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2020 SCC OnLine Del 1713

In the High Court of Delhi at New Delhi

(Before C. Hari Shankar, J.)

Big Charter Private Limited … Petitioner;

Versus

Ezen Aviation Pty. Ltd. and Others … Respondents.

O.M.P.(I) (COMM.) 112/2020

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Decided on October 23, 2020, [Reserved on : 27 May, 2020]

Advocates who appeared in this case:

Mr. Gautaum Narayan, Ms. Asmita Singh and Mr. Aditya Nair, Advs.

Mr. Arvind Kamath, Sr. Adv. With Mr. Pashant Popat, Mr. Nikit Bala,
Ms. Karishma Naghnoor, Mr. Pai Amit, Mr. Rahat Bansal and Mr. Souvik
Majumdar, Advs.

The Judgment of the Court was delivered by

C. HARI SHANKAR, J.:— This petition, preferred under Section 9 of the

Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the
1996 Act”) seeks certain pre-arbitration interim reliefs.

2. The consent, of learned Counsel appearing for the petitioner as well

as the respondent, ad idem, to final disposal of the present OMP, on
the basis of arguments advanced and written submissions filed,
without any further pleadings being brought on record, stands
specifically noted. Accordingly, this judgement disposes of the OMP.

Factual Backdrop
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3. The petitioner provides scheduled air operator services, under the

name “Flybig”. The respondents are engaged in the business and lease
of aircrafts, and other associated activities. Respondent No. 1 is one of
the group companies of Respondent No 2. Respondent No. 2 was
running his business, in India, through Respondent No. 1.

4. The aircraft, forming subject matter of the present controversy -

which was an ATR 72-500, bearing Manufacturer Serial Number (MSN)
688 - was owned by Respondent No 1.

5. The petitioner proposed to lease the aforesaid aircraft (hereinafter

referred to as “the aircraft”) from Respondent No 1. The following
communications ensued, between the petitioner and the respondent,
prior to issuance of the Letter of Intent:

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(i) On 24 July, 2019, the respondent wrote, to the petitioner,
acknowledging the desire, of the petitioner, to lease the MSN 688

aircraft, with effect from 1st October, 2019, for a period of 3

years. Lease rent was fixed at Rs. 37 lakhs per month, plus 5%
GST, for the first 18 months, and Rs. 40 lakhs per month, plus
5% GST for the remaining 18 months. Additionally, the letter
noted that the petitioner would have to pay Maintenance
Reserves, to the respondent, @ US $400 per flying cycle/flying
hour.

(ii) On 19th August, 2019, the respondent wrote, to the petitioner,

requiring the petitioner to communicate with the Directorate
General of Civil Aviation (DGCA) and enquire regarding the
progress of the application, submitted for import of the aforesaid
aircraft.

(iii) The petitioner responded, on the same day, i.e. 19th August,
2019, stating that its main concern was regarding the issuance of
a No Objection Certificate (NOC) by the DGCA.
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(iv) To this, the respondent replied, again on the very same day, i.e.
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19 August, 2019, stating that the aircraft would be issued with
a valid Certificate of Airworthiness (CoA).

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6. On 2 September, 2019, a Letter of Intent (hereinafter referred to
as “LOI”) was issued by the respondent to the petitioner, containing,
inter alia, the following covenants:

(i) The petitioner would accept the aircraft with a valid CoA issued
by the Isle of Man Aircraft Registry (IOMAR).

(ii) It was the petitioner's responsibility to ensure that the aircraft

was registered with the DGCA, showing the respondent as the
owner/lessor, and the petitioner as its operator/lessee.

(iii) The term of lease was to commence with the delivery of the
aircraft, and was to continue for 36 months.

(iv) The schedule of payment of lease rent was set out, along with
the covenant that the petitioner would have to pay applicable
Maintenance Reserves, as per the aircraft's monthly utilisation,
for every flight hours/flight cycle of usage. The LOI also set out
the deposits that were required to be made by the petitioner, and
the stages at which they were required to be made.

(v) Failure, on the part of the petitioner, to lease the aircraft, after
execution of the Lease Agreement (to be executed
subsequently), would entitle the petitioner to refund of the
Security Deposit, less three months' rent. If, however, failure to
lease the aircraft was owing to any fault of the respondent, or
owing to regulatory issues, the petitioner would be entitled to a
complete refund of Security Deposit.

(vi) The aircraft was required to be maintained by the petitioner, at

all times, as airworthy, in accordance with all applicable
legislation/Airworthiness Directives and mandatory guidelines
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issued by the DGCA or by any other governmental authority.

(vii) The Final Lease Agreement, as and when executed between the
petitioner and the respondent, would supersede the LOI.

7. Clause 20 of the LOI stipulated as under:—

“20. Governing Law:

This Proposal and the underlying documents for the

contemplated transaction shall be governed by the laws of India
without regard to conflict of laws principles. Lessee and Lessor agree
to submit to the exclusive jurisdiction of the courts located in
Singapore with regard to any claim of matter arising under or in
connection with this Proposal or the Lease Documentation. The
English-language shall be used in all documents and proceedings.”

8. On 7th September, 2019, the respondent wrote to the petitioner,

stating that it was confident of working with the DGCA to get the CoA
issued for the aircraft.

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9. On 12 November, 2019, a Lease Deed was executed, between the
petitioner and the respondent. According to the petitioner, this Lease

Deed was superseded by a subsequent Lease Deed, executed on 9th

December, 2019. The respondent, however, refutes the submission, by
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pointing out that the Schedules to the Lease Deed dated 9
December, 2019, were not signed by the parties. For the purposes of
this judgement, it would hardly matter whether one refers to the
clauses of the first, or the second Lease Deed. Having said that, I am
inclined to agree with the submission, of Mr. Gautam Narayan, learned

Counsel for the petitioner, that the Lease Deed dated 9th December,
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2019 did, in fact, supersede the Lease Deed dated 12 November,
2019, and that the absence of signatures on the schedules to the later
Lease Deed cannot be regarded as fatal, especially as they are identical

to the Schedules of the Lease Deed dated 12th November, 2019, which
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were duly signed by both the parties.

10. On 23rd November, 2019, the Certificate of Registration (COR) of

the aircraft, as issued by the IOMAR, was supplied, by the respondent
to the petitioner.

11. On 1st December, 2019, the specifications of the aircraft were

forwarded, by the respondent to the petitioner. The petitioner
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responded, on 3 December 2019, pointing out that the aircraft did not
have a Cockpit Door Surveillance System (CDSS) installed, and that
this would obstruct obtaining of approval from the DGCA. It was,
therefore, requested that CDSS be installed on the aircraft. The

respondent replied, on 6th December, 2019, undertaking to deliver the

aircraft as per the European Aviation Standards Authority (EASA)
standards, with a valid COA.

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12. NOC, for import of the aircraft, was granted, by the DGCA, on 9
December, 2019. It was, however, stipulated that the aircraft could
not be used for commercial operations unless it was compliant with the
requirements of the Civil Aviation Requirements (CAR) issued by the
DGCA.

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13. On 9 December, 2019, a second Lease Agreement (which,
according to the petitioner, superseded the Lease Agreement dated

12th November, 2019 supra) was executed between the petitioner and
respondent. The petition avers that, though the Schedules to the said
second Lease Agreement, could not be signed by both parties, the
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parties were ad idem that the Schedules to the Lease Deed dated 12
November, 2019 were to be treated as a part of the Lease Deed dated

9th December, 2019. The Lease Deed stipulated that the aircraft would
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be delivered, for a period of 36 months commencing 15 December,
2019. Clause 4.1 required the petitioner to ensure registration of the
aircraft with the DGCA, with the respondent shown as owner/lessor
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and the petitioner as operator/lessee, for which the respondent

undertook to provide all necessary documentation. Possession of the
aircraft was to be with the petitioner, whereas right, title and interest
in the aircraft was, as per Clause 5 of the Lease Deed, to vest with the
respondent. Clause 6 required the respondent to deliver, and the
petitioner to accept, the aircraft, with a current and valid COR, issued
by the IOMAR. Acceptance of the aircraft was, as per Clause 6.2, to be
by way of execution of a Delivery Acceptance Certificate, in accordance
with Schedule II to the Lease Deed. Clause 7 provided for the modes
of termination of the Lease Deed, whereas Clause 8 stipulated the rent
payable, and the date from which it would be payable.

14. The petition avers that the petitioner had paid, to the respondent,
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US $ 336,000 towards Security Deposit, Lease Rent, till 15 March,
2020, totalling US $ 112,000, and US $ 26,000 towards the CDSS Kit.

15. On 4th March, 2020, the petitioner wrote to the respondent,

requiring for confirmation of the final date, by which the aircraft would
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be delivered. The respondent replied, on 5 March, 2020, alleging that
delay in delivery of the aircraft was because of the delay, on the part of
the petitioner, in finalising the painting, design, etc., for the livery of

the aircraft. The petitioner responded, on 5th March, 2020 itself,

stating that painting was the responsibility of the respondent, and
pointing out that the painting vendor had never interacted with the
petitioner. Certain defects, which remained in the aircraft, were also
pointed out. The petitioner, additionally, submitted that it had paid for
the CDSS, and sought the status of the installation thereof.

16. On 9th March, 2020, the respondent wrote to the petitioner, stating
that, as the petitioner had “unilaterally terminated” the Lease
Agreement, till further communication from the respondent, no
modification/work on the aircraft was to be carried out by the
petitioner. Chagrined at the said communication, the petitioner
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responded, on the same day, i.e. 9 March, 2020, categorically
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denying any termination, of the Lease Agreement, by it. Rather, it was

submitted, the respondent had reneged on its commitments under the
Lease Agreement, despite timely payments having been made by the
petitioner. The request, for handing over, of the aircraft, with all
necessary documents, was reiterated, emphasising, additionally, the
fact that CDSS was required to be installed in the aircraft, and that the
respondent was also required to provide necessary support towards
acquiring of the COR and COA from the DGCA. The petitioner put the
respondent on notice, further, that, if the DGCA were to reject the
request for issuance of COA because of the age of the aircraft (as the
policy of the DGCA did not allow import and utilisation, for carriage of
passengers, of an aircraft which was over 18 years of age), the
respondent would be required to return, to the petitioner, all amounts
paid by it, along with the cost for ferrying the aircraft. The aircraft was,
it may be pointed out, manufactured in June 2002.

17. Further communications, largely to the same extent, followed,

th nd
from the petitioner to the respondent, on 11 March 2020 and 22
March, 2020. In the latter communication, the petitioner pointed out
that, during oral discussions, the respondent had made it clear that it
had no intention to deliver the aircraft to the petitioner. In the
circumstances, the petitioner called on the respondent to refund, to
the petitioner, an amount of Rs. 5,31,000/-, stated to be due from the

respondent. This was followed by a reminder, on 1st April, 2020.

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18. On 2 April, 2020, the respondent addressed a detailed
communication, to the petitioner, asserting that the aircraft had been

ferried to Hyderabad on 29th November, 2019, and was ready for

st
inspection and acceptance by the petitioner on 1 December, 2019, as
per the terms of the Lease Agreement. Obtaining COR and COA, it was
further asserted, was the responsibility of the petitioner, and not of the
respondent. The communication alleged default, on the part of the
petitioner, in payment of Security Deposit and Advance Lease Rent, as
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per the terms of the Lease Agreement. The delay in completion of the
work, as desired by the petitioner, on the aircraft, it was further
alleged, continued owing to the internal decision-making process of
the petitioner. This delay, according to the communication, continued
till March, 2020. The petitioner, it was alleged, became liable to pay

Maintenance Reserves, to the respondent, w.e.f. 1st February, 2020.

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Thereafter, vide email dated 5 March, 2020, it was alleged that the
petitioner had unilaterally terminated the Lease Agreement, thereby
obviating the necessity of any termination notice having to be issued
by the respondent. In these circumstances, it was alleged that the
petitioner was liable to pay Rs. 19,20,460/-, to the respondent.

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19. Vide a reply email dated 10 April, 2020, the petitioner denied the
assertion, of the respondent, that the Lease Deed had been terminated
by the petitioner. On the other hand, it was alleged, the respondent
had failed to perform its obligations under the Lease Deed, which
included delivery of the aircraft with a valid CoA. The demand, for
refund of US $ 5,30,000 was reiterated.

20. No response was received, from Respondent No. 1 to the said

email, resulting in a Notice of Dispute, under Clause 23.2 of the Lease
Deed, being issued by the petitioner, calling on Respondent No. 1 to
resolve the dispute by negotiation, being issued by the petitioner. The
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respondent replied, vide letter dated 29 April, 2020, levying various
allegations against the petitioner. The petitioner emphasises the fact
that, even in this communication, the respondent did not seek to
submit that it had, in fact, delivered the aircraft with requisite
documentation.

21. Further communications, from the petitioner to the respondent on

12th May, 2020, and from Respondent No. 1 on 20th May, 2020, to the
petitioner; the petitioner, however, avers that the conduct of the
respondent puts paid to any chance of the dispute, between the
petitioner and the respondent, being amicably settled. Asserting that
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there has been a clear and undeniable breach, by Respondent No. 1 of

the Lease Deed, the petitioner has moved this Court, under Section 9
of the 1996 Act.

22. The invocation of Section 9 has been sought to be justified on the

ground that Respondent No. 1 is located in Australia and that,
therefore, if the interests of the petitioner are not secured, it would
become nearly impossible to enforce any award, even if the petitioner
were to succeed in arbitral proceedings. Additionally, it is asserted that
the website of Respondent No. 1 indicates that an ATR 72-500 aircraft,
similar to the aircraft in issue, has been advertised for sale.

23. The petitioner asserts that the contention, of Respondent No. 1,

that the petitioner had terminated the Lease Deed, is not borne out by
the record, and is being used as a ploy to cover the breach of its
contractual obligations and defend the withholding of amounts, paid
by the petitioner, and which are, allegedly, refundable to it. The total
amount of US $ 530,000, it is submitted, has become payable to the
petitioner by the respondent. The petitioner asserts that it has a good
prima facie case and that the balance of convenience and special
equities are overwhelmingly in its favour. Denial of interim relief, as
sought in the petition, it is further asserted, would result in irreparable
injury to the petitioner.

24. The petition prays for:

(i) a restraint, against the respondents creating any third party

interest/right/title on the aircraft, or from selling, transferring or
encumbering the aircraft in any manner,

(ii) a restraint, against the respondents, from taking the aircraft out
of India, and

(iii) a direction, to the respondents, to deposit US $ 530,000

(equivalent to Rs. 4,01,05,736/-) in an escrow account.
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25. I have heard Mr. Gautam Narayan, learned Counsel for the
petitioner, and Mr. Arvind Kamath, learned Senior Counsel for the
respondent, at length.

Rival Submissions and Findings

Re. Territorial Jurisdiction

26. A preliminary objection was raised, by Mr. Arvind Kamath, learned

Senior Counsel for the respondents, to the effect that this Court did
not have the territorial jurisdiction to deal with this petition. As the
objection goes to the root of the competence, of this Court, to
entertain the petition on merits, it is necessary to examine this
objection, before proceeding further, if necessary.

27. Clauses 22 and sub-clauses 23.1 to 23.4 of the Lease Deed, which
are relevant, may be reproduced as under:

“22. GOVERNING LAW AND JURISDICTION

22.1 This Deed shall be governed by and construed in

accordance with the laws of Singapore without giving effect to its
choice of laws. The Parties shall submit to the exclusive
jurisdiction of the courts of Singapore.

23. DISPUTE RESOLUTION

23.1 The following provisions shall apply in the event of any

dispute or differences between the Parties arising out of or
relating to the lease of the Aircraft and this Deed (the
“Dispute”).

23.2 A Dispute will be deemed to arise when one Party has

any issue, difference, or demands action or alleges inaction,
damage, injury or loss or serves on the other Party a notice
stating the nature of such Dispute (“Notice of Dispute”). The
Parties hereto agree that they will use all reasonable efforts to
resolve between themselves, any Disputes through negotiations.
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23.3 Any Disputes and differences whatsoever arising under or

in connection with this Deed (including the enforcement of the
rights, duties, powers and obligations conferred under this Deed)
which are not settled by the Parties through negotiations, after
the period of (15) fifteen days from the service of the Notice of
Dispute, shall be referred to a sole arbitrator mutually appointed
by the Parties.

23.4 The arbitration proceedings shall be in accordance with

the Arbitration Rules of the Singapore International Arbitration
Centre or any statutory modification or re-enactment thereof for
the time being in force. All proceedings shall be conducted in
English and the daily transcript of the proceedings shall be
prepared in English. The seat of arbitration shall be in
Singapore.”

(Emphasis supplied)

28. The contractual position that emerges, thus, is that (i) the
petitioner and respondent have agreed to subject themselves to the
jurisdiction of courts at Singapore, (ii) the seat of arbitration is
Singapore, and (iii) the arbitration proceedings are to be in accordance
with the Arbitration Rules of the Singapore International Arbitration
Centre (SIAC).

29. Mr. Kamath submits that, the petitioner and the respondent
having agreed to submit themselves to the jurisdiction of the courts at
Singapore, this Court is proscribed from entertaining the present
matter.

30. In this context, it is also appropriate to reproduce Section 2(2)

and 20 of the 1996 Act, thus:

“(2) This Part shall apply where the place of arbitration is in

India:
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Provided that subject to an agreement to the contrary, the

provisions of sections 9, 27 and clause (a) of sub-section (1) and
sub-section (3) of section 37 shall also apply to international
commercial arbitration, even if the place of arbitration is outside
India, and an arbitral award made or to be made in such place is
enforceable and recognised under the provisions of Part II of this
Act.”

31. “International commercial arbitration” is defined, in clause (f) of

Section 2 of the 1996 Act, thus:

“(f) “international commercial arbitration” means an arbitration

relating to disputes arising out of legal relationships, whether
contractual or not, considered as commercial under the law in force
in India and where at least 1 of the parties is—

(i) an individual who is a national of, or habitually resident in,

any country other than India; or

(ii) a body corporate which is incorporated in any country other

than India; or

(iii) an association or a body of individuals whose central

management and control is exercised in any country other
than India; or

(iv) the Government of a foreign country;”

32. That the arbitration, to which the rival claims between the
petitioner and the respondent may be subjected, conforms to the
definition of “international commercial arbitration”, is not in dispute.

