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2016 SCC OnLine Del 4098 : (2016) 232 DLT 384 : (2016) 159
DRJ 291 : (2016) 4 Arb LR 288

In the High Court of Delhi at New Delhi

Reversed in Union of India v. Hardy Exploration & Production

(India) Inc., (2019) 13 SCC 472
(BEFORE BADAR DURREZ AHMED AND SANJEEV SACHDEVA, JJ.)

Union of India .…. Appellant

Versus
Hardy Exploration & Production (India) Inc. .….
Respondent
For the Appellant : Mr. Tushar Mehta, ASG with Mr. K.R. Sasiprabhu,
Mr. Samiran Sharma, Mr. Rajat Nair, Mr. Manas Popli and Mr. Adit
Khorana
For the Respondent : Mr. Rajiv Nayar, Sr. Adv. with Mr. Ameet Naik,
Mr. Rishi Agrawala, Mr. Abhishek Kale, Mr. Harshvardhan Jha, Mr. Karan
Luthra and Mr. Mohit Vohra
FAO (OS) 59/2016
&
CM Nos. 7062-63/2016 & 7066/2016
Decided on July 27, 2016

Arbitration — Arbitration and Conciliation Act, 1996 — Ss. 37(2) and 34

— Uncitral Model Law, 1985 — The appeal was dismissed as withdrawn on
the basis of submission made by the counsel for the petitioner and it is
contended by the petitioner that a concession on a point of law would not be
binding on the petitioner and this was not a case of a foreign award and the
petition under S. 34 would be maintainable and the court also had territorial
jurisdiction to entertain the said petition — Legality and justifiability — Held,
part I of the arbitration act, 1996 will not apply if it has been excluded
either expressly or by necessary implication if it is found that on the facts of
the case either the juridical seat of the arbitration is outside India or the law
governing the arbitration agreement is a law other than the Indian law and
in the instant case the seat or place of arbitration was at Kuala Lumpur
which is outside India and therefore, the present case would not be
governed by the Bhatia principle — Part I of the act would not apply and S.
34 thereof would also not apply — The appeal is dismissed
(Paras 19, 23 and 24)

Reliance Industries Ltd. v. Union of India, (2014) 7 SCC 603; Bhatia International
v. Bulk Trading S.A., (2002) 4 SCC 105, relied on
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The Judgment of the Court was delivered by

BADAR DURREZ AHMED, J.:— The present appeal has been filed under
Section 37(2) of the Arbitration & Conciliation Act, 1996 (hereinafter
referred to as ‘the said Act’) against the order dated 09.07.2015 in OMP
693/2013 and the order dated 20.01.2016 in Review Petition No.
400/2015.
2. OMP No. 693/2013 was a petition filed by the appellant under
Section 34 of the said Act challenging an award dated 02.02.2013. In
the order dated 09.07.2015, a learned single Judge had noted the two
principle objections which had been taken by the respondent. The first
being that the petition under Section 34 of the said Act would not lie in
view of the fact that the impugned award was a foreign award. The
second objection taken on behalf of the respondent was that even if the
petition under Section 34 of the said Act was maintainable, the same
would not lie in this court as this court did not have the necessary
territorial jurisdiction. When faced with these objections, the learned
counsel for the Union of India sought to withdraw the petition to move
the same before an appropriate forum in accordance with law. The
learned single Judge dismissed the said OMP as withdrawn in these
circumstances.
3. Thereafter, a review petition (Review Petition No. 400/2015) was
filed seeking review/recall of the order dated 09.07.2015. The main
point urged in the review petition was that the learned counsel for the
appellant had, on 09.07.2015, made a clear concession of law which led
to the consequential withdrawal of the said petition. The plea taken was
that a lawyer's concession in law would not bind his client.
4. The review petition was taken up for hearing on 20.01.2016 when
the same was dismissed. The learned single Judge, after extracting the
earlier order dated 09.07.2015, had this to say : -
“1.1 A perusal of the aforementioned order would show that the
concerned law officer who represented the petitioner on that date,
withdrew the captioned petition to approach the appropriate
forum; albeit in accordance with law. This aspect of the matter
finds mention in paragraph 2.2 of the order extracted above.
1.2 As a matter of fact, a submission was made on behalf of the
petitioner that the delay caused on account of time spent in this
court ought to be condoned. As is evident from paragraph 3 of the
order dated 09.07.2015, I had indicated that this aspect will have
to be considered by the appropriate forum. It is, in these
circumstances, that the petition was dismissed as withdrawn.
2. I must note though elaborate arguments were addressed, on the
previous dates, on behalf of the petitioner, by Mr. Tushar Mehta,
learned ASG, as to how and why this court would have jurisdiction
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in the matter. However, having heard, the learned ASG, to my

