- Bench – Rohinatan Fani Nariman, Aniruddha Bose, V. Ramasubramaniam, JJ
- Appellant – Bgs Sgs Soma Jv Pvt. Ltd.
- Respondent – Nhpc Ltd.
Issues
• What is the distinction between "seat" and "venue" in the arbitral proceedings?
• Does the selection of a "seat" determine a Court’s supervisory jurisdiction?
Facts
• On 16.01.2004, the petitioner was awarded a contract for construction of largest hydropower project in India which would have included - construction of Diversion Tunnels, Coffer Dams, Concrete Gravity Dams, Plunge Pools and Cutoff Walls of Subansri Lower Hydroelectric Project on river Subansri, with an installed capacity of 2000 MW
• Clause 67.3 of the agreement provides for the dispute resolution through arbitration. On 16.05.2011, a notice of arbitration was filed by the petitioner to the respondent in regard to payment of compensation for losses suffered due to abnormal delays and abnormal costs due to hindrances caused by the respondent.
• A three member tribunal was constituted as per the clause. The Tribunal delivered its unanimous award at New Delhi on 26.08.2016, by which the claims of the Petitioner aggregating to INR 424,81,54,096.29 were allowed, together with simple interest at 14% per annum till the date of actual payment. On 04.10.2016, in view of certain computational and typographical errors in the arbitral award, the figure of 424,81,54,096.29 was rectified to INR 424,70,52,126.66.
• The Respondent filed an application under Section 34 of the Arbitration Act, 1996 seeking to set aside these awards before the Court of the District and Sessions Judge, Faridabad, Haryana.
• The Special Commercial Court at Gurugram allowed the application of the petitioner, against which the respondent has filed an appeal in the Punjab & Haryana High Court in which the appeal was allowed and the judgement of the Special Commercial Court was set aside.
Appellant’s Contentions
• The counsel assailed the impugned high court judgements on both accounts – a combined reading of Section 13 of the Commercial Courts Act, 2015 only provides the forum for challenge, whereas Section 37 of the Arbitration Act, 1996 - which is expressly referred to in the proviso to Section 13(1) of the Commercial Courts Act, 2015 - circumscribes the right of appeal.
• He further contented that this when read with Section 5 of the Arbitration Act, 1996, makes it clear that only certain judgments and orders are appealable, and no appeal lies under any provision outside Section 37 of the Arbitration Act, 1996.
• He went on to submit that the High Court was manifestly wrong when it said that the present appeal was appealable under Section 37(1)(c) of the Arbitration Act, 1996 as being an appeal against an order refusing to set aside an arbitral award under Section 34 of the Arbitration Act, 1996; because an order which allows an application under Section 151 read with Order VII Rule 10 of the CPC can by no stretch of the imagination amount to an order refusing to set aside an arbitral award under Section 34 of the Arbitration Act, 1996. For this proposition, he strongly relied upon on our judgment in Kandla Export Corporation & Anr. v. M/s OCI Corporation case.
Respondent’s Contentions
• The counsel appearing on part of the respondent stressed one important difference in the facts of his case, which is, that the arbitral award made in his case expressly referred to Section 31(4) of the Arbitration Act, 1996, and stated that the place of arbitration, as determined in accordance with Section 20 of the Arbitration Act, 1996, was New Delhi. Therefore, this being the "seat" as determined by the Arbitral Tribunal in this case, a challenge under Section 34 of the Arbitration Act, 1996 could only be made in the courts at New Delhi.
• The Additional Solicitor General, supporting the learned defendant counsel’s argument, put forth that the reasoning of the impugned judgment, that an order passed under Section 151 read with Order VII Rule 10 of the CPC would amount to a refusal to set aside an arbitral award, is correct, and relied heavily upon a Division Bench judgment of the Delhi High Court in Antrix Corporation Ltd. v. Devas Multimedia Pvt. Ltd 2018- for this purpose. On the second point, she argued that the arbitration clause did not expressly state that either New Delhi or Faridabad was to be the seat of the Arbitral Tribunal. Therefore, the arbitration clause only referred to a convenient venue, and the fact that the sittings were held at New Delhi, therefore, would not make New Delhi the seat of the arbitration under Section 20(1) of the Arbitration Act.
Judgement
The impugned judgment was set aside, and the Section 34 petition was ordered to be presented in the Courts in New Delhi, as was held by the learned Single Judge of the Special Commercial Court at Gurugram.
Relevant Paragraphs
• "12. In view of the above discussions, we conclude that the present appeal is not maintainable. The ap- pellant’s remedy clearly lies elsewhere. An attempt was made to urge that no litigant can be deprived of remedy if there is a grievance: ubi jus ibi remedium; however, that argument is wholly without substance because an appeal, it has been repeatedly empha- sised, is a specific creation of statute and cannot be claimed as a matter of right.
• "There is a basic distinction between the right of suit and the right of appeal. There is an inherent right in every person to bring suit of a civil nature and unless the suit is barred by statute one may, at one’s peril, bring a suit of one’s choice. It is no answer to a suit howsoever frivolous the claim, that the law confers no right to sue. A suit for its maintainability requires no authority of law and it is enough that no statute bars the suit. But the position in regard to appeals is quite the opposite. The right of appeal inheres in no one and therefore an appeal for its maintainability must have the clear authority of law. That explains why the right of appeal is described as a creature of statute.
13. In view of the above discussion, it is held that the present appeal is plainly not maintainable by virtue of provisions of the Commercial Courts Act, 2015; the appeal is therefore dismissed. No costs."
• 27. The matter can be looked at from a slightly differ- ent angle. Given the objects of both the statutes, it is clear that arbitration itself is meant to be a speedy resolution of disputes between parties. Equally, en- forcement of foreign awards should take place as soon as possible if India is to remain as an equal partner, commercially speaking, in the international community. In point of fact, the raison d'être for the enactment of the Commercial Courts Act is that com- mercial disputes involving high amounts of money should be speedily decided. Given the objects of both the enactments, if we were to provide an additional appeal, when Section 50 does away with an appeal so as to speedily enforce foreign awards, we would be turning the Arbitration Act and the Commercial Courts Act on their heads. Admittedly, if the amount contained in a foreign award to be enforced in India were less than Rs 1 crore, and a Single Judge of a High Court were to enforce such award, no appeal would lie, in keeping with the object of speedy en- forcement of foreign awards.
• "10. Coming to Section 37(1), it is evident that an ap- peal can lie from Coming to Section 37(1), it is evi- dent that an appeal can lie from only the orders speci- fied in clauses (a), (b) or (c). In other words, an ap- peal under Section 37 would only be maintainable against (a) an order refusing to refer the parties to ar- bitration under Section 8 of the A&C Act; (b) an order granting or refusing to grant any measure under Sec- tion 9 of the A&C Act; or (c) an order setting aside or refusing to set aside an arbitral award under Section 34 of the A&C Act. The impugned order is clearly not relatable to Sections 8 or 9 of the A&C Act. It was sought to be contended by the learned counsel for the appellant that the present appeal would fall within Section 37(1) (c) which relates to an order "setting aside" or "refusing to set aside" an arbitral award un- der Section 34. We are unable to accept this proposition. By virtue of the impugned order, the arbitral award dated 10.09.2013 has not been set aside. Nor has the court, at this stage, refused to set aside the said arbitral award under Section 34 of the A&C Act. In fact, the appellant in whose favour the award has been made, would only be aggrieved if the award were to have been set aside in whole or in part. That has not happened. What the learned single Judge has done is to have condoned the delay in re-filing of the petition under Section 34.
This has not, in any way, impacted the award."
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