Case: Roger Shashoua  Vs. Mukesh Sharma

1. Though innumerable facts have been graphically stated in the petitions seeking leave to appeal as well as in the written note of submissions, yet regard being had to the centrality of the controversy, we shall refer to the facts which are absolutely necessary for adjudication of the lis in question. It may be stated that the High Court has narrated the facts in detail on various aspects, for it was deciding a writ petition and a petition preferredSection 34 of the Arbitration and Conciliation Act, 1996 (for brevity,Act) together and it was required to advert to the "seat of arbitration and venue of arbitration" to determine the maintainability of the petition in the Courts of India. That apart, the High Court was obliged to dwell upon the territorial jurisdiction of a petitionSection 34 of the Act at Gautam Budh Nagar, Uttar Pradesh or High Court of Delhi, in case the Courts in India have the jurisdiction to deal with the objections as postulated under Part I of the Act. Be it noted, a petitionSection 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, that is, FAO (D) 1304 of 2011, filed before the High Court of Allahabad was dismissed on the ground of maintainability. Thereafter, Writ Petition No. 20945 of 2014 was filed challenging the order dated 06.07.2011 of the District Judge, Gautam Budh Nagar. In the meantime, a petitionSection 34 of the Act came to be filed before the High Court of Delhi.When the matter stood thus, ITE India Pvt. Limited approached this Court by filing Special Leave Petition (Civil) Nos.of 2010. On 15.09.2015, the Court passed the followingcourse of hearing, we have been apprised that on behalf of ITE India Private Limited, an applicationSection 34 of the Arbitration and Conciliation Act, 1996 (for short,Act) is pending before the learned Single Judge of the High Court ofthis juncture, learned2 submitted that he had filed an applicationSection 34 of the Act before the learned District Judge, Gautam Budh Nagar, U.P. who had rejected the application to be filed before the proper court. Against the order passed by the District Judge, an FAO, i.e. FAFO (D)was filed before the High Court of Allahabad, Bench at Allahabad and same has been dismissed on the ground of maintainability. Be it stated, thereafter the 2ndhas challenged the order passed by the District Judge, Gautam Budh Nagar, UP in Writ Petition (C) No. 20945 of 2014 titled as International Trade Expo Centre Ltd. v. Mukesh Sharman our considered opinion, the writ petition and the petition filedSection 34 of the Act in Delhi High Court should be heard together by one court and accordingly, we transfer the writ petition from Allahabad and accordingly it is ordered that the writ petition be transferred to the High Court of Delhi and be heard by the same learned Judge who is hearing the petitionSection 34 of theRegistrar (Judicial) is directed to send a copy of this order to the Registrar (Judicial) of the High Court of Allahabad for transmitting the record to the High Court of Delhi. A copy of the order be sent to the Registrar General of the High Court of Delhi. The learned Chief Justice of the High Court of Delhi is requested to nominate a Judge who will hear the writ petition as well as the application preferredSection 34 of theAct. The nominated judge, we request, should to dispose both the matters by the end of November 2015. Let the matter be listed for further hearing on 08.12.2015.It is worthy to mention that extension of time was sought for by the parties and was granted. Before the High Court thetook the stand that the applicationSection 34 was not maintainable since Part I of the Act is not applicable regard being had to the arbitrationin 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 filedSection 34 of theAct is maintainable and the Delhi High Court has the territorial jurisdiction to deal with the same and accordingly directed the objection to be filedSection 34 before the Court.We may immediately state here that Special Leave Petition (Civil) Nos.of 2010 had beenvide order dated 15.02.2017 passed by the Court.

Reasoning:
25. It is patent from the law enunciated in the aforesaid decision is that stipulations in the agreement are required to be studiedly analysed and appropriately appreciated for the purpose of arriving at whether there is express or implied exclusion and further meaning of the term "seat of arbitration". The Court has also ruled that it is necessary to avoid inconsistency between the provisions in the agreement and Part I of the Act.At this juncture, we may state that there are other subsequent authorities that have dealt with express or implied exclusion. There are also authorities which have declined to accept the stance of implied exclusion. We shall refer to the same at the subsequent stage when we shall refer to the Share Holders Agreement (SHA) and appreciate what interpretation needs to be placed on the Clause relating to arbitration. Prior to that we are disposed to think to address the issue as regards the approval of Shashoua principle in BALCO and the legal acceptability of the observations made by theBench in Enercon (India) Ltd. (supra) or it is per incuriam as is proponed bythe learned senior50. We had earlier extracted extensively from the said judgment, as we find, the Court after adverting to various aspects, has categorically held that the High Court had not followed Shashoua principle. The various decisions referred to in Enercon (India) Ltd. (supra), the analysis made and the propositions deduced leads to an indubitable conclusion that Shashoua principle has been accepted by Enercon (India) Ltd. (supra). It is also to be noted that in BALCO, the Constitution Bench has not merely reproduced few paragraphs from Shashoua but has also referred to other decisions on which Shashoua has placed reliance upon. As we notice, there is analysis of earlier judgments, though it does not specifically state that "propositions laid down in Shashoua are accepted". On a clear reading, the ratio of the decision in BALCO, in the ultimate eventuate, reflects that the Shashoua principle has been accepted and theBench in Enercon (India) Ltd. (supra), after succinctly analyzing it, has stated that the said principles have been accepted by the Constitution Bench. Therefore, we are unable to accept the submission of Mr. Chidambaram that the finding recorded in Enercon (India) Ltd. (supra) that Shashoua principle has been