mind, what cannot be lost sight of, is that, the court at this
juncture is only exercising review jurisdiction. Therefore, having
regard to the fact that the petition filed under Section 34 of the
Arbitration and Conciliation Act, 1996 was withdrawn by the
petitioner on its own volition, albeit under advice, I find, there is
no error apparent on the record; a prerequisite for triggering the
review jurisdiction of this court.
3. Thus, in my opinion, the captioned review petition cannot be
entertained. It is accordingly dismissed.
4. Consequently, the pending application will suffer the same fate
having been rendered infructuous. It is, also, accordingly,
dismissed.”
5. Strictly speaking, there can be no quarrel with the decision of the
learned single Judge insofar as the review order is concerned because
in a case of withdrawal of a petition by the petitioner, there is no
question of any error apparent on the record. The present appeal could
be decided on this short point alone. However, Mr. Tushar Mehta, the
learned ASG, appearing on behalf of the appellant, pleaded with us and
quoted several authorities to indicate that a concession on a point of
law would not be binding on the petitioner and that, according to him,
this was not a case of a foreign award and, therefore, Part I of the said
Act was applicable, which included Section 34. Consequently, the
petition under Section 34 would be maintainable. He also submitted
that this court also had territorial jurisdiction to entertain the said
petition. These submissions of Mr. Tushar Mehta were vehemently
opposed by Mr. Rajiv Nayar, senior advocate, appearing on behalf of the
respondent. Both sides made elaborate arguments with regard to the
applicability/non-applicability of Part I of the said Act. It is for this
reason that we are examining this issue in detail.
6. Rival contentions were made with regard to the ‘place of
arbitration’. According to the appellant, the place of arbitration was
New Delhi and, according to the respondent, the place of arbitration
was Kuala Lumpur, Malaysia. The clauses pertaining to arbitration and
the applicable laws contained in the product sharing contract between
the parties are contained in Articles 32 and 33, which are reproduced
hereinbelow : -
“32.1 This contract shall be governed and interpreted in
accordance with the laws of India.
32.2 Nothing in this contract shall entitle the contractor to
exercise the rights, privileges and powers conferred upon it by this
contract in a manner which will contravene the laws of India.
32.3 The English language shall be the language of this contract
and shall be used in arbitral proceedings. All communications,
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hearing or visual materials or documents relating to this Contract

