IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO.519 OF 2002 APPEAL NO.519 OF 2002 APPEAL NO.519 OF 2002 IN ARBITRATION PETITION NO.49 OF 2000 Jindal Drugs Limited, a Company ) incorporated under the Companies ) Act, 1956, having its registered ) office at 145 Maker Chambers VI, ) 220, Nariman Point, Mumbai-400 021)..Appellants Versus 1. Noy Vallesina Engineering SpA, ) a corporation organised and ) existing under the laws of Italy) having its registered office at) Via Sant’ Alberto,1-24020 ) Parre (BG) Italy. ) 2. Mr.Richard Fernyhough Q.C. ) having his office at Keating ) Chambers, 10 Essex Street, ) London WC2 3AA, United Kingdom ) 3. Mr.Alberto Santa Maria ) having his office at Studio ) Legale Santa Maria, Galleria ) San Babila, 4/B, 20122 ) Milano, Italy ) 4. Mr.Berjis M.Desai ) having his office at 3rd Floor ) 324, Dr.D.N.Road, Fort, ) Mumbai-400 001. ) 5. Mr.Ashok Sancheti ) having his business address at ) 124, New Bond Street, London ) WIS IDX, United Kingdom )..Respondents ---- Dr.Virendra Tulzapurkar, Senior Counsel alongwith Miss.Alpana Ghone i/by DSK Legal for the appellants. Mr.F.E.D’vetre, Senior Counsel alongwith Divesh Chamboowala i/by A.T.Agarwal for the respondents. ---- Coram : SRI.R.M.S.KHANDEPARKAR & Coram : SRI.R.M.S.KHANDEPARKAR & Coram : SRI.R.M.S.KHANDEPARKAR & SRI.R.S.MOHITE,JJ SRI.R.S.MOHITE,JJ SRI.R.S.MOHITE,JJ : 2 : Date : 28.04.2008. JUDGMENT :- ( PER : R.S.MOHITE,J) JUDGMENT :- ( PER : R.S.MOHITE,J) JUDGMENT :- ( PER : R.S.MOHITE,J) 1. By this appeal Jindal Drugs Ltd., (hereinafter referred to as the "appellants) impugns a judgment and order passed by the learned single Judge of this Court on 6.2.2002 in Arbitration Petition No.49 of 2000. By the said judgment and order the single Judge dismissed the petition filed by the appellants under Section 34 of the Arbitration and Conciliation Act 1996 on the sole ground that the same was not maintainable in law. 2. The brief relevant facts of the case are as under :- (a) That on 30.1.1995 the appellant which was a company incorporated in India, entered into four related agreements with a company by name Enco Engineering Chur A.G. of Sagenstrasse which was a company incorporated under the laws of Switzerland. One of these four agreements was known as "Engineering Contract for Ascorbic Acid Plant (ECAAP)". (b) By a further tri-partite agreement executed on 1.3.1995 by and between the petitioner, Enco and another company incorporated in Italy by name of Noy : 3 : Vallesina Engineering SPA (hereinafter referred to as ‘respondent no.1’), a transfer of rights was effected and pursuant to Article 12.1 of the said transfer agreement the rights and obligations under ECAAP were assigned to respondent no.1 and Enco was released from such assigned obligations. (c) Clause 12.4 of the ECAAP made provisions for "applicable law and arbitration". It was further sub-divided into clauses 12.4.1 and 12.4.2. These clauses were in the following terms :- 12.4 Applicable law and arbitration 12.4.1 This ENGINEERING CONTRACT shall be governed by the laws of India " 12.4.2 In all cases of disputes or disagreements between the parties as to any matter arising out of or relating to this ENGINEERING CONTRACT and provided no understanding between the parties can be reached for the settlement of the difference, the matter shall be finally settled by Arbitration under the rules of Conciliation and Arbitration of the International Chamber of Commerce, Paris, and Arbitration proceedings shall be in English language and shall take place in : 4 : London. The decision of such arbitration shall be final and binding on the parties." (d) As disputes arose between the appellant and respondent no.1, on 31.10.1996, the appellants served a request for arbitration on the International Chamber of Commerce in Paris. The appellant claimed damages from respondent no.1 on account of alleged mis-representation and breaches of the ECAAP. The appellant further claimed that it had terminated the ECAAP on 10.7.1996. On this request the arbitration proceedings were taken up by the Arbitral Tribunal. Respondent no.1 filed a counter claim and at the end of the arbitration, the Arbitral Tribunal handed out a partial award fixing the liability. The appellants’ claim was dismissed and it was held that respondent no.1 was entitled to recover from the appellants a sum of Swiss Fr. 4,433,316/-. The Arbitral Tribunal decided that the question of award and interest would be decided later, after the parties filed their further submissions. The award so made was a majority award by the Arbitral Tribunal. (e) That after the passing of this partial award, on 28.2.2000, the appellants filed in this Court, an Arbitration Petition bearing No.49/2000. This petition was admitted by this Court on 1.3.2000. : 5 : During its pendency the petition was amended and the appellants claimed that the petition was also filed under the provisions of section 48 of the Act. (f) During the pendency of this petition a final award relating to interest and cost was also passed by the Arbitral Tribunal and in the circumstances, at the hearing of the petition, Counsel for the appellants submitted that as the final award of the arbitral had come and in so far as respondent no.1 had not taken any steps to invoke the award, he was not pressing the petition as a petition filed under Section 48 of the Act. He submitted that petition should be taken as a petition filed only under Section 34 of the Act for setting aside the first partial award alone. On this footing, the Arbitration Petition was heard and ultimately by the impugned judgment and order dated 6.2.2002 the petition was dismissed on the preliminery ground that it was not maintainable. 