Ultrabulk Asia Pte A Company Incorporated Laws of Singapore v. Khuzema Bagwala
2025-08-01
SANJEEV S.KALGAONKAR, SANJEEV SACHDEVA
body2025
DigiLaw.ai
ORDER 1. Respondent has raised an objection with regard to maintainability of the present petition. 2. Firstly, it is contended that this petition is not maintainable before this Court, since the High Court of Madhya Pradesh does not have ordinary original civil jurisdiction and the application, if any, is liable to be filed before the Principal Court of Civil Jurisdiction, which would impliedly the District Court. Secondly, it is contended that since in Clause 19 of the Deed of Settlement and Guarantee dated 25th May 2023, parties have agreed that the dispute shall be governed by the Laws of England, there is exclusion, by implication of Part-I of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act). 3. Reference may be had to section 2(1) (e) of the Act, which read as under : "(e) “Court” means :-- (i) in the case of an arbitration other than international commercial arbitration, the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any Civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes; (ii) in the case of international commercial arbitration, the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, and in other cases, a High Court having jurisdiction to hear appeals from decrees of Courts subordinate to that High Court;” 4. Section 2(1)(e) of the Act stipulates three situations. One; where ‘arbitration’ is other than ‘international commercial arbitration’, Court is defined to mean the Principal civil Court of original jurisdiction in a district, and includes High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions, forming subject matter of arbitration, but excludes a civil Court of a grade inferior to such principal civil Court, or any Court of Small Causes.
Second; situation contemplated is, in case of international commercial arbitration, where the High Courts have ordinary original civil jurisdiction and third; where the High Courts do not have ordinary original civil jurisdiction but, have jurisdiction to hear appeals from decrees of Courts subordinate to the High Court. 5. In arbitrations other than international commercial arbitration, High Court would be included in the definition of Court only if it exercises ordinary original civil jurisdiction. In international commercial arbitration, those High Courts that exercise ordinary original civil jurisdiction and those High Courts that though do not exercise ordinary original civil jurisdiction but have jurisdiction to hear appeals from decrees of Courts subordinate to it would be included in the definition of Court. 6. In the instant case, admittedly, the High Court of Madhya Pradesh does not have ordinary original civil jurisdiction, however, the High Court of Madhya Pradesh has jurisdiction to hear appeals from decrees of Courts subordinate to this Court. It thus falls in the third category. Consequently, in case of the International Commercial Arbitration, ‘Court’ as defined in section 2(1)(e)(ii) of the Act would include the High Court of Madhya Pradesh. 7. The second contention of learned counsel for the respondent that there is exclusion of Part - 1 of the Act by implication, also does not have any merit. Said objection does not take into account the proviso to section 2(2) of the Act that was inserted by the Amendment Act, 2015 (w.e.f. 23.10.2015). 8. section 2 (2) reads as under : “2(2). This part shall apply where the place of arbitration is in India: Provided that subject to an agreement to the contrary, the provisions of sections 9, 27 and [Clause (b)] of Sub-section (1) and sub-section (3) of section 37 shall also apply to International Commercial Arbitration, even if the place of arbitration is outside India, and an arbitral award made or to be made in such place is enforceable and recognized under the provisions of Part II of this Act.” 9. Proviso to section 2(2) of the Act, stipulates that subject to an agreement to the contrary, provisions of section 9, 27 and Clause 8 of sub-section 1 and sub-section 3 of section 37 shall also apply to International Commercial Arbitration. Said provisions apply even if the place of arbitration is outside India.
Proviso to section 2(2) of the Act, stipulates that subject to an agreement to the contrary, provisions of section 9, 27 and Clause 8 of sub-section 1 and sub-section 3 of section 37 shall also apply to International Commercial Arbitration. Said provisions apply even if the place of arbitration is outside India. Clearly, said proviso makes the provisions of sections 9, 27 and 37 (1)(a) and 37(3) applicable to International Commercial Arbitration, unless parties have agreed to the contrary. 10. The Supreme Court of India, while discussing the scope of Arbitration under section 2(2) of the Act, as amended by the Amendment Act of 2015, it was held in the case of Mankastu Impex (P) Ltd v. Airvisual Ltd (2020) 5 SCC 399 that by the Amendment Act, 2015 (w.e.f. 23/10/2015), a proviso has been added to section 2 Sub-Clause 2 of the Act, as per which, certain provision of Part 1 of the Act i.e. section 9 - interim relief - section 27 - Court Assistance for evidence, section 37(1)(a)- appeal against the orders and section 37 (3) have been made applicable to “International Commercial Arbitrations”, even if the place of arbitration is outside India. 11. Applicability of provisions of section 9, 27 and Clause 8 of Sub-section 1 and Sub-section 3 of section 37 of the Act can be excluded by the parties if they agree to the contrary. 12. In the instant case, as per the respondent, parties by incorporating Clause 19 in the agreement have by necessary implication excluded applicability of Part-1 of the Act. 13. Reference may be had to Clause - 19 of the Agreement, which reads as under : “19. This Deed (and any non-contractual obligations arising in connection with it) shall be governed by, and construed in accordance with, English law and any dispute arising out of or in connection with this Deed shall be referred to arbitration in London subject to current LMAA Terms as if it were a dispute arising under the character party. If a multiparty dispute arises hereunder, each Party shall appoint one arbitrator and the LMAA appointment terms current at the date thereof shall apply to the appointment procedure, mutatis mutandis.” 14. The contention of learned counsel for the respondent that Clause - 19 of the agreement constitutes an agreement to the contrary to the proviso to section 2(2) has no merit. 15.