shall be written or prepared in English.”
“33.1 The Parties shall use their best efforts to settle amicable all
disputes, differences or claims arising out of or in connection with
any of the terms and conditions of this Contract including the
validity and existence hereof or concerning the interpretation or
performance thereof.
33.2 Matters which, by the terms of this Contract, the Parties
have agreed to refer to a sole expert and any other matters which
the Parties may agree to so refer shall be submitted to an
independent and impartial person of international standing with
relevant qualifications and experience appointed by agreement
between the Parties. Any sole expert appointed shall be acting as an
expert and not as an arbitrator and the decision of the sole expert on
matters referred to him shall be final and binding on the Parties and
not subject to arbitration.
If the Parties fail to agree on the sole expert, then the sole
expert shall be appointed, upon request by one of the Parties, by
the Secretary General of the Permanent Court of Arbitration at the
Hague, from amongst persons who are not nationals of the
countries of any of the countries of any of the Parties.
33.3 Subject to the provisions herein, the Parties hereby agree
that any unresolved dispute, difference or claim which cannot be
settled amicably within a reasonable time may, except for those
referred to in Article 33.2 be submitted to an arbitral tribunal for
final decision as hereinafter provided.
33.4 The arbitral tribunal shall consist of three arbitrators. The
Party or Parties instituting the arbitration shall appoint one arbitrator
and the Party or Parties responding shall appoint another arbitrator
and both parties shall so advise the other Party. The two arbitrators
appointed by the parties shall appoint the third arbitrator.
33.5 Any Party(ies) may, after appointing an arbitrator request
the other Party(ies) in writing to appoint the second arbitrator. If
such other Party(ies) fails to appoint an arbitrator within forty five
(45) days of receipt of the written request to do so, such arbitrator
may, at the request of the first Party(ies), be appointed by the
Secretary General of Permanent Court of Arbitration at Hague, within
forty five (45) days of receipt of such request, from amongst persons
who are not nationals of the country of any of the parties to the
arbitration proceedings.
33.6 If the two arbitrators appointed by the Parties fail to agree
on the appointment of the third arbitrator within thirty (30) days of
the appointment of the second arbitrator and if the Parties do not
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otherwise agree the Secretary General of Permanent Court of

Arbitration at Hague may at the request of either Party and in
consultation with both, appoint the third arbitrator who shall not be
a national of the country of any Party.
33.7 If any of the arbitrator fails or is unable to act, his successor
shall be appointed in the manner set out in this Article as if he was
the first appointment.
33.8 The decision of the arbitral tribunal and in the case of
difference among the arbitrators, the decision of the majority, shall
be final and binding upon the Parties.
33.9 Arbitration proceedings shall be conducted in accordance
with the Suncitral Model Law on International Commercial Arbitration
of 1985 except that in the event of any conflict between the rules
and the provisions of this Article 33, the provisions of this Article 33
shall govern.
33.10 Notwithstanding anything to the contrary contained in
Article 30, the right to arbitrate disputes and claims under this
Contract shall survive the termination of this Contract.
33.11 Prior to submitting a dispute to arbitration, a Party may
submit the matter for conciliation under the UNCITRAL conciliation,
rules by a sole conciliator to be appointed by mutual agreement of
the Parties. If the Parties fail to agree on a conciliator in accordance
with the said rules, the matter may be submitted for arbitration. No
arbitration proceedings shall be instituted while conciliation
proceedings are pending.
33.12 The venue of conciliation or arbitration proceedings
pursuant to this Article unless the parties otherwise agree, shall be
Kuala Lumpur and shall be conducted in English language. Insofar as
practicable the parties shall continue to implement the terms of this
contract notwithstanding the initiation of arbitration proceedings and
any pending claim or dispute.
33.13 The fees and expenses of a sole expert or conciliator
appointed by the Parties shall be borne equally by the Contractor
and the Government. Assessment of the costs of arbitration
including incidental expenses and liability for the payment thereof be
at the discretion of the authorities.”
The appellant's submissions : -
7. It was submitted by Mr. Mehta that Article 33 of the Contract does
not provide for any “proper law governing the arbitration”. Though, the
law governing the contract has been specified to be Indian law, the
authority governing the reference to arbitration has been specified as
the Secretary General of the Permanent Court of the Arbitration at the
Hague and the Curial law has been specified to be UNCITRAL Model Law
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on International Commercial Arbitration, 1985.