33. The proviso to Section 2(2) is categorical and unequivocal. It

provides that, irrespective of the location of the place of arbitration
Part I of the 1996 Act - which includes Section 9 - would apply to all
international commercial arbitrations, subject to an agreement to the
contrary. In the present case, Clause 23.4 of the Lease Agreement
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fixes both the place, as well as the seat, of arbitration, as Singapore.

The arbitration being an international commercial arbitration, the
proviso to Section 2(2) would make Part I of the 1996 Act applicable,
subject to agreement to the contrary. All that is to be seen is,
therefore, whether, in the present case, there is any agreement,
between the parties, which renders the proviso to Section 2(2)
inapplicable.

34. Mr. Kamath submits that the second sentence, in Clause 22.1 of
the Lease Agreement, constitutes such an “agreement to the contrary”.

35. Mr. Kamath submits, further, that no part of the cause of action
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arose in Delhi. The Lease Deed dated 9 December, 2019, he points
out, did not contain any Schedules and could not, therefore, be
regarded as a Lease Deed at all as, without the Schedules, it would be

meaningless and incomplete. The Lease Deed dated 12th November,

2019 was executed at Vietnam. Mr. Kamath submits that the
contention, of the petitioner, that there was consensus, ad idem,
between the petitioner and the respondent, regarding the Schedules to
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the Lease Deed dated 12 November, 2019 having to be read as part
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of the Lease Deed dated 9 December, 2019, he submits, was a
matter of evidence. Besides, points out Mr. Kamath, the petitioner and
Respondent No. 2 were located in Mumbai, and Respondent No. 1 was
located in Australia.

36. Expanding on his initial submission that Clause 22.1 of the Lease
Agreement resulted in ouster of jurisdiction of this Court, to entertain
the present petition, Mr. Kamath emphasises the omission of the word
“express”, in the proviso to Section 2(2) of the 1996 Act, denoting a
departure by the legislature, to that extent, from the recommendation
of the Law Commission. The ouster of jurisdiction, as contemplated by
the proviso to Section 2(2) does not, therefore, he submits, need to be
“express”; it can also be implied.
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37. Mr. Kamath also submits that the petitioner is not without a
remedy in Singapore, and invites attention, in this context, to Section
12A of the International Arbitration Act, which empowers the Court to
order interim measures.

38. In response to the objection, of Mr. Kamath, to the territorial

jurisdiction of this Court to adjudicate on the present petition, Mr.
Gautam Narayan advanced the following submissions:

(i) The aircraft was located at Hyderabad. It was required to be

registered with the DGCA, and operated in accordance with the
Aircraft Act, 1934, Aircraft Rules, 1937 and the CAR issued by
the DGCA. The most efficacious remedy, available to the
petitioner was, therefore, by means of recourse to the jurisdiction
of this Court under Section 9 of the 1996 Act.

(ii) The proviso to Section 2(2) conferred Section 9 jurisdiction on

this Court, even in respect of foreign seated arbitrations. This
proviso was introduced, pursuant to the recommendations of the

246th Report of the Law Commission, intended to prevent

dissipation of assets located in India. Mr. Gautam Narayan took
me through the relevant passages of the said Report.

(iii) Meaningful provisional relief, such as attachment of the

defendant's properties, could be granted only by the Court within
whose territorial jurisdiction the properties were located, and not
by a foreign Court, which may have jurisdiction over the situs of
the arbitral proceedings. For this purpose, Mr. Gautam Narayan
referred to certain passages from “International Commercial
Arbitration” by Gary Born.

(iv) Articles 9 and 17J of the UNCITRAL Model also vested

jurisdiction, in Courts outside the seat of arbitration, to grant
interim relief.

(v) Apropos Clause 22.1 of the Lease Agreement, Mr. Gautam

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Narayan submitted that the exclusive jurisdiction, vested with

Courts at Singapore, by the said Clause, was with respect to the
application of the governing law of the Lease Deed and
adjudication of disputes pertaining to substantive rights and
obligations of the parties under the Lease Deed, or proceedings
ancillary thereto. In his submission, the clause had no application
to grant of interim relief even before the constitution of the
arbitral tribunal.

(vi) The jurisdiction of the Court, in such a case, would have to be

decided on the basis of the curial law governing the conduct of
the arbitral proceedings which, according to Clause 23.4 of the
Lease Agreement, was the SIAC Rules, 2016. Rule 30.3 of the
SIAC Rules permitted parties to approach any judicial authority
for interim relief, before the constitution of the Tribunal, and not
merely judicial authorities located in Singapore.

(vii) Singaporean law permitted interim measures to be granted by

Courts only after commencement of the arbitration. For this
purpose, Mr. Gautam Narayan drew my attention to Section 12A
of the International Arbitration Act. Rule 3.1 of the SIAC Rules
was also cited, in this context, which provides that an arbitration
would commence only after service of a notice of arbitration.
Accepting the contention of the respondent would, therefore, in
Mr. Narayan's submission result in rendering the petitioner
remediless, in that it would not be able to seek, or obtain, a pre-
arbitration injunction from any forum.

(viii) Courts in Singapore could not provide any efficacious

alternative remedy. Mr. Gautam Narayan relied, in this context,
on the judgement of the Singapore Court of Appeal in Maldives
1
Airport Co. Ltd. v. GMR Male International Airport Pte. Ltd. and

SSL International plc v. TTK LIG Ltd.2, which denied interim relief
in cases in which an unacceptable degree of supervision in a
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foreign land would be involved.

(ix) Courts in Singapore exercised the jurisdiction, to secure assets

located abroad only if they had in personam jurisdiction over the
parties, i.e. where the parties had presented themselves before
Courts in Singapore. For this purpose, Mr. Gautam Narayan relied

on Five Ocean Corporation v. Cingler Ship Pte Ltd.3. As such,

without first approaching the SIAC, it was not possible for the
petitioner to petition the Courts at Singapore.

(x) Section 12A of the International Arbitration Act did not apply at
the pre-arbitration stage. Mr. Gautam Narayan relies, for this
1
purpose, on the decision in Maldives Airport Co. Ltd. . He also
placed reliance on the judgement, of a Division Bench of the High
Court of Andhra Pradesh in National Aluminium Co. Ltd. v. Gerald

Metals4.

39. Mr. Gautam Narayan also placed reliance on the judgements of

this Court in Raffles Design International India Pvt. Ltd. v. Educomp

Professional Education Ltd.5 and Naval Gent Maritime Ltd. v. Shivnath

6
Rai Harnarain (I) Ltd. and the judgement of the High Court of Bombay

in Heligo Charters Pvt. Ltd. v. Aircon Feibars FZE7.

40. Apropos the submission, of Mr. Kamath, that the Lease Deed,

dated 9th December, 2019, was not valid, Mr. Gautam Narayan draws
attention to Clause 32 thereof, which terminated all prior agreements
or understandings, pertaining to matters covered by the said Lease
Deed, except with regard to any accrued rights thereunder.

Analysis

41. In the first place, it is necessary to emphasise that the issue to be

addressed does not really concern the ease, or difficulty, in prosecuting
the present claim in Singapore though, to a limited extent, this aspect
may have to be factored into consideration. Essentially, though, we are
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not concerned, here, with the availability of an alternative remedy.

What is pleaded, by Mr. Kamath, and needs to be addressed, is the
competence of this Court to adjudicate on the present petition. The
respondent contends that this Court does not possess the jurisdiction
to hear this matter and is, essentially, therefore, coram non judice.
Jurisdiction is always a matter of competence, in that want of
jurisdiction renders a judicial authority incompetent to adjudicate on a
claim. A plea of alternate remedy, on the other hand, involves an
element of discretion. Alternate remedy is never a bar to adjudication
of the claim, especially in original civil jurisdiction. If this Court does
not have jurisdiction to entertain this petition, it cannot assume such
jurisdiction merely because the petitioner has no other remedy
available with it. For this reason, the plea, of Mr. Gautam Narayan,
that, were this Court to decline to entertain the present petition, the
petitioner would be rendered remediless, insofar as its prayer for pre-
arbitral interim relief is concerned, has necessarily to cede place to the
fundamental question of whether this Court possesses, or does not
possess, jurisdiction to deal with the matter.

42. Having said that, the submissions of Mr. Gautam Narayan, on the
possibility of obtaining interim relief, from a Singaporean court, do
assume some relevance, as the discussion hereinafter would reveal.

43. The fundamental issue to be addressed is, therefore, whether this

Court has the jurisdiction to hear and decide the present case, and not
whether the petitioner has any other alternate, or efficacious, remedy
available with it. The plea of alternate remedy predicates the existence
of jurisdiction and, consequently, the existence of a remedy before the
Court which has been petitioned. There can be no question of an
alternate remedy, if the remedy that has been invoked itself does not
exist, in the first place.

44. I do not deem it necessary, however, to refer to the commentary

on “International Commercial Arbitration” by Gary Born, or to Articles
19 and 17J of the UNCITRAL Model. Arbitration law, in India, is
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codified, in the form of the 1996 Act. Jurisdiction, in a Court, to

adjudicate a petition under Section 9 of the 1996 Act, must, therefore,
emanate from the 1996 Act itself. Any reference to the UNCITRAL
Model, or to any textual commentaries may, if at all, be justified only if
there is any ambiguity in any of the provisions of the 1996 Act, which
requires resolution.

45. The provision, in the 1996 Act, which most fundamentally impacts
the issue at hand is, unquestionably, Section 2(2). One has, however,
also to take note of the definition of “Court”, as contained in clause (e)
of Section 2(1), as the 1996 Act empowers “the Court” to pass orders
of interim measure of protection. Section 2(1)(e) defines “Court” in the
following words:

“(e) “Court” means—

(i) in the case of an arbitration other than an international

commercial arbitration, the principal Civil Court of original
jurisdiction in the district, and includes the High Court in
exercise of its ordinary original civil jurisdiction, having
jurisdiction to decide the questions forming the subject-matter
of the arbitration is the same had been the subject-matter of
the suit, but does not include any Civil Court of a grade
inferior to such principal Civil Court, or any Court of Small
Causes;

(ii) in the case of international commercial arbitration, the High

Court in exercise of its ordinary original civil jurisdiction,
having jurisdiction to decide the questions forming the subject
-matter of the arbitration if the same had been the subject-
matter of a suit, and in other cases, a High Court having
jurisdiction to hear appeals from decrees of courts subordinate
to that High Court;”

(Emphasis supplied)
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46. The issue of the situs of jurisdiction, concurrent jurisdiction, and

exclusion of jurisdiction, in Courts, to entertain petitions under
Sections 9, 11, 34 and 36, of the 1996 Act, have been the subject
matter of consideration in numerous decisions of the Supreme Court.
One of the most illuminating expositions, which traces the entire
precedential history on the issue is, perhaps, to be found in the
Keynote speech delivered by Hon'ble Mr. Justice Rohinton Fali
Nariman, at the GAR Live India 2020 seminar, which, fortunately, is
available in the virtual public domain, and makes for rewarding
viewing, by any student of law, and for compulsory viewing by every
student of arbitration law. The disciplinary protocols of judgement
writing, however, inhibit me from relying on the said address, while
penning this decision. Turning, therefore, to the black-and-white
precedents, of the Supreme Court, on the issue, the entire law may, in
my view, be comprehensively understood by the study of seven
judgements, namely (in chronological order) Bharat Aluminium Co. v.

Kaiser Aluminium Technical Services Inc.8 (hereinafter referred to as

9
“BALCO”), Swastik Gases Pvt. Ltd. v. Indian Oil Corporation Ltd. , B.E.

Siomese Von Staraburg Niedenthal v. Chhatisgarh Investment Ltd.10,

11
Indus Mobile Distribution Pvt. Ltd. v. Datawind Innovations Pvt. Ltd. ,

Brahmani River Pellets Ltd. v. Kamachi Industries Ltd.12, BGS SGS

13
Soma JV v. NHPC Ltd. and Mankastu Impex Pvt. Ltd. v. Airvisual

Ltd.14.

Precedential Analysis and the 246th Report of the Law Commission of

India

47. BALCO8:

8
45.1 BALCO , rendered by a Constitution Bench, emanated from
Section 2(2) of the 1996 Act, prior to the insertion, in the said sub-
Rule, of the proviso thereto. Section 2(2), as it stood at that time,
therefore, made the provisions of Part I of the 1996 Act applicable
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“where the place of arbitration is in India”. There was a difference,

in the views of the Hon'ble Judges constituting a two-Judge Bench,
resulting in the appeals, before it, being directed to be placed
before the Hon'ble Chief Justice, for being listed before another

Bench15. The appeal was placed before a 3-Judge bench which, vide
st 16
its order dated 1 November, 2011 , directed that the matter be
placed before a Constitution Bench. Thus, came to be delivered the

judgement in BALCO8.

45.2 The facts, in BALCO8, are only briefly noted in the

judgement, as the issue referred to the Constitution Bench was
nd
purely legal. An agreement, dated 22 April, 1993, was executed,
between BALCO and Kaiser Aluminium Technical Services Inc., for
installation of a computer-based system for shelter modernisation.
The agreement contained the following clauses:

“17.1 Any dispute or claim arising out of or relating to this

Agreement shall be in the first instance, endeavour to be settled
amicably by negotiation between the parties hereto and failing
which the same will be settled by arbitration pursuant to the
English Arbitration Law and subsequent amendments thereto.

17.2 The arbitration proceedings shall be carried out by two

arbitrators, one appointed by BALCO and one by KATSI chosen
freely and without any bias. The Court of Arbitration shall be held
wholly in London, England and shall use the English language
and the proceeding. The findings and award of the Court of
Arbitration shall be final and binding upon the parties. …

*****

22. Governing Law— This agreement will be governed by the

prevailing law of India and in case of Arbitration, the English law
shall apply.”
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The above process, held the Supreme Court, made it apparent

that the governing law, of the agreement, i.e. the substantive law,
was the prevailing law of India, but the lex fori for the arbitration
would be English law.

45.3 Disputes arose, between the parties, which were referred to

arbitration, held in England. The Arbitral Tribunal rendered two

awards, dated 10th and 12th November, 2002. Applications, for

setting aside the award, were preferred, by BALCO, under Section
34 of the 1996 Act, before the learned District Judge, Bilaspur. The
learned District Judge dismissed the applications vide order dated
th
20 July, 2004. BALCO challenged the dismissal by way of appeals
before the High Court of Chhattisgarh. The appeals were also
dismissed, by a Division Bench of the High Court, vide order dated

10th August, 2005, holding that they were not maintainable. BALCO
appealed to the Supreme Court.

45.4 Tagged, with the BALCO appeal, was the appeal in Bharti

Shipyard Ltd. v. Ferrostaal AG17 which, however, dealt with an

application under Section 9 of the 1996 Act. The facts, in this case,
also deserve to be noticed. Bharti Shipyard Ltd. (hereinafter referred
to as “BSL”) entered into to shipbuilding contracts with Ferrostaal
AG (hereinafter referred to as “FAG”), whereunder BSL was to
construct vessels and deliver them to FAG. BSL and FAG agreed to
settlement of the dispute, by arbitration, under the Rules of the
London Maritime Arbitrators Association (LMAA), in London. Two
requests, for arbitration of the disputes which arose between them,
were submitted by FAG, in accordance with the rules of the LMAA.

45.5 During the pendency thereof, FAG filed applications, under

Section 9 of the 1996 Act, seeking injunction against encashment of
bank guarantees, issued under the contracts. The learned District
Judge, Mangalore, granted ex parte ad interim injunction, against
encashment of the bank guarantee and, later, vide judgement dated
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th
14 January, 2011, allowed the application under Section 9. The
judgement of the learned District Judge was, however, set aside by

the High Court, vide judgement dated 9th September, 2011. BSL
appealed to the Supreme Court.

45.6 Among the issues, framed by the Supreme Court as arising

for its consideration, were the following:

“10.1 What is meant by the place of arbitration as found in

Sections 2(2) and 20 of the Arbitration Act, 1996?

*****

10.3 Does Section 2(2) bar the application of Part I of the

Arbitration Act, 1996 (“Part I” for brevity) to arbitrations where
the place is outside India?”

45.7 The Supreme Court overruled, at the very outset, its earlier
18
decisions in Bhatia International v. Bulk Trading S.A. and Venture

Global Engineering v. Satyam Computer Services Ltd.19 and,

thereafter, proceeded to address the issues framed by it, thus:

(i) The debate, before the Supreme Court, revolved around the
absence of the word “only” in Section 2(2) of the 1996 Act.
The provision stated that Part I “shall apply where the place of
arbitration is in India”, and not that Part I “shall apply only
where the place of arbitration is in India”. As the Supreme
Court paraphrased the controversy (in para 63 of the report),
“the crucial difference between the views expressed by the
appellants on the one hand and the respondents on the other
hand is as to whether the absence of the word “only” in
Section 2(2) clearly signifies that Part I of the Arbitration Act,
1996 would compulsorily apply in the case of arbitrations held
in India, or would it signify that the Arbitration Act, 1996
would be applicable only in cases where the arbitration takes
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17
place in India.” Bhatia International and Venture Global

Engineering18 held that Part I would apply to all arbitrations

held outside India, unless the parties, by agreement, excluded
the applicability of any or all of the provisions of Part I. The
Constitution Bench expressed its disagreement with the said
enunciation, and held (in para 67 of the report) that “a plain
reading of Section 2(2) makes it clear that Part I is limited in
its application to arbitrations which take place in India”.

(ii) The Supreme Court went on to hold, further, that the “seat of
the arbitration” was the “centre of gravity” thereof. At the
same time, it is clarified that the arbitral proceedings were not
required, necessarily, to be conducted at the “seat of
arbitration”, as the arbitrators were at liberty to hold meetings
at different, convenient, locations. The law governing the
arbitration was, however, it was held, normally the “law of the
seat or place where the arbitration is held” (in para-76 of the
report). The Constitution Bench went on to approve the
theory, postulated in Redfern and Hunter on International

Arbitration20, that “the concept that an arbitration is governed

by the law of the place in which it is held, which is the
‘seat’ (or ‘forum’ or locus arbitri) of the arbitration, is well
established in both the theory and practice of international
arbitration. Reliance was also placed on the Geneva Protocol,
1923, which stated that the arbitral procedure, including the
Constitution of the Arbitral Tribunal, would be governed by the
will of the parties and by the law of the country in whose
territory the arbitration takes place.