The contention of learned counsel for the respondent that Clause - 19 of the agreement constitutes an agreement to the contrary to the proviso to section 2(2) has no merit. 15. Clause 19 of the Agreement stipulates that the Deed (Agreement) shall be governed by English Law and any dispute arising out of or in connection with the deed shall be referred to arbitration in London subject to LMAA Terms. 16. It is settled position of law that exclusion of a statutory provision has to be express and cannot be implied. For the exclusion clause to operate, it is imperative that the exclusion should have been expressly agreed to by the parties and should not be merely inferred from the conduct or correspondence. 17. Reference may be had to the judgment of the Supreme Court of India in PASL Wind Solutions (P) Ltd v. GE Power Conversion (India) (P) Ltd (2021) 7 SCC page 1, wherein the Supreme Court in para-38 has held as under : “38. As a matter of fact pursuant thereto, a proviso has now been inserted to section 2(2), which only makes it clear that where, in an arbitration which takes place outside India, assets of one of the parties are situated in India interim orders are required qua such assets, including preservation thereof, the Courts in India may pass such orders.” 18. The Supreme Court in PASL Wind Solutions (supra) held that even where arbitration takes place outside India but assets of one of the parties is situated in India, the Courts in India may pass interim orders qua those assets including for preservation thereof. 19. Similarly, a Division Bench of the High Court of Judicature at Bombay in Hellgo Charters Private Limited v. Alrcon Felbars FZE (29.6.2018 -HOMHC) MANU/MH/1987/2018 has specifically held that an application under section 9 of the Act would be maintainable for International Commercial Arbitration, even if the parties agreed to be governed by Laws of Singapore for arbitration. 20. Reference may also be had to the judgment of a Division Bench of the Delhi High Court, in Shanghai Electric Group Co. Ltd Versus Reliance Infrastructure Ltd. 2024 SCC Online Del 1606, where one of us (Sanjeev Sachdeva CJ), was a party.
20. Reference may also be had to the judgment of a Division Bench of the Delhi High Court, in Shanghai Electric Group Co. Ltd Versus Reliance Infrastructure Ltd. 2024 SCC Online Del 1606, where one of us (Sanjeev Sachdeva CJ), was a party. To a similar plea raised by the Respondent with regard to implied exclusion of applicability of section 9 of the Act, as the parties therein had agreed to a foreign seated arbitration, the Division Bench held as under : “38. The third objection raised by the Respondent is that applicability of section 9 of the Arbitration Act was excluded in terms of proviso to section 2(2) of the Arbitration Act. 39. Reference may be had to section 2(2) of the Arbitration Act which reads as under: “(2) This Part shall apply where the place of arbitration is in India : Provided that subject to an agreement to the contrary, the provisions of sections 9, 27 and clause (a) of sub-section (1) and sub-section (3) of section 37 shall also apply to international commercial arbitration, even if the place of arbitration is outside India, and an arbitral award made or to be made in such place is enforceable and recognised under the provisions of Part II of this Act.” 40. Proviso to section 2(2) of the Arbitration Act specifically provides that provision of section 9 shall apply to International Commercial Arbitration unless there is an agreement to the contrary. The contention of the Objector is that having agreed to a foreign seated institutional arbitration and agreeing to applicability of English Law, the parties agreed to exclude applicability of section 9. 41. This argument is to be rejected for the asking. The fact that the proviso specifically makes the provision of section 9 applicable to international commercial arbitration presupposes that parties would have agreed to a foreign seated arbitration. If parties do not agree to a foreign seated arbitration, there would be no international commercial arbitration, the arbitration would be a domestic arbitration. 42. There is no express exclusion pleaded by the Respondent, the exclusion is pleaded on the ground that parties agreed to a foreign seated arbitration and the applicability of English Law. As noted above, a petition for enforcement would lie where the asset is situated and as such a petition for interim protection of the asset would also lie where the asset is situated.” 21.
As noted above, a petition for enforcement would lie where the asset is situated and as such a petition for interim protection of the asset would also lie where the asset is situated.” 21. In the present case, there is no express stipulation in the agreement between the parties that the provisions of section 9 of the Act would not be application. The exclusion is sought to be implied by merely agreeing to a foreign seated arbitration and applicability of English Law. Exclusion by implication cannot be inferred in facts of the present case. Further, the assets in respect of which orders are also situated in Indore, within the territorial jurisdiction of this Court. 22. In view of the above, we find no merit in the objection raised by the respondent. The objection is accordingly overruled. 23. Learned counsel for the respondent submits that petitioner has sought attachment/injunctive relief in respect of assets of the respondent that are worth more than the claim of the petitioner. 24. Accordingly, respondent is directed to file an affidavit giving details of its liquid assets, inter alia balance in his bank accounts as also the value of his other assets within a period of two weeks. 25. List the matter after two weeks.