8. It was further contended on behalf of the appellant that Article
33.12 of the subject contract does not specify any place of arbitration in
the sense of the seat of arbitration. It only specifies the venue of the
arbitration proceedings to be Kuala Lumpur unless the parties agree
otherwise. It was further submitted that in the absence of a clear
stipulation of a place or seat of arbitration, it is for the arbitral tribunal
to decide the same. This has been specifically stipulated in Article 20 of
the UNCITRAL Model Law. Article 31.3 of the UNCITRAL Model Law is
also relevant as it deals with the form and contents of the award. The
said two provisions are set out hereinbelow for ready reference : -
“Article 20. Place of arbitration
(1) The parties are free to agree on the place of arbitration. Failing
such agreement, the place of arbitration shall be determined by
the arbitral tribunal having regard to the circumstances of the
case, including the convenience of the parties.
(2) Notwithstanding the provisions of paragraph (1) of this article,
the arbitral tribunal may, unless otherwise agreed by the parties,
meet at any place it considers appropriate for consultation among
its members, for hearing witnesses, experts or the parties, or for
inspection of goods, other property or documents.”
“Article 31. Form and contents of award
(3) The award shall state its date and the place of arbitration as
determined in accordance with article 20(1). The award shall be
deemd to have been made at that place.”
9. In the context of the above provisions, it was submitted that the
place of arbitration has not been declared by the arbitral tribunal and
that merely noting that the award was signed and made in Kuala
Lumpur would not be sufficient compliance of Article 20 read with
Article 31(3) of the UNCITRAL Model Law. Therefore, it cannot be said
that Kuala Lumpur, which was only a venue of the arbitration
proceedings, can be regarded as the place or seat of arbitration. It was,
therefore, submitted that the supervisory jurisdiction of the Indian
courts was not excluded by the parties either on account of the place of
arbitration being outside India or on account of the arbitration
agreement being governed by a law other than Indian law. It was
contended that the principle laid down in Bharat Aluminium Company
v. Kaiser Aluminium Technical Services Inc. : (2016) 4 SCC 126 would
be applicable which provides that when there is an absence of any
specific choice on the law governing the arbitration agreement, the
same would be determined by the substantive law of contract. It was,
therefore, contended that since by virtue of Article 32.1, the contract
was to be governed by the laws of India, the Arbitration and
Conciliation Act, 1996 would have to be treated as the proper law of the
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arbitration agreement which allows for the filing of a petition under

Section 34 before the Indian courts.
10. It was next contended by Mr. Mehta that even under the
UNCITRAL Model Law, recourse against an award is provided for under
Article 34(2) thereof. The said provision reads as under : -
“Article 34. Application for setting aside as exclusive recourse
against arbitral award : -
(1) Recourse to a court against an arbitral award may be made
only by an application for setting aside in accordance with
paragraphs (2) and (3) of this article.
(2) An arbitral award may be set aside by the court
specified in Article 6 only if:
xxxx xxxx xxxx xxxx xxxx”
11. Furthermore, Article 6 of the UNCITRAL Model Law provides that
the functions referred to, inter alia, in Article 34(2) shall be performed
by a court to be specified by each state enacting the model law. Article
6 of the UNCITRAL Model law reads as under : -
“Article 6. Court or other authority for certain functions of
arbitration assistance and supervision
The functions referred to in articles 11(3), 11(4), 13(3), 14, 16(3)
and 34(2) shall be performed by … [Each State enacting this
model law specifies the court, courts or, where referred to therein,
other authority competent to perform these functions.]”
12. It was submitted that the UNCITRAL Model Law was adopted by
the Indian Parliament by enacting the Arbitration and Conciliation Act,
1996 as is evidenced by the Statement of Objects and Reasons. It was
submitted that the grounds mentioned in Article 34 of the UNCITRAL
Model Law have been, mutatis mutandis, incorporated in Section 34 of
the Arbitration and Conciliation Act, 1996. Thus, according to the
learned counsel for the appellant, a conjoint reading of the said Articles
of the UNCITRAL Model Law, 1985 and the Statement of Objects and
Reasons of the said Act makes it clear that the intention of the parties
by providing for UNCITRAL Model Law as the curial law was to
incorporate the provisions pertaining to recourse against the arbitral
awards under Article 34 thereof, which was more or less similar to
Section 34 of the said Act. This, according to the learned counsel for
the appellant, would mean that the parties intended to apply Part I of
the said Act in the present case. This, according to the learned counsel
for the appellant, was in consonance with the reasoning of the Supreme
Court in Bhatia International v. Bulk Trading, S.A. : (2002) 4 SCC 105.
13. With regard to the applicability of Part I of the said Act, it was
further submitted that the product sharing contract, which contains the
arbitration clause, having been entered into prior to 06.09.2012, would
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be governed by the ratio in Bhatia International (supra) and not by