(iii) The omission of the word “only” in Section 2(2) of the 1996
Act, it was held, did not detract from the territorial scope of
the application of Part I thereof. Accordingly, it was held (in
para 78 of the report) that Part I would not apply to
arbitrations which did not take place in India. To make
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matters clearer, the Constitution Bench went on to say, in para

79 of the report, “with the submission made by Mr. Aspi
Chenoy that Section 2(2) is an express parliamentary
declaration/recognition that Part I of the Arbitration Act, 1996
applies to arbitration having their place/seat in India and does
not apply to arbitrations seated in foreign territories”. Yet
again, in paras 80 and 81 of the report, it was held that “the
provisions have to be read as limiting the applicability of Part I
to arbitrations which take place in India” and “Section 2(2)
merely reinforces the limits of operation of the Arbitration Act,
1996 to India”.

(iv) The Constitution Bench also went on to examine Section 2(1)

(e), and the impact, thereof, on the above position. Having
extracted the clause, the Supreme Court went on, in para 97
of the report, to hold that “Section 2(1)(e) being purely
jurisdictional in nature can have no relevance to the question
whether Part I applies to arbitrations which take place outside
India”.

(v) The Constitution Bench went on, thereafter, to underscore the

importance of the distinction between the “seat” and the
“venue” of the arbitration, in the context of international
commercial arbitration, in para 100 of the report, in the
following words:

“True, that in an international commercial arbitration,

having a seat in India, hearings may be necessitated outside
India. In such circumstances, the hearing of the arbitration
will be conducted at the venue fixed by the parties, but it
would not have the effect of changing the seat of arbitration
which would remain in India. The legal position in this regard
is summed up by Redfern and Hunter, The Law and Practice of
International Commercial Arbitration (1986) at p. 69 in the
following passage under the heading “The Place of
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Arbitration”:

“The preceding discussion has been on the basis that there

is only one “place” of arbitration. This will be the place chosen
by or on behalf of the parties; and it will be designated in the
arbitration agreement or the terms of the reference or the
minutes of proceedings or in some other way as the place or
“seat” of the arbitration. This does not mean, however, that
the Arbitral Tribunal must hold all its meetings or hearings at
the place of arbitration. International commercial arbitration
often involves people of many different nationalities, from
many different countries. In these circumstances, it is by no
means unusual for an Arbitral Tribunal to hold meetings - or
even hearings - in a place other than the designated place of
arbitration, either for its own convenience or for the
convenience of the parties or their witnesses…. It may be
more convenient for an Arbitral Tribunal sitting in one country
to conduct a hearing in another country - for instance, for the
purpose of taking evidence…. In such circumstances, each
move of the Arbitral Tribunal does not of itself mean that the
seat of arbitration changes. The seat of the arbitration remains
the place initially agreed by or on behalf of the parties.”

This, in our view, is the correct depiction of the practical

considerations and the distinction between “seat” [Sections 20(1)
and 20(2)] and “venue” [Section 20(3)]. We may point out here
that the distinction between “seat” and “venue” would be quite
crucial in the event, the arbitration agreement designates a foreign
country as the “seat”/“place” of the arbitration and also select the
Arbitration Act, 1996 as the curial law/law governing the arbitration
proceedings. It would be a matter of construction of the individual
agreement to decide whether:

(i) The designated foreign “seat” would be read as in fact only

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providing for a “venue”/“place” where the hearings would be

held, in view of the choice of the Arbitration Act, 1996 as
being the curial law, OR

(ii) Whether the specific designation of a foreign seat, necessarily

carrying with it the choice of that country's arbitration/curial
law, would prevail over and subsume the conflicting selection
choice by the parties of the Arbitration Act, 1996.

Only if the agreement of the parties is construed to provide

for the “seat”/“place” of arbitration being in India - would Part
I of the Arbitration Act, 1996 be applicable. If the agreement
is held to provide for a “seat”/“place” outside India, Part I
would be inapplicable to the extent inconsistent with the
arbitration law of the seat, even if the agreement purports to
provide that the Arbitration Act, 1996 shall govern the
arbitration proceedings.”

(Underscoring supplied; Italics in original)

(vi) The resulting position was crystallised, in paras 116 and 117
of the report, thus:

“116. The legal position that emerges from a conspectus

of all the decisions, seems to be, that the choice of another
country as the seat of arbitration inevitably imports an
acceptance that the law of that country relating to the
conduct and supervision of arbitrations will apply to the
proceedings.

117. It would, therefore, follow that if the arbitration

agreement is found or held to provide for a seat/place of
arbitration outside India, then the provision that the
Arbitration Act, 1996 would govern the arbitration
proceedings, would not make Part I of the Arbitration Act,
1996 applicable or enable Indian Courts to exercise
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supervisory jurisdiction over the arbitration or the award. It

would only mean that the parties have contractually
imported from the Arbitration Act, 1996, those provisions
which are concerned with the internal conduct of their
arbitration and which are not inconsistent with the
mandatory provisions of the English Procedural Law/curial
law. This necessarily follows from the fact that Part I applies
only to arbitrations having their seat/place in India.”

(Underscoring supplied; Italics in original)

(vii) The Constitution Bench went on to hold, in para 123 of the

report, that it was “clear that the regulation of conduct of
arbitration and challenge to an award would have to be done
by the courts of the country in which the arbitration is being
conducted”. Such a court, alone, it was held, was the
“supervisory court possessed of the power to annul the
award”.

(viii) Thereafter, from para 155 of the report, the Supreme Court
addressed, squarely, the issue of “interim measures, etc. by
the Indian courts where the seat of arbitration is outside
India” - precisely the issue which arises in the present case.
The very first submission, advanced to support the existence
of jurisdiction, in Indian courts, to grant interim relief, under
Section 9, even where the seat of arbitration was outside
India, was the precise submission urged by Mr. Gautam
Narayan before me, i.e., “that in such circumstances, the
parties would be left remediless” as “no application for interim
relief would be available under Section 9 of the Arbitration Act,
1996, in an arbitration seated outside India”. The Constitution
Bench was, therefore, exhorted to hold that “courts in India
have the jurisdiction to take necessary measures for
preservation of assets and/or to prevent dissipation of assets”,
even in such cases. The enunciation of the law, to the said
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effect, in Bhatia International17 was, it was submitted, correct.

Section 9, it was submitted, was required to be distinguished
from Section 34, as grant of interim relief under Section 9 did
not interfere with the final award. It was also contended that
“annulment of the award under Section 34 would have extra
territorial operation whereas Section 9 being entirely asset
focused, would be intrinsically territory focused and intra-
territorial in its operation” (as recorded in para 155 of the
report). The Constitution Bench, in clear, categorical in
unmistakable terms, rejected the submission, holding (in para
156 of the report) that “it would be wholly undesirable for this
Court to declare by process of interpretation that Section 9 is a
provision which falls neither in Part I not Part II”. Observing
that “schematically, Section 9 was placed in Part I” of the
1996 Act, the Constitution Bench held that it could not be
treated as sui generis, or granted a special status. Observing
that Part I of the 1996 Act had already been held, by it, not to
apply to foreign seated arbitrations, the Constitution Bench
also observed that Part II did not contain any provision similar
to Section 9. Thus, it was held, “on a logical and schematic
construction of the Arbitration Act, 1996, the Indian courts do
not have the power to grant interim measures when the seat
of arbitration is outside India” (in para 157 of the report). The
“arbitral proceedings”, to which Section 9 refers, it was held,
“cannot relate to arbitration which takes place outside India”.
The Constitution Bench went on to declare, unequivocally, in
para 158 of the report, “that the provision contained in Section
9 is limited in its application to arbitrations which take place in
India” and that holding otherwise “would be to do violence to
the policy of the territoriality declared in Section 2(2) of the
Arbitration Act, 1996”.

(ix) The Constitution Bench also went on to address the

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grievance that exclusion, of Section 9, to foreign seated

arbitrations, would result in great hardship to parties who
were in need of interim measures, by tellingly observing thus
(in paras 163 and 164 of the report):

“163. In our opinion, the aforesaid judgment in Reliance

Industries Ltd. [(2002) 1 All ER 59 (Comm) : (2002) 1 Lloyd's
Rep 645] does not lead to the conclusion that the parties were
left without any remedy. Rather the remedy was pursued in
England to its logical conclusion. Merely because the remedy
in such circumstances may be more onerous from the
viewpoint of one party is not the same as a party being left
without a remedy. Similar would be the position in cases
where parties seek interim relief with regard to the protection
of the assets. Once the parties have chosen voluntarily that
the seat of the arbitration shall be outside India, they are
impliedly also understood to have chosen the necessary
incidents and consequences of such choice. We, therefore, do
not find any substance in the submissions made by the
learned counsel for the appellants, that if applicability of Part I
is limited to arbitrations which take place in India, it would
leave many parties remediless.

164. If that be so, it is a matter to be redressed by the

legislature.”

(Emphasis supplied)

No consideration of sympathy, at the petitioner being

rendered “remediless” can operate to confer jurisdiction, on
this Court, if no such jurisdiction exists under the statutory
dispensation in force. In deciding the sustainability of the
objection, of Mr. Kamath, to the territorial jurisdiction of this
Court to entertain the present proceedings, therefore, the
difficulty in obtaining relief from Singaporean courts cannot be
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the determinative factor, though it does play a role, as would

become more apparent from the discussion hereinafter.

8
45.8 Thus, in BALCO , the Constitution Bench of the Supreme
Court held, in unmistakable terms, that Section 2(2) of the 1996
Act resulted in complete exclusion of jurisdiction, of courts in India,
in respect of foreign seated arbitrations, even for the purpose of
obtaining interim reliefs, whether at the pre-arbitral stage or
otherwise, and also went on to clarify that this position was not
affected by Section 2(1)(e).

9
48. Swastik Gases :

46.1 This decision was concerned, essentially, with the scope of

an “exclusive jurisdiction” clause, engrafted in the agreement
between the parties. It did not involve any international commercial
arbitration.

46.2 The dispute between the parties arose out of an agreement,

th
dated 13 October, 2002, whereby Swastik Gases (hereinafter
referred to as “Swastik”) was appointed as the consignment agent
of IOCL, for marketing lubricants at Jaipur. Disputes arose in

November, 2003, which could not be amicably resolved. On 25th

August, 2008, Swastik sent a notice, to IOCL, invoking the
arbitration clause in the agreement, and naming a retired Judge of
the High Court of Rajasthan as its arbitrator. IOCL was requested to
nominate a corresponding arbitrator, from its side. On failure, of
IOCL, to do so, Swastik petitioned the High Court, under Section 11
of the 1996 Act.

46.3 IOCL contested the petition on the ground that the High
Court of Rajasthan lacked territorial jurisdiction to adjudicate the lis,
as the agreement was subject to jurisdiction of courts at Kolkata.
The High Court agreed with IOCL and dismissed the petition, of
Swastik, on the ground of jurisdiction. Swastik appealed to the
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Supreme Court.

46.4 Admittedly, Clause 18 in the agreement between Swastik

and IOCL, which provided for “Jurisdiction”, postulated that “the
agreement shall be subject to jurisdiction of the courts at Kolkata”.
Even so, Swastik contended, before the Supreme Court, that the
jurisdiction of courts at Jaipur was not ousted, as the major part of
the cause of action had arisen within such jurisdiction.

46.5 The Supreme Court held that, in view of Section 2(1)(e) of

the 1996 Act, read with Section 20 of the Code of Civil Procedure,
1908 (CPC), “there remains no doubt that the Chief Justice of the
designated Judge of the Rajasthan High Court has jurisdiction in the
matter”. Even so, it noted (in para 31 of the report), “the question
is, whether parties by virtue of Clause 18 of the agreement have
agreed to exclude the jurisdiction of the courts at Jaipur or, in other
words, whether in view of Clause 18 of the agreement, the
jurisdiction of the Chief Justice of the Rajasthan High Court has
been excluded”. The Supreme Court proceeded to answer the
question, thus (in para 22 of the report):

“For answer to the above question, we have to see the effect

of the jurisdiction clause in the agreement which provides that
the agreement shall be subject to jurisdiction of the courts at
Kolkata. It is a fact that whilst providing for jurisdiction clause in
the agreement the words like “alone”, “only”, “exclusive” or
“exclusive jurisdiction” have not been used but this, in our view,
is not decisive and does not make any material difference. The
intention of the parties - by having Clause 18 in the agreement -
is clear and unambiguous that the courts at Kolkata shall have
jurisdiction which means that the courts at Kolkata alone shall
have jurisdiction. It is so because for construction of jurisdiction
clause, like Clause 18 in the agreement, the maxim expression
unius est exclusion alterius comes into play as there is nothing to
indicate to the contrary. This legal maxim means that expression
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of one is the exclusion of another. By making a provision that the

agreement is subject to the jurisdiction of the courts at Kolkata,
the parties have impliedly excluded the jurisdiction of other
courts. Where the contract specifies the jurisdiction of the courts
at a particular place and such courts have jurisdiction to deal
with the matter, we think that an inference may be drawn that
parties intended to exclude all other courts. A clause like this is
not hit by Section 23 of the Contract Act at all. Such clause is
neither forbidden by law nor it is against the public policy. It
does not offend Section 28 of the Contract Act in any manner.”

(Emphasis supplied)

46.6 The Supreme Court, therefore, concurred with the

judgement of the High Court of Rajasthan and dismissed the
appeal, preserving liberty, with the appellant, to approach the High
Court of Calcutta.

49. The 246th Report of the Law Commission of India:

47.1 In the wake of BALCO8, and the concerns expressed therein,

th
the Law Commission, in its 246 Report, tendered in August, 2014,
suggested extensive amendments to the 1996 Act. Paras 40 to 42
of the Report merit reproduction, thus:

“40. The Supreme Court in BALCO decided that Parts I and II

of the Act are mutually exclusive of each other. The intention of
Parliament that the Act is territorial in nature and sections 9 and
34 will apply only when the seat of arbitration is in India. The
seat is the “centre of gravity” of arbitration, and even where two
foreign parties arbitrate in India, Part I would apply and, by
virtue of Section 2(7), the award would be a “domestic award”.
The Supreme Court recognized the “seat” of arbitration to be the
juridical seat; however, in line with international practice, it was
observed that the arbitral hearings may take place at a location
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other than the seat of arbitration. The distinction between “seat”

and “venue” was, therefore, recognized. In such a scenario, only
if the seat is determined to be India, Part I would be applicable.
If the seat was foreign, Part I would be inapplicable. Even if Part I
was expressly included “it would only mean that the parties have
contractually imported from the Arbitration Act, 1996, those
provisions which are concerned with the internal conduct of their
arbitration and which are not inconsistent with the mandatory
provisions of the [foreign] Procedural Law/Curial Law.” The same
cannot be used to confer jurisdiction on an Indian Court.
However, the decision in BALCO was expressly given prospective
effect and applied to arbitration agreements executed after the
date of the judgment.

41. While the decision in BALCO is a step in the right direction

and would drastically reduce judicial intervention in foreign
arbitrations, the Commission feels that there are still a few areas
that are likely to be problematic.

(i) Where the assets of a party are located in India, and there
is a likelihood that that party will dissipate its assets in the
near future, the other party will lack an efficacious remedy
if the seat of the arbitration is abroad. The latter party will
have two possible remedies, but neither will be efficacious.
First, the latter party can obtain an interim order from a
foreign Court or the arbitral tribunal itself and file a civil
suit to enforce the right created by the interim order. The
interim order would not be enforceable directly by filing an
execution petition as it would not qualify as a “judgment”
or “decree” for the purposes of Sections 13 and 44A of the
Code of Civil Procedure (which provide a mechanism for
enforcing foreign judgments). Secondly, in the event that
the former party does not adhere to the terms of the foreign
Order, the latter party can initiate proceedings for contempt
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in the foreign Court and enforce the judgment of the foreign

Court under sections 13 and 44A of the Code of Civil
Procedure. Neither of these remedies is likely to provide a
practical remedy to the party seeking to enforce the interim
relief obtained by it.

That being the case, it is a distinct possibility that a

foreign party would obtain an arbitral award in its favour
only to realize that the entity against which it has to
enforce the award has been stripped of its assets and has
been converted into a shell company.

(ii) While the decision in BALCO was made prospective to

ensure that hotly negotiated bargains are not overturned
overnight, it results in a situation where Courts, despite
knowing that the decision in Bhatia is no longer good law,
are forced to apply it whenever they are faced with a case
arising from an arbitration agreement executed pre-BALCO.

42. The above issues have been addressed by way of proposed

Amendments to Sections 2(2), 2(2A), 20, 28 and 31.”

47.2 The following amendments, suggested by the Law

Commission Report, are significant:

(i) Section 2(1)(e) which, as it stood then, read as under:

“(e) “Court” means the principal Civil Court of original

jurisdiction in the district, and includes the High Court in
exercise of its ordinary original civil jurisdiction, having
jurisdiction to decide the questions forming the subject-matter
of the arbitration if the same had been the subject-matter of
the suit, but does not include any Civil Court of a grade
inferior to such principal Civil Court, or any Court of Small
Causes”.

The Law Commission Report recommended amendment of

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Section 2(1)(e), by the addition of the words “in the case of

an arbitration other than international commercial arbitration”,
before the words “the principal Civil Court of original
jurisdiction” in sub-section (i), and insertion of sub-ection (ii),
specific to international commercial arbitration. These changes
would become apparent from the amended Section 2(1)(e),
which already stands reproduced in para 43 supra.

(ii) The Law Commission Report also contains the following

recommendations, for amendments in Section 2 of the 1996
Act:

“(v) In sub-section (1), after clause (h), insert clause “(hh)

“seat of the arbitration” means the juridical seat of the
arbitration”.

[NOTE : This definition of “seat of arbitration” is

incorporated so as to make it clear that “seat of arbitration”
is different from the venue of arbitration. Section 20 has
also been appropriately modified.]

(vi) In sub-section (2), add the word “only” after the words
“shall apply” and delete the word “place” and insert the word
“seat” in its place.

[NOTE : this amendment ensures that an Indian Court

can only exercise jurisdiction under Part I where the seat of
the arbitration is in India. To this extent, it overrules Bhatia
International v. Bulk Trading S.A., (2002) 4 SCC 105, and
re-enforce the “seat centricity” principle of Bharat
Aluminium Company v. Kaiser Aluminium Technical
Service, Inc., (2012) 9 SCC 552]

Also insert the following proviso “Provided that, subject

to an express agreement to the contrary, the provisions of
sections 9, 27, 37(1)(a) and 37 (3) shall also apply to
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international commercial arbitration even if the seat of

arbitration is outside India, if an award made, or that which
might be made, in such place would be enforceable and
recognised under Part II of this Act.

