.kfT;d ek/;LFkeksa dks ykxw ugha gksxk tks Hkkjr ls ckgj gksrs gSa] izHkko ;g gksxk fd Hkkx 1 Hkh Hkkjr ds ckgj gksus okys varjkZ"Vªh; okf.kfT;d ek/;LFkeksa dks ykxw gksxkA ijarq fofufnZ"Vr% ;g micaf/kr ugha djus esa fd Hkkx 1 ds mica/k Hkkjr ls ckgj gksus okys varjkZ"Vªh; okf.kfT;d ek/;LFkeksa dks ykxw gksrk gS] fo/kku&eaMy dk vk‘k; i{kdkjksa dks djkj }kjk ;g micaf/kr djus nsus dk izrhr gksrk gS fd Hkkx 1 vFkok rn/khu dksbZ mica/k ykxw ugha gksxkA vr%] mu ek/;LFkeksa ds laca/k esa tks Hkkjr ls ckgj gksrs gSa] Hkkx 1 ds og mica/k Hkh vioftZr fd, tk ldrs gSa ftudk vYihdj.k ugha fd;k tk ldrkA ,slk djkj lqO;Dr vFkok ijks{k gks ldrk gSA ¿ iSjk 21

       ¼3½ ek/;LFke~ vkSj lqyg vf/kfu;e] 1996 && /kkjk 28 Hkkx 1 && /kkjk 28 && ek/;LFke~ dk LFkku Hkkjr ls ckgj gksus dh fLFkfr esa fu;e micaf/kr ugha && tgk¡ ek/;LFke~ dk LFkku Hkkjr esa gS ogk¡ fu;e ykxw gksrs gSaA

       /kkjk 28 Hkkx 1 esa gSA ;fn Hkkx 1 ,sls ek/;LFke~ dks ykxw ugha gksuk gksrk tks Hkkjr ls ckgj gks] rc ;g fofufnZ"V djus dh vko‘;drk ugha gksrh fd fu;e ogk¡ ykxw gksaxs ^^tgk¡ ek/;LFke~ dk LFkku Hkkjr eas fLFkr gS**A ----varjkZ"Vªh; okf.kfT;d ek/;LFkeksa esa i{kdkj] lqO;Drr% vFkok vko‘;d foo{kk }kjk] ykxw dh tkus okyh fof/k rFkk izfØ;k pquus dks Lora= gSaA ,slk ek/;LFke~ fofu;fer djus okys izfØ;k ;k fu;e ml ns‘k ds gks ldrs gSa tgk¡ ek/;LFke~ fd;k tk jgk gS vFkok mldk fudk; ds gks ldrs gSa ftlds rRoko/kku esa ek/;LFke~ gks jgk gS && og lc fudk; ftuds }kjk ek/;LFke~ fd;k tkrk gS rFkk og lc ns‘k ftuesa ek/;LFke~ fofu;fer djus ds fu;e rFkk fof/k;k¡ gSaA bl izdkj] /kkjk 28 esa ogk¡ fu;e micaf/kr ugha gSa tgk¡ ek/;LFke~ dk LFkku Hkkjr ls ckgj gSA ¼1992½3 ,l lh lh 551 voyafcrA ¿ iSjk 25

       ¼4½ ek/;LFke~ vkSj lqyg vf/kfu;e] 1996 && /kkjk 45 rFkk 54( Hkkx 1 ,oa 2 && ek/;LFke~ Hkkjr ls ckgj && /kkjk 45 rFkk 54 ds v/khu loksZifj [kaM Mky dj fofufn"Vr% vioftZr ugha fd;k x;k gks rc Hkkx 2 ds lkFk&lkFk Hkkx 1 Hkh ykxw gksrk gSA ¿ iSjk 25

       ¼5½ ek/;LFke~ vkSj lqyg vf/kfu;e] 1996 && mn~ns‘; && varjkZ"Vªh; okf.kfT;d vioftZr ugha fd;k x;k gks rc Hkkx 2 ds lkFk&lkFk Hkkx 1 Hkh ykxw gksrk gSA ¿ iSjk 15

       ¼6½ fof/k dk fuoZpu && :f<+xr rjhdk && mlds fuekZrk dk vk‘k; tkuuk gS && mica/k ds ,dkf/kd fuoZpu laHko && U;k;ky; }kjk og pquk tkuk gksxk ftlls fo/ku&eaMy ds lgh vk‘k; dk izfrfuf/kRo gksrk gksA ¿ iSjk 15

       ¼7½ U;k;ky; && dkuwu dk fuokZpu djrs le; && ml fo/kku dks ^ifj"d`r djus okys*] ^‘kks/ku djus okys* rFkk ^ifjektZu djus okys* vfHkfu/kkZfjr fd, x, gSa tks muds ikl ,slh voLFkk esa vkrk gS ftlesa vkxs fHkUu&fHkUu ek=k esa izlaLdj.k visf{kr gksrk gSA ¼1968½2 vky bZ vkj 1059 rFkk , vkb vkj 1975 ,l lh 1952 voyafcrA ¿ iSjk 15

       ¼8½ fof/k dk fuoZpu && dfBukbZ esa ifj.kr gksus okys ‘‘kCn&foUkl ls cpuk pkfg, && U;k;ky; }kjk ogh ‘‘kCn&foUkl vaxhd`r fd;k tk,xk tks _tq] ;qfDr;qDr rFkk lehphu gSA ¼1978½3 vky bZ vkj 37] ¼1978½1 vky bZ vkj 948 rFkk , vkb vkj 1961 ,l lh 1549 voyafcrA ¿ iSjk 15