3. On behalf of the appellants it was contended that the petition was dismissed by the single Judge by up-holding a preliminery objection raised on behalf of respondent no.1 to the effect that the petition was not maintainable in law. The preliminery objection which was raised on behalf of respondent no.1 was on the footing that section 34 fell in part I of the Arbitration & Conciliation Act : 6 : 1996 and section 2(2), which also fell in part I provided as under :- " 2(2) This part shall apply where the place of arbitration is in India." . Learned single Judge held that in so far as it was an admitted position that the arbitration was conducted outside India and the award which was challenged in the petition was a foreign award governed by part-II of the Arbitration & Conciliation Act 1996, even accepting that the arbitration was governed by the laws of India which included the Arbitration & Conciliation Act 1996, yet in view of section 2(2) of the concerned law of India i.e. Arbitration & Conciliation Act 1996, no petition could be filed under Section 34 of the said Act which fell in part I because section 2(2) made part 1 applicable, where the place of arbitration was in India. It was brought to our notice that the learned single Judge had concluded that the arbitrations governed by part I were domestic arbitrations. Whereas in the case of foreign awards, the remedy of the party aggrieved by the foreign award was to oppose its enforcibility on the grounds contained in section 48. The learned single Judge had concluded that the person aggrieved by a foreign award could oppose the enforcement of the : 7 : same on the grounds available to him under provisions of part-II which were identical to the grounds available to him under section 34 of the Arbitration & Conciliation Act 1996 for setting aside the award. 4. It was contended that after the passing of the impugned judgment and order by the learned single Judge the issue relating to the applicability of part-I of the Arbitration and Conciliation Act 1996 to all arbitrations was settled by the Apex Court in the case of Bhatia International V/s.Bulk Trading Bhatia International V/s.Bulk Trading Bhatia International V/s.Bulk Trading reported in AIR 2002 SC 1432. It was contended that this issue was also dealt with and affirmed by a more recent judgment of the Apex Court in the case of V.G.Engineering V/s.Satyam Computer Services V.G.Engineering V/s.Satyam Computer Services V.G.Engineering V/s.Satyam Computer Services Ltd., & Anr. Ltd., & Anr. Ltd., & Anr. reported in 2008(1) Supreme 1. 5. As against this, on behalf of the respondents, it was contended that since it had been held by the learned single Judge that the grounds for setting aside an award under Section 34 of the Arbitration and Conciliation Act 1996 and the grounds for resisting the enforcement of an award under part II were identical, this appeal against the dismissal of a petition under Section 34 ought not to be entertained as all objections raised by the appellants could be considered in the two companion appeals which pertain to the enforcement of the : 8 : foreign award. 6. After hearing both sides and after perusing the record, we find that, the view taken by the learned single Judge to the effect that an application to set aside a foreign award would not be maintainable under Section 34 in view of section 2(2) of the Arbitration and Conciliation Act 1996, has been overturned by the Apex Court in the case of Bhatia International (supra). In paragraph-32 of the said judgment the Apex Court has observed as under :- " The provisions of part I would apply to " The provisions of part I would apply to " The provisions of part I would apply to all arbitrations and to all proceedings all arbitrations and to all proceedings all arbitrations and to all proceedings relating thereto. Where such arbitration relating thereto. Where such arbitration relating thereto. Where such arbitration is held in India the provisions of Part I is held in India the provisions of Part I is held in India the provisions of Part I would compulsory apply and parties are would compulsory apply and parties are would compulsory apply and parties are free to deviate only to the extent free to deviate only to the extent free to deviate only to the extent permitted by the derogable provisions of permitted by the derogable provisions of permitted by the derogable provisions of Part I. In cases of International Part I. In cases of International Part I. In cases of International commercial arbitrations held out of India commercial arbitrations held out of India commercial arbitrations held out of India provisions of Part I would apply unless provisions of Part I would apply unless provisions of Part I would apply unless the parties by agreement express or the parties by agreement express or the parties by agreement express or implied, exclude all or any