[NOTE : This proviso ensures that an Indian Court can

exercise jurisdiction with respect to these provisions even
where the seat of the arbitration is outside India.]”

(iii) Additionally, the Law Commission Report also suggested

certain amendments, in Sections 20 and 31 of the 1996 Act:

“Amendment of Section 20

12. In Section 20, delete the word “Place” and add the words
“Seat and Venue” before the words “of arbitration”.

(i) In sub-section (1), after the words “agree on the” delete the
word “place” and add words “seat and venue”.

(ii) In sub-section (3), after the words “meet at any” delete the
word “place” and add word “venue”.

[NOTE : The departure from the existing phrase “place” of

arbitration is proposed to make the wording of the Act consistent
with the international usage of the concept of a “seat” of arbitration,
to denote the legal home of the arbitration. The amendment further
legislatively distinguishes between the “[legal] seat” from a,
“[mere] venue” of arbitration.]

Amendment of Section 31

17. In Section 31

(i) In sub-section (4), after the words “its date and the” delete
the word “place” and add the word “seat”.”

These recommendations, for amendment of Sections 20 and

31 were, however, not accepted, and the provisions remained
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inviolate.

47.3 While the recommendation, qua Section 2(1)(e), was

accepted and implemented, and the clause was amended
accordingly, the amendments relating to Section 2(2) were not
accepted in toto. While a proviso was added, to the said sub-
section, the proposal to add, after the words “shall apply”, the word
“only”, was not implemented. Similarly, the word “express”, as
contained in the proposed proviso to Section 2(2), did not figure in
the proviso as it ultimately came to be inserted vide the Arbitration
and Conciliation (Amendment) Act, 2016 (hereinafter referred to as
“the 2016 Amendment Act”). What impact these deviations have,
when compared with the original recommendations of the Law
Commission, would become more apparent from the discussion that
follows hereinafter.

10
50. B.E. Siomese Von Staraburg Niedenthal :

48.1 In the context of the controversy before me, this

judgement, though brief, assumes considerable importance. An
agreement, for raising mines, located in Goa, was executed,
between the appellant (hereinafter referred to as “BES”) and the
respondent (hereinafter referred to as “CIL”), whereunder CIL was
the exclusive purchaser of ore, mined by BES. Clause 13 of the
raising agreement expressly stipulated that “the courts at Goa shall
have exclusive jurisdiction”. Disputes arose, resulting in CIL filing
an application, under Section 9 of the 1996 Act, for interim
protection, in the Court of the District Judge, Raipur. BES
questioned the jurisdiction of the District Judge, Raipur, to
adjudicate the lis, on the ground that the mines were located in
Goa, the agreement was executed in Goa and the second
respondent was residing at Goa. CIL contended, per contra, that the
working of the company was at Raipur and that the cause of action
also arose in Raipur. The District Judge, Raipur, rejected the
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objection of BES. Aggrieved thereby, BES appealed to the

Chhattisgarh High Court. The High Court directed the District Judge
to decide the Section 9 application, along with the objection
regarding territorial jurisdiction, afresh. BES appealed to the
Supreme Court.

48.2 Placing reliance on the passage, from Swastik Gases Pvt.

Ltd.9, extracted in para 46.5 supra, the Supreme Court held that
Clause 13 of the raising agreement ousted the jurisdiction of the
District Judge, Raipur, and conferred exclusive jurisdiction on the
courts at Goa. The judgement of the High Court was, therefore, set
aside.

11
51. Indus Mobile Distribution Pvt. Ltd. :

49.1 Datawind Innovations Pvt. Ltd. (hereinafter referred to as

“DIPL”), the respondent in this case, was supplying goods to the
appellant (who would be referred to, hereinafter, as “Indus”). DIPL
was located in New Delhi, and Indus was located at Chennai. An
th
agreement, dated 25 October, 2014, was executed between them.
Clause 18 of the agreement provided for resolution of disputes,
which could not be settled amicably, by arbitration, to be conducted
at Mumbai, in accordance with the 1996 Act. Clause 19 stipulated
that “all disputes and differences of any kind whatever arising out of
or in connection with (the) agreement shall be subject to the
exclusive jurisdiction of courts of Mumbai only”.

49.2 Disputes arose, resulting in the issuance of a notice, dated

th
25 September, 2015, from DIPL to Indus, invoking Clause 18 of
the agreement and appointing Justice H.R. Malhotra, a retired Judge
of this Court, as Sole arbitrator. Indus objected to the appointment

of Justice Malhotra, vide its reply dated 15th October, 2015.

49.3 DIPL moved two petitions before this Court, one under
Section 9, seeking certain pre-arbitral interim reliefs, and another
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under Section 11, for appointment of an arbitrator. Both the

rd 21
petitions were disposed of, vide judgement dated 3 June, 2016 .
An objection, raised by Indus, to the maintainability of the Section
9 petition before this Court, was rejected, holding that the
“exclusive jurisdiction clause”, i.e. Clause 19, in the agreement
between the parties, would not apply on facts, as no part of the
cause of action had arisen within the jurisdiction of any court in
Mumbai. In other words, this Court was of the opinion that the
parties could not, by an exclusive jurisdiction clause, confer
jurisdiction on a court, within the jurisdiction of which no part of the
cause of action had arisen. This Court opined that only courts of
Delhi, Chennai or Amritsar, would have jurisdiction in the matter
and that, therefore, the petitioner had correctly filed the Section 9
petition in this Court. This Court proceeded to confirm the interim

order dated 22nd September, 2015 and also disposed of the Section
11 petition, by appointing Justice S.N. Variava, a learned retired
Judge of the Supreme Court, as the sole arbitrator.

49.4 Indus challenged this judgement, before the Supreme

Court. The Supreme Court quoted extensively from BALCO8, and

reproduced, with approval, the following passage from the
22
judgement of the Court of Appeal, England, in A v. B (on which

BALCO8, too, relied):

“… an agreement as to the seat of an arbitration is analogous

to an exclusive jurisdiction clause. Any claim for a remedy … as
to the validity of an existing interim or final award is agreed to be
made only in the courts of the place designated as the seat of
arbitration.”

49.5 The Supreme Court endorsed the view, earlier expressed in

Enercon (India) Ltd. v. Enercon GmBH23, that “once the seat of

arbitration has been fixed, it would be in the nature of an exclusive
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jurisdiction clause as to the courts which exercise supervisory

powers over the arbitration”.

49.6 The Supreme Court, thereafter, went on to note the

recommendations, of the 246th Law Commission, and the

amendments proposed by it. In para 18 of the report, the Supreme
Court rationalised the decision, of the Legislature, not to amend
Sections 20 and 31 of the 1996 Act, as proposed by the Law
Commission, thus:

“The amended Act, does not, however, contain the aforesaid

amendments, presumably because the BALCO judgment in no
uncertain terms has referred to “place” as “juridical seat” for the
purpose of Section 2(2) of the Act. It further made it clear that
Section 20(1) and 20 (2) where the word “place” is used, refers
to “juridical seat”, whereas in Section 20 (3), the word “place” is
equivalent to “venue”. This being the settled law, it was found
unnecessary to expressly incorporate what the Constitution
Bench of the Supreme Court has already done by way of
construction of the Act.”

49.7 The concluding paras 19 and 20 of the report, in Indus

Mobile Distribution11, are of significance:

“19. A conspectus of all the aforesaid provisions shows that

the moment the seat is designated, it is akin to an exclusive
jurisdiction clause.On the facts of the present case, it is clear that
the seat of arbitration is Mumbai and Clause 19 further makes it
clear that jurisdiction exclusively vests in the Mumbai courts.
Under the Law of Arbitration, unlike the Code of Civil Procedure
which applies to suits filed in courts, a reference to “seat” is a
concept by which a neutral venue can be chosen by the parties to
an arbitration clause. The neutral venue may not in the classical
sense have jurisdiction - that is, no part of the cause of action
may have arisen at the neutral venue and neither would any of
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the provisions of Section 16 to 21 of the Code of Civil Procedure

be attracted. In arbitration law however, as has been held above,
the moment “seat” is determined, the fact that the seat is at
Mumbai would vest Mumbai courts with exclusive jurisdiction for
purposes of regulating arbitral proceedings arising out of the
agreement between the parties.

20. It is well settled that where more than one court has
jurisdiction, it is open for parties to exclude all other courts. For
an exhaustive analysis of the case law, see Swastik Gases (P)
Ltd. v. Indian Oil Corpn. Ltd., (2013) 9 SCC 32. This was followed
in a recent judgment in B.E. Simoese Von Staraburg Niedenthal
v. Chhattisgarh Investment Ltd., (2015) 12 SCC 225. Having
regard to the above, it is clear that Mumbai courts alone have
jurisdiction to the exclusion of all other courts in the country, as
the juridical seat of arbitration is at Mumbai. This being the case,
the impugned judgment is set aside. The injunction confirmed by
the impugned judgment will continue for a period of four weeks
from the date of pronouncement of this judgment, so that the
respondents may take necessary steps under Section 9 in the
Mumbai Court. The appeals are disposed of accordingly.”

(Emphasis supplied)

52. Brahmani River Pellets12:

50.1 The Supreme Court was seized, in this case, with the
question of whether an application for appointment of an arbitrator,
under Section 11(6) of the 1996 Act, would lie before the Madras
High Court, despite the venue of arbitration having been fixed as
Bhubaneswar, in the agreement between the parties.

50.2 The agreement related to sale of 40,000 Wet Metric Tonne

(WMT) of Iron ore pellets, by the appellant to the respondent. The
pellets were to be loaded at Odisha and unloaded at Chennai.
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Clause 18 of the agreement provided for arbitration, of disputes,

and specified that “the venue of arbitration shall be Bhubaneswar”.

th
50.3 On 7 October, 2015, the respondent invoked the
arbitration clause. The appellant opposed the appointment of an
arbitrator, whereupon the respondent filed a petition, under Section
11(6), before the High Court of Madras, for appointment of the sole
arbitrator. The appellant challenged the jurisdiction of the High
Court of Madras, to entertain the petitioner, on the ground that the
seat of arbitration was Bhubaneswar. The High Court of Madras
appointed a learned former Judge of the High Court as the sole
arbitrator, holding that the mere designation of a “seat” of
arbitration, did not result in ouster of the jurisdiction of all other
courts to deal with the matter. An express clause, excluding
jurisdiction of other courts was, in the opinion of the High Court,
required, for such an ouster to take place.

50.4 Before the Supreme Court, the appellant contended that,

once the parties had agreed for a place/venue for the arbitration,
that place acquired the status of a “seat”, which was the juridical
seat of arbitration, resulting in confinement of jurisdiction to the
Courts having jurisdiction over such juridical seat. The respondent
contended, per contra, that, the cause of action having arisen both
at Bhubaneswar and Chennai, both High Courts, i.e. the High Court
of Orissa and the High Court of Madras, would have supervisory
jurisdiction over the arbitral proceedings. Absent any specific
exclusion of the jurisdiction of a court, in the agreement, it was
contended that the mere designation of a “seat” of arbitration, did
not result, ipso facto, in ouster of the jurisdiction of all courts, save
and except the court having territorial jurisdiction over such seat.

50.5 Noting, in detail, the import of the decisions in BALCO8,

9 11
Swastik Gases and Indus Mobile Distribution , the Supreme Court
concluded, in paras 18 and 19 of the report, thus:
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“18. Where the contract specifies the jurisdiction of the court

at a particular place, only such court will have the jurisdiction to
deal with the matter and parties intended to exclude all other
courts. In the present case, the parties have agreed that the
“venue” of arbitration shall be at Bhubaneswar. Considering the
agreement of the parties having Bhubaneswar as the venue of
arbitration, the intention of the parties is to exclude all other
courts. As held in Swastik Gases (P) Ltd. v. Indian Oil Corpn.
Ltd., (2013) 9 SCC 32 : (2013) 4 SCC (Civ) 157, non-use of
words like “exclusive jurisdiction”, “only”, “exclusive”, “alone” is
not decisive and does not make any material difference.

19. When the parties have agreed to have the “venue” of

arbitration at Bhubaneswar, the Madras High Court erred in
assuming the jurisdiction under Section 11(6) of the Act. Since
only the Orissa High Court will have the jurisdiction to entertain
the petition filed under Section 11(6) of the Act, the impugned
order is liable to be set aside.”

(Emphasis supplied)

53. BGS SGS Soma JV13:

51.1 This was a batch of three Civil Appeals, emanating from

three petitions, under Section 34 and, thereafter, three appeals
under Section 37, of the 1996 Act. Two issues arose before the
Supreme Court, of which one, alone, is relevant for our purpose.
These issues were (i) the maintainability of the appeals under
Section 37, and (ii) whether the “seat of arbitration” was New Delhi
or Faridabad, on which would depend the forum, before which the
Section 34 petition could have been filed. We are not concerned
with issue (i).

51.2 SLP (Civil) 25618/2018 dealt with the contract, awarded by

NHPC to the petitioner (hereinafter referred to as “BGS”) for
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construction of a project, touted as the largest hydropower project

in India. The project was located in the Lower Subansiri Districts in
Assam and Arunachal Pradesh. Clause 67.3 of the contract provided
for arbitration, to resolve disputes between the parties. Sub-clause
(vi) thereof provided that arbitration proceedings would be held in
New Delhi/Faridabad.

th
51.3 Disputes arose. BGS issued a notice of arbitration, on 16
May, 2011, to NHPC. A three-member Arbitral Tribunal was
constituted as per Clause 67.3. 71 sittings of the Arbitral Tribunal

took place, following which, on 26th August, 2016, the Arbitral

Tribunal delivered a unanimous award at New Delhi. NHPC
challenged the award, by way of a petition under Section 34 of the
1996 Act, before the District and Sessions Judge, Faridabad. BGS
moved an application, under Section 151 read with Order VII Rule
10 of the CPC and Section 2(1)(e)(i) of the 1996 Act, seeking that
the petitioner be returned to NHPC for presentation before the
appropriate court at New Delhi and/or the District Judge at Dhemaji,
Assam. The case was, subsequently, transferred to the Special
st
Commercial Court, Gurugram which, vide order dated 21
December, 2017, allowed the application of BGS and returned the
Section 34 petition to NHPC, for presentation before the proper
court having jurisdiction, in New Delhi. NHPC appealed, against the
said decision, under Section 37 of the 1996 Act, before the High

Court of Punjab and Haryana. Vide judgement dated 12th

September, 2018, the High Court of Punjab and Haryana allowed
the appeal of NHPC, and held that Delhi was only a convenient
venue, where the arbitral proceedings were held, and was not the
seat of the arbitration proceedings. As such, part of the cause of
action having arisen in Faridabad, the High Court held that the
District Judge at Faridabad was possessed of jurisdiction to decide
the petition of NHPC. BGS carried the matter to the Supreme Court.
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51.4 Before the Supreme Court, BGS contended that, as the

sittings of the Arbitral Tribunal had taken place at New Delhi, and
the award was also posted in New Delhi, New Delhi was the “seat”
of the arbitral proceedings between the parties. Even if it were to be
assumed that both New Delhi and Faridabad had jurisdiction, it was
contended that, New Delhi having been chosen by the parties, the
Section 34 petition would necessarily have to be filed before the
court at New Delhi. Once the venue of the arbitral proceedings had
been fixed between the parties, such venue was liable to be
regarded as the “seat” of arbitration, for which purpose reliance was

placed on the judgement of the Constitution Bench in BALCO8. The

subsequent judgement of the Supreme Court in U.O.I. v. Hardy
24
Exploration & Production (India) Inc. , which suggested otherwise
was, it was submitted, wrongly decided.

51.5 Similar submissions were advanced by learned counsel

appearing on behalf of the appellant in the other two appeals.

51.6 NHPC contended, per contra, that the arbitration clause, in

the contract between the parties, did not expressly state that New
Delhi, or Faridabad, was the “seat” of the Arbitral Tribunal. It
merely referred to a convenient venue and the fact that sittings
were held at New Delhi did not render New Delhi the “seat of the
arbitration”, within the meaning of Section 20(1) of the 1996 Act.
The agreements having been signed at Faridabad, and notices sent
by BGS to the office of NHPC at Faridabad, it was submitted that
part of the cause of action clearly arose in Faridabad, as a result of
which the Faridabad courts possessed the jurisdiction to decide the
8
Section 34 application. Even as per BALCO , it was contended, both
New Delhi and Faridabad would have concurrent jurisdiction. That
being so, as no part of the cause of action arose in New Delhi, and a
part of the cause of action having arisen at Faridabad, the Faridabad
court alone had jurisdiction to adjudicate on the matter.
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51.7 On this issue, the Supreme Court observed, at the outset

(in para 21 of the report) that it was necessary to lay down the law
on what constituted the “juridical seat” of the arbitral proceedings
and whether, once the seat was delineated by the arbitration
agreement, exclusive jurisdiction over the arbitral proceedings
would vest in the courts at the place where such seat was located,
alone. Thereafter, the Supreme Court traced the legislative history,
behind the 1996 Act, and the various provisions thereof. The
Supreme Court went on to observe that there was no distinction
between the “place of arbitration” and “seat of arbitration” and that
Sections 20 and 31(4) of the 1996 Act granted primacy of place to
the juridical seat of the arbitral proceedings. In para 32, the
Supreme Court observed that “given the new concept of “juridical
seat” of the arbitral proceedings, and the importance given by the
Arbitration Act, 1996 to this “seat”, the arbitral award is now not
only to state its date, but also the place of arbitration as determined
in accordance with Section 20.” The Supreme Court went on to
paraphrase, with reference to relevant passages, the law enunciated
8
in BALCO , including, inter alia, the following observations, from
para-76 of the report in that case, which clearly synonymizes
“place” and “seat” of the arbitration:

“It must be pointed out that the law of the seat or place where
the arbitration is held, is normally the law to govern that
arbitration. The territorial linkbetween the place of arbitration and
the law governing that arbitration is well established in the
international instruments, namely the New York Convention of
1958 and the UNCITRAL Model Law of 1985. It is true that the
terms “seat” and “place” are often used interchangeably. In
Redfern and Hunter on International Arbitration (Para-3.51), the
seat theory is defined thus:‘The concept that an arbitration is
governed by the law of the place in which it is held, which is the
“seat” (or “forum” or locus arbitri) of the arbitration, is well
established in both the theory and practice of international
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arbitration. In fact, the Geneva Protocol, 1923 states:

‘2. The arbitral procedure, including the constitution of the

Arbitral Tribunal, shall be governed by the will of the parties
and by the law of the country in whose territory the arbitration
takes place.’

