2017 Supreme(SC) 621

SUPREME COURT OF INDIA
Dipak Misra, R. Banumathi, JJ.
Roger Shashoua & Others – Appellant(s)
Versus
Mukesh Sharma & Others – Respondent(s)
CIVIL APPEAL NOS. 2841-2843 OF 2017 (@ S.L.P. (Civil) Nos. 22616-22618 of 2016)
Decided On : 04-07-2017

IMPORTANT POINTS
It is open to the parties to exclude application of provision of Part I of the Act, 1996 by express or implied agreement. Unless that is done, whole of Part I would apply.
If arbitration agreement is silent as to the law and procedure is to be followed in implementing the arbitration agreement, ordinarily, law governing the contract would be the law governing the arbitration agreement. In case the place of arbitration is in India, even under international commercial agreements to be governed by the laws of another country, provisions of Part I would apply.
Prospective overruling.
Clause declaring seat of arbitration is analogous to exclusive jurisdiction clause.
While interpreting an arbitration clause inconsistency between provisions of agreement and Part I of the Act, 1996 should be avoided.
Enercon (India) Ltd. is not per incuriam BALCO.
Mere filing of application before any court cannot clothe such court with jurisdiction unless the law vests the same in it.
Jurisdiction can neither be conferred with the consent of the parties nor by a superior court.
When the arbitration agreement provided inter alia that arbitration proceedings shall be in accordance with the Rules of the ICC Paris and the venue shall be in London, courts in London will have jurisdiction.

Headnote:(a) Arbitration and Conciliation Act, 1996 – Part I – Open to the parties to exclude application of provision of Part I by express or implied agreement – Unless that is done, whole of Part I would apply. (Para 12)

       (2002) 4 SCC 105; (2008) 4 SCC 190 – Relied upon

       (2012) 9 SCC 552 (BALCO) – Distinguished

       2009 EWHC 957 (Comm) 2; (2014) 5 SCC 1; (1992) 3 SCC 551 – Referred

       (b) Arbitration and Conciliation Act, 1996 – Part I – Arbitration agreement silent as to the law and procedure to be followed in implementing the arbitration agreement – In such case, ordinarily, law governing the contract would be the law governing the arbitration agreement – In case the place of arbitration is in India, even under international commercial agreements to be governed by the laws of another country, provisions of Part I would apply. (Para 14)

       (2002) 4 SCC 105; (2008) 10 SCC 308 – Relied upon

       (2005) 3 ALL ER 789; (1992) 3 SCC 551; (2009) 7 SCC 220 – Referred

       (c) Legal interpretation – Interpretation of judgment – Prospective overruling – BALCO overruling of Bhatia International – However, in view of Bhatia International having been followed by Supreme Court and all the High Court, ruling in BALCO declared to be operative prospectively. (Para 17)

       (2002) 4 SCC 105; (2008) 4 SCC 190; (2012) 9 SCC 552 – Referred

       (d) Arbitration and Conciliation Act, 1996 – Part I – Seat of arbitration – Analogous to exclusive jurisdiction clause – London being the juridical seat of arbitration and arbitration agreement governed by laws of England – Part I will not be applicable. (Para 21)

       (2014) 7 SCC 603 – Relied upon

       (2011) 6 SCC 161; (2011) 6 SCC 179; (1998) 1 SCC 305; (2011) 9 SCC 735; (2014) 5 SCC 1 – Referred

       (e) Arbitration and Conciliation Act, 1996 – Part I – Proper analysis and appreciation of stipulations of agreement required – Inconsistency between provisions of agreement and Part I should be avoided. (Para 25)

       2008 Bus LR D 137 (QBD) : 2008 EWHC 426 (TCC); (2012) 9 SCC 552 (BALCO); 2009 EWHC 957 (Comm) 2 – Referred

       (f) Interpretation of judgments – Precedent – Enercon (India) Ltd. accepting Shashoua principle – BALCO also accepting Shashoua principle – Therefore statement in Enercon (India) Ltd. that Shashoua principle has been accepted in BALCO not per incuriam. (Para 50)

       (2014) 5 SCC 1; (2012) 9 SCC 552; 2008 Bus LR 843 : 2007 EWCA Civ 1282 (CA); 2009 EWHC 957 (Comm) 2; (2014) 16 SCC 623; (2015) 10 SCC 333; (1989) 2 SCC 754; (2002) 4 SCC 234; (1964) 4 SCR 461 : AIR 1964 SC 1284; (1969) 2 SCC 412; (1991) 4 SCC 139; (1990) 1 SCC 109; (2016) 9 SCC 541; (1993) 2 Lloyd’s Rep 48; (1988) 1 Lloyd’s Rep 116 (CA) – Referred

       (g) Administration of justice – Binding precedent – Ratio decidendi – To be determined on reading the judgment in entirety – Law laid down to be considered keeping in view the questions arising in the case – Picking up a word or sentence will not constitute ratio decidendi – BALCO considering applicability of Part I or II of Arbitration and Conciliation Act, 1996 – Shashoua principle accepted in BALCO as well as Enercon (India) Ltd. on proper ratiocination. (Para 55, 56)

       2009 EWHC 957 (Comm) 2; (2012) 9 SCC 552; (2014) 5 SCC 1; (1976) 3 SCC 334; (2002) 4 SCC 638; (1992) 4 SCC 363; (1987) 1 SCC 213 – Relied upon

       (h) Administration of justice – Jurisdiction – Conferment of jurisdiction – Legislative function – Jurisdiction can neither be conferred with the consent of the parties nor by a superior court – Order/decree passed by a court having no jurisdiction over the matter, would amount to a nullity – Mere filing of application before any court cannot clothe such court with jurisdiction unless the law vests the same in it. (Para 62, 63, 64)

       (2011) 6 SCC 161; (2012) 4 SCC 307; (2013) 10 SCC 136; (2015) 7 SCC 690; AIR 1951 SC 230; AIR 1951 SC 230; (1996) 5 SCC 477; (1996) 7 SCC 711; (1999) 3 SCC 722; (2000) 6 SCC 650 – Relied upon

       (i) Arbitration – Jurisdiction – Arbitration agreement providing inter alia that arbitration proceedings shall be in accordance with Rules of ICC Paris and the venue shall be in London – English court rightly holding that courts in London will have jurisdiction – Arbitration and conciliation Act, 1996 – Section 34. (Para 68)

       (2014) 7 SCC 603 – Relied upon

       (1992) 3 SCC 551 – Distinguished

       Facts of the case:

       A petition under Section 34 of the Act was filed before the learned District Judge, Gautam Budh Nagar, Uttar Pradesh who vide order dated 06.07.2011 had not entertained the application on the ground of lack of territorial jurisdiction and returned it to be filed before the appropriate Court and the appeal arising therefrom filed before the High Court of Allahabad was dismissed on the ground of maintainability. Thereafter, Writ Petition was filed challenging the order of the District Judge, Gautam Budh Nagar. In the meantime, a petition under Section 34 of the Act came to be filed before the High Court of Delhi.

       Before the High Court the appellant took the stand that the application under Section 34 was not maintainable since Part I of the Act is not applicable regard being had to the arbitration clause in the agreement from which it is discernible that the courts in London have jurisdiction. Learned single Judge by the impugned order came to hold that application filed under Section 34 of the Act is maintainable and the Delhi High Court has the territorial jurisdiction to deal with the same and accordingly directed the objection to be filed under Section 34 before the Court.

       Finding of the Court:

       Courts in India do not have jurisdiction in the matter.

       Result: Appeal allowed.