Bharat Aluminium Company v. Kaiser Aluminium Technical Services
Inc. : (2012) 9 SCC 552. It was submitted that, in the present case,
neither the place of arbitration has been specified to be outside India
nor does the law of any other country govern the subject arbitration. It
was submitted that from the intention of the parties, it is clear that
they had expressly adopted the said Act for the purposes of exercising
supervisory jurisdiction over the subject arbitration. Consequently, it
was submitted that this court had the requisite jurisdiction to entertain
the petition under Section 34 of the said Act.
14. On the other hand, Mr. Rajiv Nayar, appearing on behalf of the
respondent, submitted that, as the respondent was a foreign company,
the present arbitration would be an international commercial arbitration
within the meaning of Section 2(1)(f) of the said Act, he reiterated that
this case involves the interpretation of the product sharing contract
dated 19.11.1996 between the parties and, in particular, Articles 32
and 33 thereof. We have already extracted the said Articles earlier in
this judgment. It was submitted by Mr. Nayar that the governing law of
contract was the Indian law, the proper law of arbitration was the
UNCITRAL Model Law, 1985. Furthermore, in terms of Articles 33.5 and
33.6, in case there is difficulty in the appointment of an arbitrator
and/or the two arbitrators appointed by the parties fail to agree on the
appointment of the third arbitrator, the same shall be appointed by the
Secretary General of the Permanent Court of Arbitration at the Hague.
It is also clear from the arbitration clause and, in particular, clause
33.12 that the venue of the arbitration was to be Kuala Lumpur,
Malasya.
15. It was contended by Mr. Nayar that Section 44 of the said Act
defines a foreign award in the following manner : -
“44. Definition.- In this Chapter, unless the context otherwise
requires, “foreign award” means an arbitral award on differences
between persons arising out of legal relationships, whether
contractual or not, considered as commercial under the law in force
in India, made on or after the 11th day of October, 1960 : -
(a) in pursuance of an agreement in writing for arbitration to
which the Convention set forth in the First Schedule applies,
and
(b) in one of such territories as the Central Government, being
satisfied that reciprocal provisions have been made may, by
notification in the Official Gazette, declare to be territories to
which the said Convention applies.”
16. A reference was also made to Articles 20 and 31(3) of the
UNCITRAL Model Law which we have already extracted above. Article 20
(1) of the UNCITRAL Model Law makes it clear that the parties are free
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to agree on the place of arbitration and, failing such agreement, the