The New York Convention maintains the reference to ‘the law

of the country where the arbitration took place’ [Article V(1)(d)]
and, synonymously to ‘the law of the country where the award is
made’ [Articles V(1)(a) and (e)]. The aforesaid observations
clearly show that the New York Convention continues the clear
territorial link between the place of arbitration and the law
governing the arbitration.”

Finally, in para 35, the Supreme Court noted the conclusion,

8
drawn in para 116 of BALCO , thus:

“The legal position that emerges from a conspectus of all the

decisions, seems to be, that the choice of another country as the
seat of arbitration inevitably imports and acceptance that the law
of that country relating to the conduct and supervision of
arbitrations will apply to the proceedings.”

(Emphasis supplied)

Additionally, the conclusion, in para-194 of BALCO8, that Part I of

the 1996 Act would have no application to international commercial
arbitration held outside India, was also endorsed.

51.8 In view of the law enunciated in BALCO8, the Supreme

Court went on to hold (in para 38 of the report) that “where parties
have selected the seat of arbitration in their agreement, such
election would then amount to an exclusive jurisdiction clause, as
the parties have now indicated that the courts at the “seat” would
alone had jurisdiction to entertain challenges against the arbitral
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award which had been made at the seat.”

51.9 Apropos Section 2(1)(e) of the 1996 Act, vis-à-vis Section 2

(2) and Section 20, the Supreme Court went on, in paras 44, 45,
49, 50 and 53 of the report, to clarify that Section 2(1)(e) did not,
in any manner, militate against the exclusive jurisdiction, vesting in
the Courts, within whose territory the “seat” of arbitration was
situate, in the following words:

“44. If paras 75, 76, 96, 110, 116, 123 and 194 of BALCO are
to be read together, what becomes clear is that Section 2(1)(e)
has to be construed keeping in view Section 20 of the Arbitration
Act, 1996, which gives recognition to party autonomy — the
Arbitration Act, 1996 having accepted the territoriality principle
in Section 2(2), following the UNCITRAL Model Law. The narrow
construction of Section 2(1)(e) was expressly rejected by the five
-Judge Bench in BALCO. This being so, what has then to be seen
is what is the effect Section 20 would have on Section 2(1)(e) of
the Arbitration Act, 1996.

45. It was not until this Court's judgment in Indus Mobile

Distribution (P) Ltd. v. Datawind Innovations (P) Ltd., (2017) 7
SCC 678 : (2017) 3 SCC (Civ) 760 that the provisions of Section
th
20 were properly analysed in the light of the 246 Report of the
Law Commission of India titled, “Amendments to the Arbitration
and Conciliation Act, 1996” (August, 2014) (hereinafter referred
to as “the Law Commission Report, 2014”), under which Sections
20(1) and (2) would refer to the “seat” of the arbitration, and
Section 20(3) would refer only to the “venue” of the arbitration.
Given the fact that when parties, either by agreement or, in
default of there being an agreement, where the Arbitral Tribunal
determines a particular place as the seat of the arbitration under
Section 31(4) of the Arbitration Act, 1996, it becomes clear that
the parties having chosen the seat, or the Arbitral Tribunal
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having determined the seat, have also chosen the courts at the
seat for the purpose of interim orders and challenges to the
award.

49. Take the consequence of the opposite conclusion, in the

light of the facts of a given example, as follows. New Delhi is
specifically designated to be the seat of the arbitration in the
arbitration clause between the parties. Part of the cause of
action, however, arises in several places, including where the
contract is partially to be performed, let us say, in a remote part
of Uttarakhand. If concurrent jurisdiction were to be the order of
the day, despite the seat having been located and specifically
chosen by the parties, party autonomy would suffer, which
BALCO specifically states cannot be the case. Thus, if an
application is made to a District Court in a remote corner of the
Uttarakhand hills, which then becomes the court for the purposes
of Section 42 of the Arbitration Act, 1996 where even Section 34
applications have then to be made, the result would be contrary
to the stated intention of the parties - as even though the parties
have contemplated that a neutral place be chosen as the seat so
that the courts of that place alone would have jurisdiction, yet,
any one of five other courts in which a part of the cause of action
arises, including courts in remote corners of the country, would
also be clothed with jurisdiction. This obviously cannot be the
case. If, therefore, the conflicting portion of the judgment of
BALCO in para 96 is kept aside for a moment, the very fact that
parties have chosen a place to be the seat would necessarily
carry with it the decision of both parties that the courts at the
seat would exclusively have jurisdiction over the entire arbitral
process.

50. In fact, subsequent Division Benches of this Court have

understood the law to be that once the seat of arbitration is
chosen, it amounts to an exclusive jurisdiction clause, insofar as
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the courts at that seat are concerned.In Enercon (India) Ltd. v.

Enercon GmbH, (2014) 5 SCC 1 : (2014) 3 SCC (Civ) 59, this
Court approved the dictum in Shashoua v. Sharma, 2009 EWHC
957 : (2009) 2 LLR 376] as follows : (SCC p. 55, para 126)

“126. Examining the fact situation in the case, the Court in

Shashoua case observed as follows:

‘The basis for the court's grant of an anti-suit injunction

of the kind sought depended upon the seat of the
arbitration. An agreement as to the seat of an arbitration
brought in the law of that country as the curial law and was
analogous to an exclusive jurisdiction clause.

Not only was there agreement to the curial law of

the seat, but also to the courts of the seat having
supervisory jurisdiction over the arbitration, so that, by
agreeing to the seat, the parties agreed that any challenge
to an interim or final award was to be made only in the
courts of the place designated as the seat of the arbitration.

Although, “venue” was not synonymous with “seat”, in

an arbitration clause which provided for arbitration to be
conducted in accordance with the Rules of the ICC in Paris
(a supranational body of rules), a provision that “the venue
of arbitration shall be London, United Kingdom” did amount
to the designation of a juridical seat.…’

In para 54, it is further observed as follows:

‘There was a little debate about the possibility of the

issues relating to the alleged submission by the claimants
to the jurisdiction of the High Court of Delhi being heard by
that Court, because it was best fitted to determine such
issues under the Indian law. Whilst I found this idea
attractive initially, we are persuaded that it would be wrong
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in principle to allow this and that it would create undue

practical problems in any event. On the basis of what I have
already decided, England is the seat of the arbitration and
since this carries with it something akin to an exclusive
jurisdiction clause, as a matter of principle the foreign court
should not decide matters which are for this Court to decide
in the context of an anti-suit injunction.’”

(emphasis in original)

53. In Indus Mobile Distribution (P) Ltd. v. Datawind

Innovations (P) Ltd., (2017) 7 SCC 678 : (2017) 3 SCC (Civ)
760, after clearing the air on the meaning of Section 20 of the
Arbitration Act, 1996, the Court in para 19 (which has already
been set out hereinabove) made it clear that the moment a
seat is designated by agreement between the parties, it is
akin to an exclusive jurisdiction clause, which would then vest
the courts at the “seat” with exclusive jurisdiction for purposes
of regulating arbitral proceedings arising out of the agreement
between the parties.”

(Bold emphasis and underscoring supplied; italics in

original)

51.10 In para 57 of the report, the Supreme Court drove home

the point, yet again, by holding that “the choosing of a “seat”
amounts to the choosing of the exclusive jurisdiction of the courts
at which the “seat” is located.”

51.11 Expatiating, thereafter, in detail, on the indicia

distinguishing the “seat” of arbitral proceedings, the Supreme Court
held, in para 61 of the report, that “wherever there is an express
designation of a “venue”, and no designation of any alternative
place as the “seat”, combined with a supranational body of rules
governing the arbitration, and no other significant contrary indicia,
the inexorable conclusion is that the stated venue is actually the
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juridical seat of the arbitral proceeding”. The distinction between

the “seat” and “venue” was, thereby, considerably eviscerated, save
and except for cases in which the agreement itself referred,
separately, to the “seat” and “venue” of the arbitral process, all
contained indicia, indicating to the contrary. It is not necessary to
expand on this aspect, as the arbitration agreement between the
petitioner and the respondent, in the present case, does not refer to
any “venue” of the arbitral proceedings, as distinct from the “seat”
thereof. Having said that, para 82 of the report lays down the law so
authoritatively, that it necessarily merits reproduction, in extenso:

“On a conspectus of the aforesaid judgments, it may be

concluded that whenever there is the designation of a place of
arbitration in an arbitration clause as being the “venue” of the
arbitration proceedings, the expression “arbitration proceedings”
would make it clear that the “venue” is really the “seat” of the
arbitral proceedings, as the aforesaid expression does not include
just one or more individual or particular hearing, but the
arbitration proceedings as a whole, including the making of an
award at that place. This language has to be contrasted with
language such as “tribunals are to meet or have witnesses,
experts or the parties” where only hearings are to take place in
the “venue”, which may lead to the conclusion, other things
being equal, that the venue so stated is not the “seat” of arbitral
proceedings, but only a convenient place of meeting. Further, the
fact that the arbitral proceedings “shall be held” at a particular
venue would also indicate that the parties intended to anchor
arbitral proceedings to a particular place, signifying thereby, that
that place is the seat of the arbitral proceedings. This, coupled
with there being no other significant contrary indicia that the
stated venue is merely a “venue” and not the “seat” of the
arbitral proceedings, would then conclusively show that such a
clause designates a “seat” of the arbitral proceedings. In an
international context, if a supranational body of rules is to govern
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the arbitration, this would further be an indicia that “the venue”,

so stated, would be the seat of the arbitral proceedings. In a
national context, this would be replaced by the Arbitration Act,
1996 as applying to the “stated venue”, which then becomes the
“seat” for the purposes of arbitration.”

(Emphasis supplied)

51.12 To complete the recital - though it is not strictly relevant

for the purposes of the present controversy - it may be noted that
the Supreme Court went on to hold that the earlier decision in

Hardy Exploration & Production24 was per incuriam, being contrary

8
to the law laid down in BALCO .

51.13 In conclusion, the Supreme Court held that the arbitration

clause, in the agreement between BGS and NHPC clearly indicated
that both New Delhi and Faridabad had been designated as the
“seat” of the arbitration proceedings. Even so, as the proceedings
had finally been held at New Delhi, and the awards signed at New
Delhi, and not at Faridabad, it was held that the parties had
consciously chosen New Delhi as the “seat” of arbitration, under
Section 20(1) of the 1996 Act. That being so, the Supreme Court
held that the parties had chosen the courts at New Delhi to alone
have exclusive jurisdiction over the arbitral proceedings. The arising
of a part of the cause of action at Faridabad did not, therefore,
justify invocation of the jurisdiction of the Faridabad courts, to
challenge the award. Once the “seat” of the arbitration had been
chosen, it was held that an exclusive jurisdiction clause had come
into being, so far as courts of the “seat” were concerned.
Resultantly, the Supreme Court set aside the judgement of the High
Court of Punjab and Haryana and directed that the Section 34
petition be presented in the courts at New Delhi.

Had this been the position…

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54. The judgements, cited hereinabove, unquestionably support the

premise that, once the “seat” of arbitration stood identified in the
agreement or contract between the parties, and in the absence of any
other “exclusive jurisdiction” clause in the contract, courts, having
territorial jurisdiction over such seat would, alone, be competent to
exercise supervisory control over the arbitral proceedings, which would
include applications for grant of interim relief. These judgements,
however, were rendered prior to the insertion, in Section 2(2), of the
proviso thereto, by the 2016 Amendment Act. This proviso stipulated
that, even if the place of arbitration - which, as per the aforesaid
judgements, would also be the “seat of arbitration” - were outside
India, the provisions in Part I of the 1996 Act would, nevertheless,
continue to apply. The beneficial reach of this proviso was, however,
conditioned by the caveat that there should be no “agreement to the
contrary”. It is in the awareness of this proviso that Mr. Kamath has,
consciously, sought to contend that the second sentence in Clause
22.1 of the Lease Deed constituted such an “agreement to the
contrary”. Whether it does, or does not, is examined, in detail,
hereinafter.

14
55. Mankastu Impex :

53.1 To a case covered by the proviso to Section 2(2) of the 1996

Act, this judgement assumes especial significance.

53.2 The Supreme Court was concerned, here, with a petition,

under Section 11 (6) of the 1996 Act, seeking appointment of an
arbitrator. A Memorandum of Understanding (MOU) was executed,
between the petitioner Mankastu Impex Pvt. Ltd. (hereinafter
referred to as “Mankastu”) and the respondent Airvisual. Ltd.
(hereinafter referred to as “Airvisual”), whereunder Airvisual agreed
to sell, to Mankastu, air quality monitors, for onward sale. Mankastu
was appointed as the exclusive distributor, for sale of the products
within India. Disputes surfaced, leading to the filing, by Mankastu,
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before this Court, of a petition, under Section 9 of the 1996 Act, on

11th December, 2017. Vide interim order dated 28th February, 2018,
this Court restrained Airvisual from selling any of its products in
India.

53.3 In the meanwhile, Mankastu also invoked the arbitration

th th
clause, in the MOU, on 8 December, 2017. Vide reply dated 5
January, 2018, Airvisual contended that Clause 17 of the MOU
provided for arbitration administered and seated in Hong Kong.
Mankastu filed the petition, under Section 11 (6) of the 1996 Act,
before this Court, for appointment of a Sole Arbitrator, in terms of
Clause 17 of the MOU. Clause 17 read thus:

“17. Governing law and dispute resolution

17.1 This MoU is governed by the laws of India, without

regard to its conflicts of laws provisions, and courts at New
Delhi shall have the jurisdiction.

17.2 Any dispute, controversy, difference or claim arising

out of or relating to this MoU, including the existence, validity,
interpretation, performance, breach or termination thereof or
any dispute regarding non-contractual obligations arising out
of or relating to it shall be referred to and finally resolved by
arbitration administered in Hong Kong.

The place of arbitration shall be Hong Kong.

The number of arbitrators shall be one. The arbitration

proceedings shall be conducted in English language.

17.3 It is agreed that a party may seek provisional,

injunctive or equitable remedies, including but not limited to
preliminary injunctive relief, from a court having jurisdiction,
before, during or after the pendency of any arbitration
proceeding.”
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53.4 On the aspect of territorial jurisdiction, Airvisual,

predictably, relied on the specification, in Clause 17.2 of the MOU,
of the place of arbitration as Hong Kong, contending that, once the
place of arbitration was outside India, Section 11 of the 1996 Act
would not apply. Additionally, it was pointed out, Clause 17.2 also
provided for reference, resolution and administration of all disputes,
arising out of the MOU, in Hong Kong. The petitioner contended, per
contra, that Clause 17.1 specifically conferred jurisdiction, on courts
at New Delhi, with the authority to decide disputes between the
parties. The objection of Airvisual was, therefore, it was contended,
misconceived.

53.5 The question arising before it for consideration was,

therefore, specifically framed, by the Supreme Court (in para 15 of
the report) as whether “in view of Clause 17.2 of the MOU … The
parties have agreed that the seat of arbitration is in Hong Kong and
whether this Court lacks jurisdiction to entertain the present
petition filed under Section 11 of the Arbitration and Conciliation
Act, 1996”. It appears that, while using the expression “this Court”,
the Supreme Court essentially intended to refer to the High Court of
Delhi.

53.6 The Supreme Court observed, relying on Enercon India23,

that the receipt of arbitration was a vital aspect of any arbitration
proceedings, and that its significance was “that it determines the
applicable law when deciding the arbitration proceedings and
arbitration procedure as well as judicial review over the arbitration
award”. It was “all about which court would have the supervisory
power over the arbitration proceedings”. (in para 20 of the report)

53.7 While proceeding to hold that the expressions “seat of

arbitration” and “venue of arbitration” were not interchangeable, the
Supreme Court held that, on a plain reading of the arbitration
agreement between Mankastu and Airvisual, it was “clear that the
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reference to Hong Kong as “place of arbitration” is not a simple

reference as the “venue” for the arbitral proceedings; but a
reference to Hong Kong for final resolution by arbitration
administered in Hong Kong”. Clearly, therefore, held the Supreme
Court, “the parties have agreed that the arbitration be seated at
Hong Kong and that laws of Hong Kong shall govern the arbitration
proceedings as well as have power of judicial review over the
arbitration award”. In these circumstances, the Supreme Court went
on to hold, in para 23 of the report, that, once the parties had
chosen Hong Kong as the place of arbitration, which was to be
administered in Hong Kong, the laws of Hong Kong would govern
the arbitration, and Indian courts would have no jurisdiction to
appoint any arbitrator.

53.8 In the context of the dispute before me, paras 25 to 27 of

the report are of some significance, and may be reproduced,
consequently, thus:

“25. Clause 17.1 of MoU stipulates that MoU is governed by

the laws of India and the courts at New Delhi shall have
jurisdiction. The interpretation to Clause 17.1 shows that the
substantive law governing the substantive contract are the laws
of India. The words in Clause 17.1, “without regard to its
conflicts of laws provisions and courts at New Delhi shall have the
jurisdiction” has to be read along with Clause 17.3 of the
agreement. As per Clause 17.3, the parties have agreed that the
party may seek provisional, injunctive or equitable remedies from
a court having jurisdiction before, during or after the pendency of
any arbitral proceedings. In BALCO v. Kaiser Aluminium
Technical Services Inc., (2012) 9 SCC 552 : (2012) 4 SCC (Civ)
810, this Court held that : (SCC p. 636, para 157)

“157. … on a logical and schematic construction of the

Arbitration Act, 1996, the Indian courts do not have the power
to grant interim measures when the seat of arbitration is
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outside India.”

If the arbitration agreement is found to have seat of

arbitration outside India, then the Indian courts cannot
exercise supervisory jurisdiction over the award or pass
interim orders. It would have, therefore, been necessary for
the parties to incorporate Clause 17.3 that parties have
agreed that a party may seek interim relief for which the
Delhi courts would have jurisdiction.

