Case: UNION OF INDIA MINISTRY OF PETROLEUM AND NATURAL GAS THROUGH DIRECTOR GENERAL Vs. HARDY EXPLORATION AND PRODUCTION (INDIA) INC REP. BY MACKENZIE AUTHORISED SIGNATORY

1. The present appeal arose from the final judgment and order dated 27 th July, 2016 passed by the High Court of Delhi at New Delhi in FAO No. 59 of 2016 whereby the Division Bench of the High Court had dismissed the appeal preferred by the Union of India, the appellant herein, assailing the order dated 9 th July, 2015 passed by the learned Single Judge in OMP No. 693 of 2013 and the order dated 20 th January, 2016 passed in Review Petition No. 400 of 2015 in OMP No. 693 of 2013. The Division Bench took note of the fact that the appellant had challenged the legal propriety and correctness of the award made by the Arbitrators in favour of the respondents under Section 34 of the Arbitration and Conciliation Act, 1996 (for brevity the Act). The said application was contested by the respondent raising many a ground, but the thrust of the objection related to the maintainability of the application under Section 34 of the Act. It was contended before the High Court that the courts in India do not have the jurisdiction to entertain an application under Section 34 of the Act to challenge the legality of the award in question. The learned Single Judge, vide order dated 9 th July, 2015, accepted the preliminary objection and came to hold that in view of the terms of the agreement and the precedents holding the field, the Indian courts have no jurisdiction to entertain the application. Being of this view, the learned Single Judge did not advert to the other grounds urged in the petition.Being grieved by the aforesaid order, the Union of India preferred an appeal under Section 37(2) of the Act before the Division Bench which concurred with the opinion expressed by the learned Single Judge.

Court's reasoning:
23. In view of the aforesaid development of law, there is no confusion with regard to what the seat of arbitration and venue of arbitration mean. There is no shadow of doubt that the arbitration clause has to be read in a holistic manner so as to determine the jurisdiction of the Court. That apart, if there is mention of venue and something else is appended thereto, depending on the nature of the prescription, the Court can come to a conclusion that there is implied exclusion of Part I of the Act. The principle laid down in Sumitomo Heavy Industries Ltd. (supra) has been referred to in Reliance Industries Limited (II) and distinguished. In any case, it has no applicability to a controversy under the Act. The said controversy has to be governed by the BALCO principle or by the agreement or by the principle of implied exclusion as has been held in Bhatia International.In the present case, the place of arbitration was to be agreed upon between the parties. It had not been agreed upon ; and in case of failure of agreement, the Arbitral Tribunal is required to determine the same taking into consideration the convenience of the parties. It is also incumbent on the Arbitral Tribunal that the determination shall be clearly stated in the form and contents of award that is postulated in Article 31. There has been no determination.Be it noted, the word determination requires a positive act to be done. In the case at hand, the only aspect that has been highlighted by Mr. C.U. Singh, learned senior counsel, is that the arbitrator held the meeting at Kuala Lumpur and signed the award. That, in our considered opinion, does not amount to determination. The clause is categorical. The sittings at various places are relatable to venue. It cannot be equated with the seat of arbitration or place of arbitration which has a different connotation as has been held in Reliance Industries Ltd. (I), (II) (supra), Harmony Innovation Shipping Limited (supra) and in Roger Shashoua (supra).The word determination has to be contextually determined. When a place is agreed upon, it gets the status of seat which means the juridical seat. We have already noted that the terms place and seat are used interchangeably. When only the term place is stated or mentioned and no other condition is postulated, it is equivalent to seat and that finalises the facet of jurisdiction. But if a condition precedent is attached to the term place, the said condition has to be satisfied so that the place can become equivalent to seat. In the instant case, as there are two distinct and disjunct riders, either of them have to be satisfied to become a place. As is evident, there is no agreement. As far as determination is concerned, there has been no determination. In Ashok Leyland Limited and State of T.N. and another (2004) 3 SCC 1 , the Court has reproduced the definition of determination from Law Lexicon, 2 nd Edition by Aiyar, P. Ramanatha and Blacks Law Dictionary, 6 th Edition. The relevant paragraphs read thus:or order.—The expression determination signifies an effective expression of opinion which ends a controversy or a dispute by some authority to whom it is submitted under a valid law for disposal. The expression order must have also a similar meaning, except that it need not operate to end the dispute. Determination or order must be judicial orJaswant Sugar Mills Ltd. v. Lakshmi ChandAIR 1963 SC 677 , 680 (Constitution of India, Articledetermination is a final judgment for purposes of appeal when the trial court has completed its adjudication of the rights of the parties in the action. Thomas Van Dyken Joint Venture v. Van Dyken90 Wis 236, 27 NW 2d 459,463said test clearly means that the expression of determination signifies an expressive opinion. In the instant case, there has been no adjudication and expression of an opinion. Thus, the word place cannot be used as seat. To elaborate, a venue can become a seat if something else is added to it as a concomitant. But a place unlike seat, at least as is seen in the contract, can become a seat if one of the conditions precedent is satisfied. It does not ipso facto assume the status of seat. Thus understood, Kuala Lumpur is not the seat or place of arbitration and the interchangeable use will not apply in stricto sensu.