place of arbitration shall be determined by the arbitral tribunal, of
course, having regard to the circumstances of the case, including the
convenience of the parties. It was, therefore, contended that, even if
the reference to venue in Article 33.12 of the product sharing contract
did not mean the place or seat of arbitration, it was for the arbitral
tribunal to determine the place of arbitration. It was further contended
that Article 31(3) of the UNCITRAL Model Law clearly stipulates that the
award shall state its date and place of arbitration as determined in
accordance with Article 20(1). It is further stipulated that the award
shall be deemed to be made at that place. On the basis of this, it was
contended that the award in question was made at Kuala Lumpur on
02.02.2013. It was signed in triplicate by all the members of the
arbitral tribunal at Kuala Lumpur on 02.02.2013. Therefore, it was
contended that the award would be deemed to have been made at that
place which would also be the place of arbitration. It was contended
that the place of arbitration was Kuala Lumpur and it was for this
reason that the arbitral tribunal delivered and signed the award at
Kuala Lumpur. A reference was made to Hiscox v. Outhwaite : (1992 1
AC 562) wherein the House of Lords observed as under : -
“… An Award, whilst it is no doubt that final culmination of a
continuing process, is not in itself a continuing process. It is simply
a written instrument and I can see no context for departing from
what I apprehend to be the ordinary, common and natural
construction of the word “made”. A document is made when and
where it is perfected. An Award is perfected when it is signed.”
17. It was further contended that Article 1(2) of the UNCITRAL
Model Law made it clear that its provisions, except Articles 8, 9, 35 and
36 would apply only if the place of arbitration is in the territory of “this
state” referred to in Article 1(2). In the present case, it would mean the
Republic of Malaysia. It was submitted that the effect of this would be
that the law of arbitration would be the law of the Republic of Malaysia
and the Malaysian Arbitration Act, 2005 would automatically stand
applied to the award made at Kuala Lumpur, particularly because
Article 34 of the UNCITRAL Model Law is in pari materia to Section 37 of
the Malaysian Arbitration Act, 2005. It was, therefore, contended that
the place of arbitration being Kuala Lumpur, Malaysia, Part I of the said
Act in which Section 34 falls, would not be applicable to the present
case. Reliance was also placed on the recent Supreme Court decision in
the case of Union of India v. Reliance Industries Limited : (2015) 10
SCC 213. Particular reliance was placed on paragraph 21 thereof which
reads as under : -
“21. The last paragraph of Balco [Balco v. Kaiser Aluminium
Technical Services Inc., (2012) 9 SCC 552 : (2012) 4 SCC (Civ)
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810] judgment has now to be read with two caveats, both

emanating from para 32 of Bhatia International [Bhatia International
v. Bulk Trading S.A., (2002) 4 SCC 105] itself — that where the
Court comes to a determination that the juridical seat is outside
India or where law other than Indian law governs the arbitration
agreement, Part I of the Arbitration Act, 1996 would be excluded by
necessary implication. Therefore, even in the cases governed by the
Bhatia [Bhatia International v. Bulk Trading S.A., (2002) 4 SCC 105]
principle, it is only those cases in which agreements stipulate that
the seat of the arbitration is in India or on whose facts a judgment
cannot be reached on the seat of the arbitration as being outside
India that would continue to be governed by the Bhatia [Bhatia
International v. Bulk Trading S.A., (2002) 4 SCC 105] principle.
Also, it is only those agreements which stipulate or can be read to
stipulate that the law governing the arbitration agreement is Indian
law which would continue to be governed by the Bhatia [Bhatia
International v. Bulk Trading S.A., (2002) 4 SCC 105] rule.
(underlining added)
18. It was, therefore, contended that this court would not have
jurisdiction to entertain the petition under Section 34 of the said Act as
the place of arbitration was outside India, i.e., in Kuala Lumpur,
Malaysia. Consequently, it was submitted that there was no error
committed by the learned single Judge.
Discussion : -
19. From the above arguments and counter arguments, it is evident
that the key question is with regard to the place of arbitration. Once the
place of arbitration is determined, it would be clear as to whether Part I
of the said Act would apply or not. It is true that Article 33.12 of the
product sharing contract only speaks of the venue of the arbitration
proceedings to be Kuala Lumpur. The said contract does not specifically
mention the place or seat of arbitration. But, it is clear that the award
was made at Kuala Lumpur. It is also clear that the UNCITRAL Model
Law, 1985 is applicable. As already indicated above, Article 20(1) of the
UNCITRAL Model Law, 1985 makes it clear that the parties are free to
agree on the place of arbitration, failing which, the place of arbitration
shall be determined by the arbitral tribunal having regard to the
circumstances of the case, including the convenience of the parties.
There is no express determination of the place of arbitration by the
arbitral tribunal. However, the arbitration proceedings were conducted
at Kuala Lumpur and the award has been made and signed at Kuala
Lumpur. Because of Article 31.3 of the UNCITRAL Model Law, 1985, the
date of making the award and the place of arbitration as determined in
accordance with Article 20(1) is required to be stated in the award.
Since there is no mention of any dispute with regard to the place of
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arbitration in the award made by the Arbitral Tribunal, it can safely be