26. In this regard, we may usefully refer to the insertion of

proviso to Section 2(2) of the Arbitration Act, 1996 by the
Amendment Act, 2015. By the Amendment Act, 2015 (w.e.f. 23-
10-2015), a proviso has been added to Section 2(2) of the Act as
per which, certain provisions of Part I of the Act i.e. Section 9 -
interim relief, Section 27 - court's assistance for evidence,
Section 37(1)(a) - appeal against the orders and Section 37(3)
have been made applicable to “international commercial
arbitrations” even if the place of arbitration is outside India.
Proviso to Section 2(2) of the Act reads as under:

“2. Definitions.—(1)

*****

(2) Scope.—This Part shall apply where the place of

arbitration is in India:

Provided that subject to an agreement to the contrary,

the provisions of Sections 9, 27 and clause (a) of
subsection (1) and sub-section (3) of Section 37 shall also
apply to international commercial arbitration, even if the
place of arbitration is outside India, and an arbitral award
made or to be made in such place is enforceable and
recognised under the provisions of Part II of this Act.”

It is pertinent to note that Section 11 is not included in the

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proviso and accordingly, Section 11 has no application to

“international commercial arbitrations” seated outside India.

27. The words in Clause 17.1, “without regard to its conflicts

of laws provisions and courts at New Delhi shall have the
jurisdiction” do not take away or dilute the intention of the
parties in Clause 17.2 that the arbitration be administered in
Hong Kong. The words in Clause 17.1 do not suggest that the
seat of arbitration is in New Delhi. Since Part I is not applicable
to “international commercial arbitrations”, in order to enable the
parties to avail the interim relief, Clause 17.3 appears to have
been added. The words, “without regard to its conflicts of laws
provisions and courts at New Delhi shall have the jurisdiction” in
Clause 17.1 is to be read in conjunction with Clause 17.3. Since
the arbitration is seated at Hong Kong, the petition filed by the
petitioner under Section 11(6) of the Act is not maintainable and
the petition is liable to be dismissed.”

(Underscoring supplied; italics in original)

The takeaway

56. The objection, of Mr. Kamath, to the jurisdiction of this Court to

entertain the present petition, has to be examined in the backdrop of
the law, as set out hereinabove.

57. De hors the proviso to Section 2(2) of the 1996 Act, there can be
little doubt that once the “seat of arbitration” has been fixed as
Singapore, courts at Singapore would have exclusive jurisdiction to

supervise the arbitral proceedings. Applying BALCO8, it is also clear

that such supervision would extend not only to the arbitral
proceedings, per se, culminating in the award, but would also include
the power to grant interim reliefs, whether at pre-arbitral or post-
arbitral stage. In other words, Section 9 jurisdiction would also stand
divested, from this Court.
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58. That, however, is the position de hors the proviso to Section 2(2).

The proviso to Section 2(2), which came into effect on 23rd October,
2015, changes the goalpost. By operation of this proviso, Section 9 of
the 1996 Act would also apply to international commercial arbitration,
where the place of arbitration is outside India. It is not in dispute that
any arbitral award, issued by the SIAC, would be enforceable and
recognised under Part II of the 1996 Act.

59. Though the proviso to Section 2(2) uses the expression “place of
arbitration”, the decisions, cited hereinabove, make it apparent that, in
the absence of any indication to the contrary, the reference to “place of
arbitration” may justifiably be treated as fixing Singapore as the “seat
of arbitration”.

60. With the introduction of this proviso, the fixation of Singapore as

the “place” or the “seat” of arbitration would not, ipso facto, divest this
Court of Section 9 jurisdiction. Such divestiture would occur only if
there is any “agreement to the contrary”. The submission of Mr.
Kamath is that Clause 22.1, specifically the second sentence in the
said Clause, which stipulates that “the parties shall submit to the
exclusive jurisdiction of the courts of Singapore”, constitutes
“agreement to the contrary”, within the meaning of the proviso to
Section 2(2).

61. I must admit that, at first glance, I was inclined to accept this
submission of Mr. Kamath. Presented as it was, it was undoubtedly
attractive. A deeper analysis, however, convinced me to decide
otherwise.

62. There is a qualitative, an unmistakable, difference, between the

jurisdiction exercised by a Court under Section 9, and the jurisdiction
exercised by the Court under other provisions of the 1996 Act, such as
Section 11, 34 and 36. Section 9 is available at the pre-arbitration
stage, before any arbitral proceedings, and could be subject to
supervision by any judicial forum, have commenced. The purpose in
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including, specifically, Section 9, in the proviso to Section 2(2), has to

be appreciated in the backdrop of the recommendations of the 246th

Law Commission, and the observations guiding the said
recommendations. It is at this point that the difficulty, or impossibility,
of the petitioner obtaining pre-arbitral interim relief from Singapore,
becomes relevant. As has been correctly pointed out by Mr. Gautam
Narayan, para 41(i) of the recommendations of the Law Commission
indicate, unmistakably, that the decision to exclude, generally from
the ambit of Section 2(2), applications seeking prearbitral interim
reliefs, for securing the assets constituting subject matter of the
arbitration, was that, where the assets were located in India and there
is a likelihood of dissipation thereof, the party, seeking a restraint
thereagainst, would “lack an efficacious remedy if the seat of the
arbitration is abroad”. As has been observed by the Law Commission,
in such a situation, the party seeking pre-arbitral interim injunction,
would have to obtain an interim order from the foreign Court, or the
arbitral tribunal situated abroad, and, thereafter, to file a civil suit to
enforce the right created by such interim order which, otherwise,
would not be directly enforceable by way of an execution petition, as it
would not qualify as a “judgement” or “decree”, for the purposes of
Section 13 and 44A of the CPC. Similarly, disobedience, by the party
against whom an injunction may, if at all, be obtained from a foreign
Court, would also require the applicant seeking injunction to initiate
contempt proceedings in the foreign Court and, thereafter, enforce the
judgement of the foreign Court under Section 13 and 44A of the CPC.
These reliefs, as the Law Commission has observed, are likely to be
more chimerical than substantial.

63. In this context, the reliance, by Mr. Gautam Narayan, on the

decision, of the Court of Appeal in Singapore, in Maldives Airport Co.
1 3
Ltd. and Five Ocean Corporation , is, ex facie, apt. In Maldives Airport

Co. Ltd.1, the Court of Appeal has held, relying on SSL International
2
plc , that “interim injunctive relief should not be granted if it requires
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an unacceptable degree of supervision in a foreign land”.

64. I am also inclined to agree with Mr. Gautam Narayan, in his

submission that Section 12A of the International Arbitration Act would
not readily enable the petitioner to seek interim relief, at the pre-
arbitral stage, from Singapore courts. In the first place, Section 12A
does not indicate, expressly or by necessary implication, that it would
apply at the pre-arbitral stage. For ready reference, Section 12A may
be reproduced as under:

“Court-orders interim measure

12A.—

(1) This section shall apply in relation to an arbitration—

(a) to which this Part applies; and

(b) irrespective of whether the place of arbitration is in the

territory of Singapore.

(2) Subject to subsections (3) to (6), for the purpose of and in

relation to an arbitration referred to in subsection (1), the
High Court or a Judge thereof shall have the same power of
making an order in respect of any of the matters set out in
section 12(1)(c) to (i) as it has for the purpose of and in
relation to an action or a matter in the court.

(3) The High Court or a Judge thereof may refuse to make an

order under subsection (2) if, in the opinion of the High Court
or Judge, the fact that the place of arbitration is outside
Singapore or likely to be outside Singapore when it is
designated or determined makes it inappropriate to make such
order.

(4) If the case is one of urgency, the High Court or a Judge

thereof may, on the application of a party or proposed party to
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the arbitral proceedings, make such orders under subsection

(2) as the High Court or Judge thinks necessary for the
purpose of preserving evidence or assets.

(5) If the case is not one of urgency, the High Court or a Judge
thereof shall make an order under subsection (2) only on the
application of a party to the arbitral proceedings (upon notice
to the other parties and to the arbitral tribunal) made with the
permission of the arbitral tribunal or the agreement in writing
of the other parties.

(6) In every case, the High Court or a Judge thereof shall make
an order under subsection (2) only if or to the extent that the
arbitral tribunal, and any arbitral or other institution or person
vested by the parties with power in that regard, has no power
or is unable for the time being to act effectively.

(7) An order made by the High Court or a Judge thereof under

subsection (2) shall cease to have effect in whole or in part (as
the case may be) if the arbitral tribunal, or any such arbitral or
other institution or person having power to act in relation to
the subject-matter of the order, makes an order which
expressly relates to the whole or part of the order under
subsection (2).”

65. A reading of Section 12A indicates that it applies “in relation to an

arbitration”, and can be invoked by “a party or proposed party to the
arbitral proceedings”. Mr. Gautam Narayan submits that the very tenor
of this provision indicates that it applies only to an existing arbitration,
i.e. after the arbitral proceedings have commenced. This submission
has not been discountenanced, by Mr. Kamath, by citing any instance,
either during arguments or in the written submissions filed consequent
to conclusion of hearing, in which courts in Singapore have entertained
applications, for interim relief, under Section 12A of the International
Arbitration Act, before arbitral proceedings have commenced. Rather,
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para 39 of the judgement of the High Court of Singapore, in Five

3
Ocean Corporation , which reads thus, seems to indicate otherwise:

“39. The main legislative intention behind the enactment of s

12A was to give the court powers over assets and evidence situated
in Singapore and to make orders in aid of arbitrations that were
seated in Singapore and overseas. However, I agree with Ms. Ang
that if the seat of the arbitration is in Singapore and the assets are
overseas, the court would have the power to protect or preserve
assets and evidence situated outside Singapore. Indeed, the
language of s 12A is wide enough to confer such a power on the
High Court. This exercise of power to grant interim measures is not
unlike the exercise of the court's powers and jurisdiction in granting
an injunction that covered assets outside Singapore provided the
court has in personam jurisdiction over the parties to the local
proceedings.”

66. Accession, by this Court, to the submissions of Mr. Kamath, would,

therefore, justify the apprehension, expressed by the Law Commission,
regarding the deleterious consequences of excluding, in the case of
foreign-seated arbitrations, the applicability of Section 9 of the 1996
Act.

67. There is yet another way of looking at the issue. What is required,
by the proviso to Section 2(2) of the 1996 Act, in order to render the
proviso inapplicable in a particular case, is an “agreement to the
contrary”. The agreement, which would exclude the application of the
proviso to Section 2(2) would, therefore, have to be contrary to the
dispensation provided in the proviso, i.e., it would have to be contrary
to the applicability, to the proceedings, of Section 9 of the 1996 Act.
Expressed otherwise, as the proviso makes Section 9 of the 1996 Act
applicable even in the case of foreign seated arbitrations; any
“agreement to the contrary” would, therefore, have to expressly
stipulate that Section 9 would not apply in that particular case. Absent
such a specific stipulation, the beneficial dispensation, contained in the
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proviso, cannot stand excluded.

68. Mr. Kamath would seek to submit that Clause 22.1 itself contains
such an “agreement to the contrary”, inasmuch as it stipulates that
“the parties shall submit to the exclusive jurisdiction of the courts of
Singapore”. This argument cannot be accepted, for the simple reason
that courts at Singapore cannot grant relief under Section 9 of the
1996 Act. The mere submission, by the parties, to the exclusive
jurisdiction of courts in Singapore cannot, therefore, wish away the
applicability of the proviso to Section 2(2). As already noted
hereinabove, the statutory, and precedential, position that obtains, in
Singapore, as highlighted by Mr. Gautam Narayan and noted
hereinabove, indicates that it may be tremendously difficult, if not
impossible, for the petitioner to prosecute any proceeding, for grant of
pre-arbitral interim relief, before Singapore courts in the present case.
Mr. Kamath, despite having argued the matter persuasively and at
length, has been unable to disabuse me of this belief.

69. In fact, the concern expressed by the Law Commission, which

constituted the raison d'etre for the introduction of the proviso to
Section 2(2), was precisely this. The main justification, for introducing
the proviso, was that courts in the foreign country would not
efficaciously be in a position to grant pre-arbitral interim relief, to
secure assets which may be located in India. This, in fact, appears to
be the position, at least insofar as the facts of the present case are
concerned.

70. Mr. Kamath also sought to emphasise the fact that what was
required, by the proviso to Section 2(2), was merely an “agreement to
the contrary”, and not an “express agreement to the contrary”, as

recommended by the Law Commission in its 246th Report. The

argument essentially begs the issue. The question is not whether the
agreement to the contrary is express or implied - indeed, it may be
either - but whether there is an agreement to the contrary. The
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expression “subject to any agreement to the contrary” was understood,

25
in Phonogram Ltd. v. Lane , as meaning “unless otherwise agreed”.
Read in the context of the proviso to Section 2(2), it would have to be
seen whether, by Clause 22.1, the petitioner and the respondent had
“otherwise agreed”, i.e. agreed to exclude the applicability of Section 9
of the 1996 Act. Ex facie, I am unable to convince myself that the
answer to this question can be in the affirmative.

71. The Lease Deed, significantly, was executed much after the
introduction of the proviso in Section 2(2) of the 1996 Act, in 2019. It
cannot be reasonably assumed that the contract, of this magnitude,
would have been executed without a thorough study of the law, the
statutory provisions, and without obtaining appropriate legal advice. If
the parties desired to contract themselves out of Section 9 of the 1996
Act, therefore, the Lease Deed ought, specifically, to have said so.
There is, however, no such a recital in the Lease Deed. In view of the
fact that the sweep of Section 9 was extended, the foreign seated
arbitrations, by plenary parliamentary legislation, was made “subject
to agreement to the contrary” by the same legislative instrument, any
such “agreement to the contrary” would have, specifically, to state that
Section 9 of the 1996 Act would not apply. Mere submission, by the
parties, to the jurisdiction of Singapore courts, in the “Governing Law”
clause in the Lease Deed, cannot suffice to operate as “agreement to
the contrary”, excluding the applicability of Section 9 of the 1996 Act.

72. Paras 27 to 29 of Mankastu Impex14 are also instructive, in this

regard. The Supreme Court was concerned, there, with the issue of
whether the application, under Section 11(6) of the 1996 Act, as filed
by Mankastu before this Court, was maintainable. Mankastu did not
have, for its benefit, any provision, akin to the proviso to Section 2(2).
The Supreme Court observed, in the circumstances, that the fixation of
Hong Kong as the “seat of arbitration” operated, consequently, to
exclude the jurisdiction of this Court to adjudicate on the Section 11
application of Mankastu. Significantly, Mankastu chose to rely on
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Clause 17.1, of the MOU under consideration in that case, which

stipulated that “courts at New Delhi shall have the jurisdiction”. The
Supreme Court repelled the submission, holding that, in order for such
a contention to sustain, Clause 17.3 (in that case) would have had to
specifically stipulate “that parties have agreed that a party may seek
interim relief for which Delhi Court would have jurisdiction”.

73. Extrapolating this reasoning to Clause 22.1 in the present case,

read with the requirement of an “agreement to the contrary”, for the
proviso to Section 2(2) to be rendered inapplicable, the mere
conferment of exclusive jurisdiction, on courts at Singapore, by Clause
22.1, would not suffice as an “agreement to the contrary”, within the
meaning of the proviso to Section 2(2). The agreement would be
required to have a specific stipulation that the parties had agreed to
exclude the applicability of Section 9 of the 1996 Act to the contract
between them, and to disputes arising thereunder. Absent such a
specific stipulation, the mere recital, in Clause 22.1, that the parties
had agreed to submit themselves to the jurisdiction of Singapore
courts, would not suffice as an “agreement to the contrary”, within the
meaning of the proviso to Section 2(2) of the 1996 Act.

74. The above view resonates with the opinion expressed by the

Division Bench of the High Court of Bombay in Heligo Charters7, to the

effect that “operation of provisions of Section 9 cannot be excluded in
absence of a specific agreement to the contrary” (in para 16 of the
report). I express my respectful agreement therewith.

75. Mr. Kamath also sought to submit that, in any event, this Court
would have no jurisdiction to entertain the present petition, is no part
of the cause of action has arisen within its jurisdiction. I am not
inclined to accept this submission. The respondent having chosen not
to traverse the averments, in the petition, by filing any counter
affidavit, the Court has to proceed by treating the averments as
unrebutted. It is specifically averred, in the petition, that the Lease
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Deed, dated 9th December, 2019, was executed at New Delhi. It is also
averred (in para 4.4.15 of the petition), thus:

“Proceeding on the basis of the promises and commitments given

by the Respondents to the Petitioner, the Petitioner as the Lessee
and Respondent No. 1 as the Lessor executed the Lease Deed on
09.12.2019. It is pertinent to note that initially the parties had
executed the Lease Deed dated 12.11.2019 containing the same
terms and rights and obligations as the Lease Deed ultimately
executed on 09.12.2019. The Schedules to the Lease Deed dated
12.11.2019 were also signed between the parties. Since the parties
were of the view that another Lease Deed should be executed closer
to the date of delivery of the Aircraft, the Lease Deed dated
12.11.2019 was replaced by Lease Deed dated 09.12.2019. It is
respectfully submitted that the schedules to the Lease Deed dated
09.12.2019 could not be signed by the parties inadvertently but
both parties were ad idem regarding the Schedules being a part of
the Lease Deed.”

(Emphasis supplied)

th
76. Significantly, on 9 December, 2019 itself, the following email was
addressed, by the respondent to the petitioner:

“Hello Raj,

Thank you very much for the scanned copy. I would recommend
we also signed the annexures and schedules tomorrow and
complete the document.

What say?

Chenna Reddy, N.”

“What” Raj “said”, neither side is able to clarify, at this juncture.

Even so, there is no traversal, either by way of counter affidavit, or
even in the written submissions filed by the respondent, to the
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assertion, in para 4.4.15 of the petition, that the parties were ad

th
idem to the Schedules, in the Lease Deed dated 12 November,

2019, being treated as Schedules to the Lease Deed dated 9th

December, 2019. The afore extracted email, from the respondent
also indicates, in any case, that the respondent was agreeable to
this proposal. The respondent has, in its written submission, merely
averred that “the issue of the object of entering into the second
Lease Deed and as to why the schedules were not attached, and if
there was consensus ad idem are matters of evidence.” That may be
so; however, if the petitioner desired to contest the jurisdiction of
this Court, to entertain the present petition under Section 9 of the
1996 Act, the onus was on the respondent to, at the very least,
deny the averment, contained in para 4.4.15 of the petition, on
oath. To reiterate, the respondent has not, even in its written
submissions, denied the assertion, in the petition, that the parties
th
had agreed to the Schedules, to the Lease Deed dated 12
November, 2019, being treated as Schedules to the Lease Deed

dated 9th December, 2019.