accepted in BALCO should be declared as per incuriam.At this juncture, we think it necessary to dwell upon the issue whetherShashoua principle is the ratio decidendi of BALCO and Enercon (India) Ltd. (supra)and we intend to do so for the sake of completeness. It is well settled in law that the ratio decidendi of each case has to be correctly understood.From the aforesaid authorities, it is quite vivid that a ratio of a judgment has the precedential value and it is obligatory on the part of the Court to cogitate on the judgment regard being had to the facts exposited therein and the context in which the questions had arisen and the law has been declared. It is also necessary to read the judgment in entirety and if any principle has been laid down, it has to be considered keeping in view the questions that arose for consideration in the case. One is not expected to pick up a word or a sentence from a judgment de hors from the context and understand the ratio decidendi which has the precedential value. That apart, the Court before whom an authority is cited is required to consider what has been decided therein but not what can be deduced by following a syllogistic process.Tested on the aforesaid principle, we find that question that arose in BALCO and the discussion that has been made by the larger Bench relating to Shashoua and C v. D (supra) are squarely in the context of applicability of Part I or Part II of the Act. It will not be erroneous to say that the Constitution Bench has built the propositional pyramid on the basis or foundation of certain judgments and Shashoua and C v. D (supra) are two of them. It will be inappropriate to say that in Enercon (India) Ltd. (supra) the Court has cryptically observed that observations made in Shashoua have been approvingly quoted by the Court in BALCO in para 110. We are inclined to think, as we are obliged to, that Shashoua principle has been accepted in BALCO as well as Enercon (India) Ltd. (supra) on proper ratiocination and, therefore, the submission advanced on this score byMr. Chidambaram, learned seniornt, is repelled.59. Thus, the analysis made in the said case, theBench has opined that a precedent is a judicial decision containing a principle which forms an authoritative element termed as ratio decidendi and any reasons assigned in support of such interim order containing prima facie findings are only tentative. There cannot be any quarrel over the aforesaid proposition of law. However, the controversy involved in this case has its distinctive characteristics. The Commercial Court in London, interpreting the same agreement adverted to earlier judgments (may be ininjunction) and held that in such a situation the Courts in London will have jurisdiction. The analysis made therein, as has been stated earlier, has been appreciated in BALCO and Enercon (India) Ltd. (supra) and this Court has approved the principle set forth in the said case. Once this Court has accepted the principle, the principle governs as it holds the field and it becomes a binding precedent. To explicate, what has been stated in Shashoua as regards the determination of seat/place on one hand and venue on the other having been accepted by this Court, the conclusion in Shashoua cannot be avoided by the parties. It will be an anathema to law to conceive a situation where this Court is obligated to accept that the decisions in BALCO and Enercon (India) Ltd. (supra) which approve Shashoua principle are binding precedents, yet with some innate sense of creativity will dwell upon and pronounce, as canvassed bythe learned seniornt, thatdispute arose in the context of aninjunction and, therefore, the same having not attained finality, would not bind the parties. This will give rise to a total incompatible situation and certainly lead to violation of judicial discipline. We cannot conceive it to be permissible. Therefore, without any hesitation, we reject the said submission.In view of the aforesaid, there cannot be any trace of doubt that any filing of an application by thein the courts in India can clothe such courts with jurisdiction unless the law vests the same in them.Though we have opined that Shashoua principle has been accepted in BALCO and Enercon (India) Ltd. (supra), yet we think it apt to refer to the clauses in the agreement and scrutinize whether there is any scope to hold that the courts in India could have entertained the petition. Clause 14 of the shareholders agreement (SHA) refers towe perceive, therelating to the arbitration stipulates that the arbitral proceedings shall be in accordance with the ICC Rules. There is ain the SHA that the governing law of SHA would be laws of India. The aforesaid agreement has already been interpreted by the English Courts to mean that the parties have not simply provided for the location of hearing to be in London.It is worthy to note that the arbitration agreement is not silent as to what law and procedure is to be followed. On the contrary, Clause 14.1 lays down that the arbitration proceedings shall be in accordance with the Rules of Conciliation and Arbitration of the ICC. In Enercon (India) Ltd. (supra), theBench referring to Shashoua case accepted the view of Cooke, J. that the phrase "venue of arbitration shall be in London, UK" was accompanied by the provision in the arbitrationor arbitration to be conducted in accordance with the Rules of ICC in Paris. TheBench accepted the Rules of ICC, Paris which is supernational body of Rules as has been noted by Cooke, J. and that is how it has accepted that the parties have not simply provided for the location of hearings to be in London. To elaborate, the distinction between the venue and the seat remains. But when a Court finds there is prescription for venue and something else, it has to be adjudged on the facts of each case to determine the juridical seat. As in the instant case, the agreement in question has been interpreted and it has been held that London is not mentioned as the mere location but the courts in London will have the jurisdiction, another interpretative perception as projected bythe learned senior1. We respectfully concur with the said view, for there is no reason to differ. Apart from that, we have already held that the agreement in question having been interpreted in a particular manner by the English courts and the said interpretation having gained acceptation by this Court, the inescapable conclusion is that the courts in India have no jurisdiction.