presumed that the award having been made at Kuala Lumpur, the place
of arbitration as distinct from the venue of the arbitration, would also
be Kuala Lumpur.
20. Once it is decided that the place of arbitration is Kuala Lumpur,
Malaysia and not in India, the next point that needs consideration is : -
Whether Part I of the said Act, which includes Section 34, is applicable?
From a plain reading of Section 2(2), it is evident that Part I would
apply where the place of arbitration is in India.
21. In Balco (supra), the Constitution Bench had ruled as under : -
“197. The judgment in Bhatia International [(2002) 4 SCC 105]
was rendered by this Court on 13-3-2002. Since then, the aforesaid
judgment has been followed by all the High Courts as well as by this
Court on numerous occasions. In fact, the judgment in Venture
Global Engg. [(2008) 4 SCC 190] has been rendered on 10-1-2008
in terms of the ratio of the decision in Bhatia International [(2002) 4
SCC 105]. Thus, in order to do complete justice, we hereby order,
that the law now declared by this Court shall apply prospectively, to
all the arbitration agreements executed hereafter.”
22. In other words, the decision in Bhatia International (supra) and
Venture Global Enginering (supra) would continue to apply in respect of
arbitration agreements entered into prior to the date of decision in the
Balco case (supra)(i.e., prior to 06.09.2012). In the present case, the
product sharing contract had been entered into on 19.11.1996, much
prior to 06.09.2012 and, therefore, the decision in Bhatia International
(supra) would be applicable. The operative portion of Bhatia
International (supra) is as under : -
“32. To conclude, we hold that the provisions of Part I would apply
to all arbitrations and to all proceedings relating thereto. Where such
arbitration is held in India the provisions of Part I would compulsorily
apply and parties are free to deviate only to the extent permitted by
the derogable provisions of Part I. In cases 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. In that case the laws or rules chosen by
the parties would prevail. Any provision, in Part I, which is contrary
to or excluded by that law or rules will not apply.”
23. The Supreme Court in Reliance Industries Limited (supra)
analysed the impact of the Balco decision with regard to the cases
covered by the Bhatia International (supra). The Supreme Court
observed that in paragraph 32 of Bhatia International itself, the
Supreme Court held that Part I of the Arbitration Act, 1996 will not
apply if it has been excluded either expressly or by necessary
implication. It was further observed that several judgments of the
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Supreme Court had held that Part I would be excluded by necessary

implication if it was found that on the facts of the case either the
juridical seat of the arbitration was outside India or the law governing
the arbitration agreement was a law other than the Indian law. It was
observed that this proposition was well settled by a series of the
decisions including : -
(i) Videocon Industries Limited v. Union of India : (2011) 6 SCC
161;
(ii) Dozco India (P) Limited v. Doosan Infracore Company Limited :
(2011) 6 SCC 179;
(iii) Yograj Infrastructure Limited v. SSang Yong Engineering and
Construction Company Limited : (2011) 9 SCC 735;
(iv) Reliance Industries Limited v. Union of India : (2014) 7 SCC
603;
(v) Harmony Innovation Shipping Limited v. Gupta Coal India
Limited : (2015) 9 SCC 172.
24. The Supreme Court finally observed in para 21 of the decision in
Reliance Industries (supra), which we have already quoted above, that
even in cases governed by the Bhatia principle, it is only those cases in
which agreement's stipulate that the seat of arbitration is in India or on
whose facts a judgment cannot be reached on the seat of Arbitration as
being outside India that would continue to be governed by the Bhatia
principle. In the present case, we have already concluded that the seat
or place of arbitration was at Kuala Lumpur which is outside India.
Therefore, the present case would not be governed by the Bhatia
principle. From this, it follows that Part I of the said Act would not
apply and consequently, Section 34 thereof would also not apply.
25. In these circumstances, in whichever way the matter is
examined, it is clear that Section 34 of the said Act is not applicable
and, therefore, OMP No. 693/2013 filed under Section 34 of the said Act
was not maintainable and has been rightly rejected by the learned
single Judge. The appeal is dismissed. There shall be no order as to
costs.
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