of its implied, exclude all or any of its implied, exclude all or any of its provisions. In that case the laws or provisions. In that case the laws or provisions. In that case the laws or rules chosen by the parties would prevail. rules chosen by the parties would prevail. rules chosen by the parties would prevail. Any provision in Part I, which is contrary Any provision in Part I, which is contrary Any provision in Part I, which is contrary to or excluded by that law or rules will to or excluded by that law or rules will to or excluded by that law or rules will not apply." not apply." not apply." : 9 : 7. In a more recent judgment delivered in the case of Venture Global Engineering (supra) the Apex Court affirmed the law as laid down in the judgment in the case of Bhatia International (supra) by observing in paragraph-17 as under :- " On close scrutiny of the materials and the dictum laid down in three-Judge Bench decision in Bhatia International (supra), we agree with the contention of Mr.K.K.Venugopal and hold that paragraphs 32 and 35 of the Bhatia International (supra) make it clear that the provisions of Part I of the Act would apply to all arbitrations including international commercial arbitrations and to all proceedings relating thereto. We further hold that where such arbitration is held in India, the provisions of Part-I would compulsorily apply and parties are free to deviate to the extent permitted by the provisions of Part-I. It is also clear that even in the case of international commercial arbitrations held out of India provisions of Part-I would apply unless the parties by agreement, express or implied, exclude all or any of its provisions. We are also of the view that : 10 : such an interpretation does not lead to any conflict between any of the provisions of the Act and there is no lacuna as such. The matter, therefore, is concluded by the three-Judge Bench decision in Bhatia International (supra)". 8. It was argued on behalf of the respondents that the Apex Court in the case of Bhatia International (supra) observed in paragraph-26 as under "that to the extent that part-II provides a separate definition of an arbitral award and separate provisions for enforcement of foreign awards, the provisions in part I dealing with these aspects will not apply to such foreign awards. It must immediately be clarified that the arbitration not having taken place in India, all or some of the provisions of Part-I may also get excluded by an express or implied agreement of parties. But if not so excluded the provisions of Part-I will also apply to "foreign awards". The opening words of Sections 45 and 54, which are in Part II, read "notwithstanding anything contained in Part I". Such a non-obstante clause had to be put in because the provisions of part-I apply to Part-II". . In our view, the words "To the extent that part II provides a separate definition of an arbitral award and separate provisions for enforcement of : 11 : foreign awards, the provisions in part I dealing with these aspects will not apply to such foreign awards" were in fact reproduction of the arguments of Counsel and the ratio as laid down in Bhatia International is contained in the words appearing lower down in the paragraph to the effect that "It must immediately be clarified that the arbitration not having taken place in India, all or some of the provisions of Part-I may also get excluded by an express or implied agreement of parties. But if not so excluded the provisions of Part-I would also apply to "foreign awards". The arguments of Counsel based upon certain words appearing in paragraph-26 which essentially were reproduction of Counsel’s arguments has also been dealt with in paragraph-18 of Venture Global Engineering (supra) which has also accepted the same interpretation of the observations in paragraph-26 of the judgment in Bhatia International. 9. It was then sought to be argued that both parties had accepted arbitration by the ICC and under Article 28 (6) of the ICC Rules of Arbitration was thus binding on both parties. The said sub article was in the following terms :- " Every Award shall be binding on the parties. By submitting the dispute to arbitration under these Rules, the parties : 12 : undertake to carry out any Award without delay and shall be deemed to have waived their right to any form of recourse in so far as such waiver can validly be made." . As regards this contention it is fairly conceded that the same was never raised before the single Judge and was thus never considered. It is contended that this contention arises in view of the decision of the Supreme Court in Bhatia International. In our view, this is a contention that does not arise from the impugned judgment and order. The question of deemed waiver of a right to any form of recourse is the matter which may be raised before the single Judge if permissible in law. 10. In the net result, we quash and set aside the impugned judgment and order and remand the matter to the single Judge for a fresh decision in the light of our observations and the judgments of the Apex Court which presently hold the field. Appeal disposed off accordingly with no order as to costs. (R.M.S.Khandeparkar,J) (R.M.S.Khandeparkar,J) (R.M.S.Khandeparkar,J) : 13 : (R.S.Mohite,J) (R.S.Mohite,J) (R.S.Mohite,J)