77. In any event, there being no dispute about the fact that the Lease

Deed dated 9th December, 2019 was signed by the parties at New
Delhi, it cannot, in my view, be justifiably contended, by the
respondent, that no part of the cause of action arose within the
jurisdiction of this Court. This contention of Mr. Kamath, therefore,
stands rejected.

78. For all these reasons, I am of the opinion that the present petition
is maintainable before this Court, and reject, therefore, the objection
of want of territorial jurisdiction, as advanced by Mr. Kamath.

On Merits

79. On merits, Mr. Gautam Narayan submits that, till date, the aircraft
has not been delivered, by the respondents to the petitioner, in
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accordance with the covenants of the Lease Deed. He draws my

attention to Clause 4.1 of the Lease Deed, read in conjunction with
paras 3.1, 3.2 and 3.5 of the CAR dealing with Airworthiness, dated
th
10 September, 1998, which (to the extent relevant) read thus:

Clause 4.1 of the Lease Deed

“The Lessee shall be responsible to cause that the Aircraft is duly

registered with Director General of Civil Aviation, India, in the
Lessor's name as Owner and Lessor, and in Lessee's name, as
Lessee and Operator. The Lessor shall provide all necessary
documentation, as may be required by the Lessee, for such
registration. Any costs and expenses incurred in connection with
this registration will be borne by Lessee.”

Clause 3.1, 3.2 and 3.5, CAR

“3.1 An aircraft may be registered in either of the following 2

categories, namely

Category ‘A’, where the aircraft is wholly owned either—

*****

iv. by a company or corporation registered elsewhere than in

India, provided that such company or corporation has given the
said aircraft on lease to any person mentioned in para 3.1(i), (ii)
or (iii) above;”

“3.2 No aircraft in respect of which the conditions required in 3.1

are not satisfied, or which is already validly registered in another
country, shall be registered in India.”

(Emphasis supplied)

“3.5 Application for Registration of Aircraft

The owner or his authorized representative may apply for

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registration of the aircraft in the prescribed form CA-28

(Appendix ‘A’) completed with the following documents at least
five working days for aircraft on outright purchase and ten
working days for aircraft on lease, before the expected date of
issue of Certificate of Registration.

i. Customs clearance certificate/bill of entry of the aircraft.

ii. Certificate of deregistration from the previous registering

authority.

iii. An evidence to the effect that the aircraft has been

purchased for wholly owned by the applicant. For this
purpose, a copy of invoice shall be accepted.

iv. For aircraft purchased from a previous owner, an affidavit

as required.

v. In case the aircraft is taken on dry lease a copy of the lease

agreement.

vi. In case the aircraft is owned by a company or corporation,

a document of registration of the company and the names,
addresses and nationalities of the Directors.

vii. A copy of the import licence issued by Director General

Foreign Trade or permission for import issued by the
Ministry of Civil Aviation/DGCA. Where the aircraft is
imported for private use, it will be registered in the name of
the person or company to whom the import licence has
been issued.

viii. In cases where the aircraft has been

mortgaged/hypothecated, the owner/operator shall submit
his consent for the same and the papers to this effect. Such
a mortgage/hypothecation shall be endorsed on the
Certificate of Registration.
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ix. Fee for registration as prescribed in Rule 25 paid by web

based online transaction system of DGCA (Bharatkosh).”

(Emphasis supplied)

80. Mr. Gautam Narayan points out that, further, Clause 6.2 of the
Lease Deed required the Lessor to deliver the Aircraft to the Lessee in
accordance with the terms and conditions of the Lease Deed,
whereupon the Lessee was to accept the Aircraft by execution of a
Delivery Acceptance Certificate, in accordance with Schedule II to the
Lease Deed. Execution of the Delivery Acceptance Certificate,
therefore, submits Mr. Gautam Narayan, was conditional on delivery of
the aircraft in accordance with the covenants of the Lease Deed. The
Delivery Acceptance Certificate, in the format prescribed in Schedule II
to the Lease Deed, required the petitioner to certify the “delivery of the
Aircraft together with all fixed equipment, parts, components and
accessories installed including but not limited to, all log books,
documents and records related thereon”.

81. In the absence of the Certificate of Deregistration, certifying that

the Aircraft was no longer registered with any foreign authority, Mr.
Gautam Narayan submits that no “delivery” of the Aircraft, within the
meaning of the Lease Deed, could be said to have been effected. It
was for this reason, he submits, that the petitioner did not execute any
Delivery Acceptance Certificate, certifying delivery of the Aircraft,
either.

82. By not delivering the Aircraft with all requisite documents, Mr.
Gautam Narayan submits that the respondent has breached the Lease
Deed. (I may note, here, that Mr. Gautam Narayan submitted, initially,
that the respondent had not provided the COA issued by the IOMAR,
but fairly acknowledged, later, that he was incorrect in the said
submission.)

83. Mr. Gautam Narayan pointed out, further, that Clause 8.1 of the
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Lease Deed made events, in respect of the Aircraft, to be payable with

th
effect from 15 December, 2019, which was specifically as the “Rent
Commencement Date”. As such, submits Mr. Gautam Narayan, the
Aircraft ought to have been delivered to the petitioner by the said
date. In the absence of such delivery, there would be no question of
the petitioner having to pay any lease rental. For this purpose, Mr.
Gautam Narayan also places reliance on Clause 8.2, which stipulates
that “in consideration of the lease of the Aircraft, the Lessee shall, on
and from the Rent Commencement Date pay regularly in advance on

or before 15th day of the month during the Lease Term to the Lessor an
amount equivalent to United States Dollars Fifty-six Thousand only as
rent in respect of the Aircraft (Rent).” Mr. Gautam Narayan submits
that, without delivery of the Aircraft in accordance with the covenants
of the Lease Deed, no liability, to pay rent, could be fastened on the
petitioner. He also points out that there is no other clause, in the lease
Deed, providing for delivery of the aircraft. Despite this fact, Mr.
Gautam Narayan emphasises that the petitioner did pay lease rentals,
th
to the respondent, till 15 March, 2020, the last rental having been
paid for the month of February-March.

84. Thirdly, Mr. Gautam Narayan takes serious exception to the

contention, of the respondent, that the petitioner had terminated the
Lease Agreement. He has taken me through various correspondences,
between the petitioner and respondent, to wit,

th
(i) email dated 5 March, 2020, from the respondent to the
petitioner:

“Dear Raj,

About the delivery of the aircraft, we once again reiterate the

fact that we were ready to give you the delivery but the delay
was from BCPL especially for the painting of your livery and the
time taken to decide on the design of the paint spec.
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Let me also draw your attention to our decision to complete

the aircraft painting (white paint only) & instructed GMR to slot it
accordingly. BCPL at the time was also informed of our decision
and only then BCPL finalized the livery pattern and the paint
spec., not to mention, the 4K USD additional funds spent to
procure the paint on priority.

Man Power agreement - PFA the agreement which initially was

for 3 months. Howeverwe are fine to terminate the agreement
th
right away and also write off the services given from 15 Feb till
date. We have already handed over everything to Manisha and
supporting her till date. Let me know your thoughts.

We see bulk upload mail being added to our mails. Whilst it is

internal to you, we have no idea who that mail id belongs to and
why are our mails directed to them. Please clarify.

Warm Regards

Chenna Reddy N.

Ezen Aviation”

(Emphasis supplied)

(ii) e-mail dated 9th March, 2020, from the respondent to the
petitioner:

“Hello Manisha,

As of now Big Charters Private Limited (BCPL) has unilaterally

terminated the lease agreement. The issue is being discussed by
Ezen internally. Until a communication is issued by EAPL BCPL
shall not carry out any modifications/work on the aircraft.

Warm Regards

Chenna Reddy N
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Ezen Aviation”

(Emphasis supplied)

(iii) e-mail dated 9th March, 2020, from the petitioner to the
respondent:

“Dear Chenna,

BCPL has not terminated current lease agreement, we have

some issues with current agreement and EAPL has not maintain
its commitments inspite of payments made in time. Hence
decision-making from EAPL to advice next plan of action to
continue with operating lease beside note followings.

1. Hand over the aircraft to BCPL post our head of Eng

inspection carried out.

2. Hand over require documents.

3. Decision to advice who will carry out work scope on CDSS

and seats if needs to replace BCPL happy to carry out under its
own scope however if EAPL finds under its approval will help
BCPL has no issue keeping it under EAPL.

4. As per agreed terms seats replacement cost will be born by

EAPL or EAPL installs balance 6 seats.

5. Support towards C of R and C of A.

6. If C of A does not get thru due to An age of an aircraft then

EAPL return our money minus ferry cost which agreed between
self and Channa.

th
7. Lease payment continues but MR. applicable only from 15
May towards calendar due charges.

channa I am keeping all transparent here so our relation stays

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cordial rest is all your call as discussed.

Regards Sanjay”

(Emphasis supplied)

nd
(iv) e-mail dated 2 April, 2020, from the respondent to the
petitioner, in which it was stated, inter alia, thus:

“11. E-mail was received from BCPL on 05 Mar 2020 informing

of their unilateral decision to seek refund from EZEN of all sums
paid including Security Deposit and LR within 7 days. The e-mail
also instructed CFO/CEO not to make any further payments to
EZEN and directed EZEN to co-ordinate with BCPL CEO/CFO for
CLOSING.

12. The Lessee (BCPL) thus unilaterally terminated the lease.

As a result, EZEN it is not required to issue any further
termination notice.”

On the aspect of the purported “unilateral termination” of the

Lease Agreement by the petitioner, Mr. Gautam Narayan submits
that the aforesaid email correspondences, from the respondent,
disclose a number of factual and legal infirmities. He points out

that, in the email dated 5thMarch, 2020, the respondent had

stated that it was “fine to terminate the agreement right away”.
As such, Mr. Gautam Narayan points out that the move, towards
termination of the agreement - albeit illegally - was of the
respondent, and not of the petitioner. He submits that the
allegation that the petitioner had “unilaterally terminated” the
Lease Agreement was not borne out either by the facts or the
law. No such document of “unilateral termination”, he points out,
th
is forthcoming on the record. In each response, dated 9 March,
2020, Mr. Gautam Narayan points out that the petitioner
categorically disabused the respondent of its contention that the
petitioner had terminated the Lease Agreement. At this juncture,
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he submits, the respondent sought to raise a new contention,

viz., that, by asking for refund, in its letter dated 5thMarch, 2020
(whereas, Mr. Gautam Narayan points out, refund was sought, by
nd
the petitioner, in its letter dated 22 March, 2020, and not vide

its letter dated 5thMarch, 2020), the petitioner had unilaterally

terminated the agreement. This contention, submits Mr. Gautam
Narayan, is directly in the teeth of Clause 7 of the Lease Deed,
which deals with termination thereof, and reads as under:

“7. TERMINATION OF THE LEASE DEED

7.1. Early Termination:

i. The Lessee may terminate this Deed by providing notice in

writing to the Lessor 6 (six) months prior to intended
termination date and Lessee continues to pay the lease rent
and applicable maintenance reserve during the notice
period. The termination is subject to Lessee paying Early
Termination Fee (ETF) of United State Dollars Three
Hundred Thousand (USD 300,000.00) and all other
outstanding due amounts. Upon fulfilling the aircraft
redelivery condition as per Deed, the Security Deposit shall
be refunded to the Lessee in accordance with the provisions
of this Deed.

ii. The Lessee may terminate this Deed by paying the Lessor 6
(six) month Rent at the rates stipulated under the Deed, in
lieu of such 6 (six) month notice. Lessee must forthwith
redeliver the aircraft to the Lessor. The termination is
subject to Lessee paying Early Termination Fee (ETF) of
United State Dollars Three Hundred Thousand (USD
300,000.00) and all other outstanding due amounts. Upon
fulfilling the conditions for termination of lease, the Security
Deposit shall be refunded to the Lessee in accordance with
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the provisions of this Deed.

iii. Not contravening any of the terms in Clause 7.1.(i) or

Clause 7.1.(ii) above, the Lessee is exempted from the
payment of Early Termination Fee (ETF) of United State
Dollars Three Hundred Thousand (USD 300,000.00) subject
to completion of24 continuous months of lease.

7.2. Termination by the Lessor for breach by the Lessee:

Notwithstanding the generality of the foregoing, in the

event the Lessee commits material breach of any of the terms
and conditions expressed in this Deed, the Lessor shall be
entitled to terminate this Deed, without any obligations
towards the Lessee, and Lessor shall forfeit the Security
Deposit of the Lessee. Provided further and notwithstanding
any provision to the contrary, in the event the Lessee fails to
pay any amount/s payable in terms of this Deed on or before
the due date, for 2 (two) consecutive months (each a material
breach), then the Lessor shall be entitled to terminate this
Deed forthwith. Upon such termination of Deed, Lessee is
obligated to forthwith redeliver the aircraft as per the
conditions of the Deed and to pay the outstanding dues to the
Lessor. Lessor shall forfeit the Security Deposit of the Lessee.

7.3, Termination by the Lessee for breach by the Lessor:

Notwithstanding the generality of the foregoing, in the

event the Lessor commits a breach of its representations and
warranties and covenants recorded hereunder, the Lessee shall
be entitled to terminate this Deed, by giving notice in writing
of the same to the Lessor and the Lessor shall have the right
to remedy the breach within a period of 60 (Sixty) days (or
such longer period as may be reasonably necessary to cure
such breach) from the date of receipt of the written notice
issued by the Lessee intimating Lessor of such breach.
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7.4. Procedure for Termination of Deed—

Earlv Termination or End of Lease Term : The following

procedure shall be followed for termination of Deed at the end
of lease term or at early termination:

7.4.1. The Lessee shall permit representative/s appointed

by the Lessor to inspect the Aircraft in order to assess
condition of Aircraft, Aircraft records.

7.4.2. Upon redelivery of the Aircraft as per Deed by the

Lessee to the Lessor, the Security Deposit shall be refunded by
the Lessor to the Lessee after deducting any amounts due and
receivable by Lessor towards:

(i) the arrears of Rent, and any other dues payable under
the Deed (including any monies payable by Lessee (if
applicable) in lieu of the notice period prescribed under
Article 4.1 above) and

(ii) amounts, as being reasonably required to repair

damages, jf any, to the Aircraft (reasonable wear and
tear excepted), and

(iii) any unpaid statutory or other dues payable by the

Lessee, during the Lease Term under this Deed, to any
authorities or service providers with respect to the
Aircraft.

7.4.3. If the Security Deposit is not refunded by the Lessor

to Lessee within fourteen (14) days from the Aircraft
redelivery by the Lessee in accordance with the terms of this
Deed upon early termination or expiry of the Lease Term, then
the Lessor shall be liable to refund the Security Deposit, after
adjustments in terms of this Deed, to Lessee along with
interest to be calculated at the rate of 18 % (eighteen
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percent) per annum for the period of delay. The liability of the
Lessor to such refund to the Lessee under this Deed and the
right of the Lessee to recover the same from the Lessor shall
survive the termination or expiry of this Deed.

7.4.4. In the event of the Lessee's failure to return the

Aircraft and deliver possession thereof to the Lessor, in
accordance with the terms of this Deed, or upon the earlier
termination or expiry of this Deed and upon the Lessor being
ready to take possession of the Aircraft and refund the
Security Deposit to the Lessee in terms of this Deed, the
Lessee shall, without prejudice to any other remedy which
may be available to the Lessor in law, be liable to pay an
amount equal to two times the per day Rent (computed on a
proportionate basis) or two (2) times the prevailing market
value of the Rent (computed on a proportionate basis),
whichever is higher, for every day of delay in handing over the
Aircraft from the date of termination or expiry of this Deed, in
addition to the Lessee making payment of all other charges
and payments under this Deed. It is hereby clarified that the
payment of the amounts as aforesaid shall not entitle or grant
right to the Lessee to continue in possession and operation of
the Aircraft and the Lessee shall be construed to be an ‘illegal
occupant’ of the Aircraft. The Parties hereby agree and confirm
that the amount specified herein before is not by way of
penalty and that the aforesaid amount is reasonable and a
genuine pre-estimate, as the minimum compensation payable
by the Lessee to the Lessor.

7.4.5. Without prejudice to any other right or remedy that

may be available to the Lessor, if Lessee fails to return the
Aircraft thereof to the Lessor as per the terms of this Lease
Deed, the Lessor shall be entitled to take all steps as may be
available to it to take possession of the Aircraft.”
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There could, therefore, submits Mr. Gautam Narayan, be no

question of any “unilateral termination”, far less “implied
unilateral termination”, by the petitioner, of the Lease Deed.
Termination had, necessarily, to be by way of a written notice.
In this context, Mr. Gautam Narayan also invited attention to
Clause 26.1 of the Lease Deed, which stipulated thus:

“Any notice required or otherwise given pursuant to this

Deed shall be in writing and mailed, certified return receipt
requested, postage prepaid, or delivered by overnight
delivery service…”

Mr. Gautam Narayan submits, therefore, that the plea of

“unilateral termination”, by the petitioner, of the Lease
Agreement, was merely by way of a smokescreen, created by
the respondent to wriggle out of its obligations under the
Lease Agreement.

85. Mr. Gautam Narayan submits, fourthly, that the plea, of the
respondent, that the petitioner had defaulted in paying Maintenance
Reserves, was completely false. He submits that Maintenance Reserves
were payable, under the Lease Deed, only against actual number of
hours flown. When the aircraft itself had not been delivered, in
accordance with the governance of the Lease Deed, Mr. Gautam
Narayan submits that there could be no question of flying of the
aircraft and, consequently, no question of any liability, of the
petitioner, to pay Maintenance Reserves, either.

86. The fifth issue urged by Mr. Gautam Narayan relates to the non-
fitment, in the Aircraft, of the CDSS. He drew attention to e-mail,
th
dated 16 February, 2020, from the respondent to the petitioner, in
which the respondent had categorically acknowledged the requirement
of installation of the CDSS, in order to have the Aircraft registered in
India. The said communication reads as under:
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“Subject: Good Afternoon INSTALLATION OF CDSS ON MSN 688

Dharani,

As part of induction into Indian DGCA registry we need to install

the CDSS on the aircraft. The kit is ordered and is expected to be in
hand by early-mid next week.

I have looped Ms. Manish (Engineering Head) into this mail for
discussion on the agreement for installation. Work will be carried
out under flybig GTA.

Deba& Raman will co-ordinate for the issuance of SB/Workpack

etc.

Manisha,

Please co-ordinate with Dharani and take it forward.

Warm Regards

Chenna Reddy N.

Ezen Aviation”

(Emphasis supplied)

Pointing out that the respondent had undertaken to provide the

Aircraft, compliant with DGCA and EASA standards, Mr. Gautam
Narayan referred to EASA Standard ORO. SEC. 100A(a) and (c)(2),
which reads thus:

“ORO. SEC. 100.A Flight crew compartment security

(a) In an aeroplane which is equipped with a flight crew

compartment door, this door shall be capable of being locked,
and means shall be provided by which the cabin crew can
notify the flight crew in the event of suspicious activity or
security breaches in the cabin.

*****
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(c) In all aeroplanes which are equipped with a flight crew

compartment door in accordance with point (b) above:

(2) means shall be provided for monitoring from either

pilot's station the entire door area outside the flight crew
compartment to identify persons requesting entry and to
detect suspicious behaviour or potential threat.”

87. Parallelly, points out Mr. Gautam Narayan, the CAR Section 8 -
th
Aircraft Operations, dated 30 October, 2018, which dealt with
“Operation of Commercial Air Transport - Aeroplanes” stipulated, in
Clause 13.2.3(b), thus:

“13.2.3 In all aeroplanes which are equipped with a flight crew

compartment door in accordance with 13.2.2:

(b) mean shall be provided for monitoring from either pilot's

station the entire door area outside the flight crew compartment
to identify persons requesting entry and to detect suspicious
behavior or potential threat. All new aircraft to be imported after

1st of Jan, 2008 should have cockpit door surveillance system

(CDSS) installed at the time of import. Aircraft already importing
should comply with this requirement during their next ‘C’ check
st
falling after 1 Jan, 2008.”

(Emphasis supplied)

88. Delivery of an aircraft, without CDSS fitted, submits Mr. Gautam

Narayan could not, therefore, be regarded as “delivery”, within the
meaning of the Lease Agreement.

89. Contending that, therefore, there had been clear breach of the
Lease Deed by the respondent, Mr. Gautam Narayan submits that the
petitioner has succeeded in establishing a prima facie case.
Additionally, the respondent being located outside India, permitting
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the respondents to alienate the corpus of the arbitral proceeding, i.e.

the aircraft, would render the arbitral proceedings futile. The balance
of convenience, too, he submits, would be in favour of grant of interim
reliefs, as sought in the petition.

90. Responding to the submissions of Mr. Gautam Narayan, Mr. Arvind

Kamath, learned Senior Counsel for the respondent submitted,
th
initially, that the Lease Deed dated 9 December, 2019, was invalid
and unenforceable, as it contained no Schedules. He disputes the
submission, of Mr. Gautam Narayan, that there was an implicit
agreement, between the petitioner and the respondent, to the effect

that the Schedules, to the Lease Deed dated 12th November, 2019,
th
were to be read as part of the Lease Deed dated 9 December, 2019
and submits that, in any case, this would be a matter of evidence, to
be established during the arbitral proceedings, and could not be said
to be established, prima facie, in favour of the petitioner.

91. Apropos the submission, of Mr. Gautam Narayan, that the

petitioner had never terminated the contract, Mr. Kamath submits

that, in email dated 5th March, 2020, addressed to the respondent, the
petitioner had, as the concluding remark, stated “Demand full refund
and close.” This, according to Mr. Kamath (and as contended in the
written submissions filed after conclusion of hearing) “clearly indicates
an intention to sever the relationship of lessor and lessee and restore
the status of the parties prior to entering into the lease” and “also
implies an ‘undeclared termination’ of the Lease Deed.” The
contention, of Mr. Gautam Narayan, that his client had not terminated
the Lease Deed unilaterally was, therefore, submits Mr. Kamath,
incorrect.

92. Mr. Kamath sought to submit, further, that the aircraft had been

imported, into India, by the petitioner, and had landed on 29th

November, 2019, but that, as no Bill of Entry had been filed, the
“import” of the aircraft was yet not complete, from the Customs
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perspective. Sans any valid import, submits Mr. Kamath, the question
of the registration of the Aircraft, from the IOMAR, would not arise. He
th
points out that, even as per the CAR, dated 10 November, 1998,
filing of a Bill of Entry was mandatory, before registration of the

aircraft in India. E-mail, dated 22nd March, 2020, from the petitioner to
the respondent, it is submitted, confirmed that the petitioner had
applied for permission to import the aircraft into India. The fact of non-
completion of the import formalities, which was an obligation on the
petitioner, he submits, has been suppressed by the petitioner, and
defeats the prayers made in the petition. This suppression of facts, he
submits, also disentitled the petitioner to any equitable relief from this
Court.

93. Delay in securing registration of the aircraft in India, Mr. Kamath

submits, is attributable to the non-completion of import formalities by
the petitioner. In the written submissions filed by the respondent,
after conclusion of hearing, it has been averred thus:

“The registration of the aircraft in India is the responsibility of

the Petitioner. The Petitioner claims to have taken steps for
registration before the DGCA. Section 3.5 of the CAR dated
10/09/1998 lists out documents required for registration. The very
first document is the customs clearance certificate/BoE of the
aircraft. Obtaining the certificate/BoE is the responsibility of the
Petitioner. The Petitioner has failed to obtain the certificate of
Customs clearance/BoE. The second document is the certificate of
de-registration from the previous registering authority. Although the
certificate of de-registration has to be obtained by the Respondent,
the Respondent cannot apply for de-registration in another country,
until the Petitioner completes the import process in India. The rest
of the documents are already available with the Petitioner.”

(Emphasis supplied)

94. Mr. Kamath submits that the respondent had furnished, to the
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petitioner, all necessary documentation for operating the aircraft.

There were, he submits, only two documents, necessary for this
purpose, namely the CoR and the CoA. Both these documents had
been provided, by the respondent to the petitioner. He points out that
the petitioner had not sought, from the respondent, any other specific
document, in its communications and that, even in the Notice of

Dispute, dated 24thApril, 2020, the petitioner had not alleged failure,
on the part of the respondent, to provide required documents. This
allegation, he submits, figures for the first time in the present petition.

95. Apropos the requirement of installation of the CDSS, Mr. Kamath

draws attention to Clause 6.3 of the Lease Deed, which stipulated that
“the Aircraft to be leased hereunder shall be delivered to the Lessee in
“AS IS” condition and subject to each and every disclaimer of warranty
and representation as set forth herein”. Installation of the CDSS, he
submits, was not a mandatory requirement in Vietnam, from where
the aircraft was being imported. Nor did the Lease Deed, he points out,
obligate the respondent to provide the CDSS. The mere fact that, in
certain separate e-mail communications, the respondent may have
agreed to provide the CDSS, according to Mr. Kamath, does not make
out a case of breach of the covenants of the Lease Deed, merely
because the Aircraft was not equipped with the CDSS. In fact, he
points out, the first communication, in which the requirement of the
rd
CDSS found mention, was in the e-mail dated 3 December, 2019,
from the petitioner to the respondent, in which the petitioner stated
that it “(understood) that MSN 688 Aircraft do not have the CDSS in
it” and that “as per DGCA CAR we cannot import Aircraft without
CDSS”. Installation of the CDSS, therefore, reiterates Mr. Kamath, was
not an essential covenant of the Lease Deed. This obligation, if at all,
he submits, arose from email correspondences between the petitioner
and the respondent, and non-fulfilment thereof could not be regarded
as infraction of any of the terms of the Lease Deed. He also points out,
in this context, that Clause 32.1 of the Lease Deed specifically stated
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that prior agreements or understandings stood terminated, and that

the Lease Deed was a self-contained document. The Clause read thus:

“32.1 This Deed contains all of the terms and conditions agreed
by and between the Parties hereto with respect to lease of the
Aircraft and on and from the Lease Commencement Date, the prior
agreements or understandings pertaining to any such matters
(including the Letter of Intent) shall stand terminated except with
regard to any accrued rights thereunder. No provision of this Deed
may be amended or added to except by an Addendum in writing to
be duly signed by the Parties herein.”

96. Breach of any obligation, by the respondent, unrelated to the

Lease Deed, submits Mr. Kamath, cannot be agitated in proceedings
under Section 9 of the 1996 Act. This issue is, therefore, according to
him, entirely irrelevant to these proceedings.

97. Mr. Kamath also disputes the contention, of Mr. Gautam Narayan,
that there had been no “delivery” of the aircraft, within the terms of
the Lease Deed, by the respondent. He submits that, under Clause 6.2
of the Lease Deed, delivery of the Aircraft commenced with issuance of
the Delivery Acceptance Certificate by the petitioner. Any delay, in
delivery of the aircraft, he submits, was attributable only to insistence,
by the petitioner, on compliance, by the respondent, with conditions,
which the respondent was not obligated to perform in terms of the
Lease Deed. Mr. Kamath has referred me to e-mail communications,

dated 4th March, 2020 and 5th March, 2020, from the respondent to
the petitioner, and the reply, of the petitioner, to the respondent,
th
dated 5 March, 2020, to submit that the insistence, by the petitioner,
was relating to requirements foreign to the Lease Deed.

98. In response to the submission, of Mr. Gautam Narayan, that the

respondent had not provided, to the petitioner, all documents
necessary for registration of the Aircraft, Mr. Kamath draws attention
th
to Clause 3.5 of the CAR, dated 10 September, 1998, regarding
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“Airworthiness”, which already stands extracted in para 77 supra. He

submits that the very first document, in the list of documents
necessary for registering the Aircraft, was the Customs clearance
certificate/Bill of Entry which, according to him, was required to be
filed by the petitioner, and in which respect the petitioner was in
default. He submits that the Certificate of Deregistration from the
IOMAR, though also stipulated as a necessary document for registering
the Aircraft in India, could be provided only on production of evidence,
by the respondent, before the IOMAR, to the effect that the aircraft
had been imported into another country. The factum of import having
not taken place (owing to non-filing of the Bill of Entry by the
petitioner), Mr. Kamath submits that it was not possible for him to
secure a Certificate of Deregistration from the IOMAR.

99. Mr. Kamath referred me, thereafter, to Clause 2.2 of the CAR,
th
dealing with “Airworthiness”, issued on 25 November, 2014,
specifically Clause 2.2.1, which entitled the owner, or his authorised
representative, to apply to the DGCA, together with necessary fees, for
issuance of CoA, “after the aircraft has been registered”. As the Aircraft
had not yet been registered in India, he submits that the plea, of Mr.
Gautam Narayan, that his client was unable to obtain CoA, from the
DGCA, was untenable and premature. In any event, he submits, the
existing CoA, of the aircraft, was valid till November, 2020, and could,
therefore, be got validated, by the DGCA, under Clause 3.1 of the CAR

dated 25th November, 2014, at any time.

100. Adverting, thereafter, to Schedule II to the Lease Deed, Mr.

Kamath submits that the documents, stipulated in the said Schedule,
were required to be in the Aircraft, and were available in the Aircraft at
the time of its landing in India. As such, he submits, without taking
delivery of the Aircraft, the petitioner could not, very well, contend
that there was failure, on the part of the respondent, in providing the
documents, to which Schedule II, to the Lease Deed, referred.
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101. As such, submits Mr. Kamath, no prima facie case of breach, by

the respondent, of any of the covenants of the Lease Deed, existed, as
could maintain this petition, under Section 9 of the 1996 Act.

102. Arguing in rejoinder, Mr. Gautam Narayan submitted that, in its e

th
-mail dated 24 January, 2020, the respondent had acknowledged the
fact that Bill of Entry, in respect of the Aircraft, was in existence.

Drawing my attention to e-mails, dated 4th March, 2020, 5th March

nd th
2020, 2 April, 2020 and 29 April, 2020, from the respondent, Mr.
Gautam Narayan points out that the issue of Customs clearance had
never been raised by the respondent, in any of these communications.
The plea that there was failure, on the part of the petitioner, to file a
Bill of Entry, therefore, he submits, was by way of a red herring, raised
for the first time before this Court, in order to divert attention from the
failure, on the part of the respondent, to perform its obligations under
the CAR and the Lease Deed.

103. Non-furnishing of the Certificate of Deregistration, from the

IOMAR, Mr. Gautam Narayan reiterates, was fatal to the contention, of
the respondent, that delivery of the Aircraft, in terms of the Lease
Deed, had taken place. Mr. Gautam Narayan invited my attention, in

this context, to Appendix ‘D’ to the CAR, dated 25th November, 2014,
dealing with “Airworthiness”, titled “Delivery of Aircraft”, Clause II
whereof read thus:

“The aircraft which is being exported to India other than via

flyaway, the following documents should accompany the Aircraft
and be delivered to DGCA:

a. Standard Certificate of Airworthiness issued by the country of

Export,

b. Export Certificate of Airworthiness

c. Certificate of Deregistration or a written statement that the

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Aircraft is not registered in the country of export.”

(Emphasis supplied)

104. Mr. Gautam Narayan emphasises that the respondent was aware,
at all points of time, that the aircraft was being imported, by the
petitioner, in order to fly it, as commercial carrier, in India. It was for
this reason, he submits, that the Lease Deed specifically required the
respondent to provide, to the petitioner, all documents, as would
enable the petitioner to obtain registration of the aircraft in India, from
the DGCA. Supplying of the aircraft, sans the necessary
documentation, therefore, was useless, according to Mr. Gautam
Narayan. Mr. Gautam Narayan also invited my attention to emails,
th th th
dated 24 July, 2019, 19 August, 2019 and 7 September, 2019,
which preceded the execution of the Lease Deed, to emphasise his
contention that the respondent could not legally shy away from its
obligations towards the petitioner.

105. Drawing my attention, once again, to the communications

between the petitioner and the respondent, Mr. Gautam Narayan
reiterates that his client never signified any intention to terminate the
agreement, in terms of Clause 7 of the Lease Deed.

106. Mr. Gautam Narayan submits, finally, that, in the circumstances,

the balance of convenience was clearly in favour of his client, to whom
the respondent had held out solemn assurances, on which it reneged.

Analysis

107. While proceeding to examine the rival contentions of learned

counsel, I am required to be mindful of the fact that the present
proceedings are under Section 9 of the 1996 Act.

108. Section 9 has its own distinct indicia and, while it is

fundamentally guided by the three considerations of existence of a
prima facie case, balance of convenience and irreparable loss, which
guide the exercise of discretion under Order XXXIX CPC, there is a
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fundamental difference between the two provisions.

109. Interim relief, under Order XXXIX, is in the nature of an

interlocutory order pending disposal of a suit. Pre-arbitral interim relief
under Section 9 of the 1996 Act, on the other hand, is primarily aimed
at securing the corpus of the dispute so that arbitral proceedings are
not rendered a futility before they commence. It is for this reason that,
apart from the aforesaid three criteria, of prima facie case, balance of
convenience and irreparable loss, a Section 9 petitioner is also required
to demonstrate that, were urgent interim reliefs not granted, there is a
chance of the arbitral proceedings being frustrated, even before they
take off, and of the award, if any, which may come to be passed, being
rendered futile. For this reason, the principles governing Order
XXXVIII Rule 5 CPC have, for that reason, also been held to be
applicable, while directing the furnishing of security, under Section 9
(1)(ii)(b).

110. A Section 9 court has also to be circumspect and should not take
care not to entrench on the jurisdiction vested in the arbitrator by
Section 17. The 1996 Act, it has to be remembered, is an Act dealing
with arbitration and conciliation, and not with proceedings before a
civil court. The base provision, for seeking interim relief in arbitral
proceedings, is, therefore, Section 17, and not Section 9. Section 9 is,
in fact, in the nature of an emergency clause, inserted to circumvent
the possibility of either party, to the proposed arbitral proceedings,
taking steps to render the proceedings futile, even before they
commence. The court has been conferred power, to grant pre-arbitral
interim relief, under Section 9 only in order to counter any attempt, by
either party, to frustrate the arbitral proceedings, between the stage of
arising of the dispute and, the moving the arbitrator under Section 17
of the 1996 Act. Section 9, at the pre-arbitral stage, is, therefore, a
provision in aid of the arbitral proceedings, intended to provide ad hoc
protection, till Section 17 could be invoked.
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111. The sequitur is that the degree of satisfaction, of the Section 9

court, at the pre-arbitral stage, is not the same as the degree of
satisfaction of the arbitrator, while exercising jurisdiction under
Section 17 of the 1996 Act. The Section 9 court is essentially
concerned with the issue of whether an arbitrable dispute, deserving of
resolution by arbitral proceedings, exists, or not. If the case set up by
the Section 9 petitioner is devoid of merit altogether, so that no
dispute, worthy of arbitration, exists, the Section 9 court would be
justified in declining relief. If, on the other hand, an arguable case is
found to exist, which deserves resolution by arbitration, and the court
finds that, were interim protection, under Section 9, not granted, there
is a likelihood of frustration of the arbitral proceedings, the court would
proceed to grant relief under Section 9.

112. This aspect is underscored by a comparison of the words used in

Order XXXIX of the CPC, vis-a-vis those employed in Section 9 of the
1996 Act. Order XXXIX of the CPC empowers the court to “grant a
temporary injunction”, till the disposal of the suit, or till further orders.
Section 9 of the 1996 Act, per contra, empowers the court to grant “an
interim measure of protection”. The word “protection”, as used in
Section 9(1)(ii), underscores, as it were, the raison d'etre of the
provision.

113. A section 9 court is, therefore, concerned with protecting the

corpus of the arbitral dispute, so that the arbitration can take off and
fructify. Once a dispute, amenable to, and deserving of, resolution by
arbitration, is found to exist, and the apprehension, of dissipation of
the assets forming the corpus of the dispute, is found to be real and
subsisting, or where the circumstances indicate that enforcement of
the award, as and when delivered, would otherwise be hindered, a
Section 9 can grant “interim measures of protection”.

114. For a comprehensive discussion of this aspect, reference may be

made to the recent decisions of this Court in CRSC Research and
Design Institute Group Co. Ltd. v. Dedicated Freight Corridor
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Corporation of India Ltd.26 and Avantha Holdings Ltd. v. Vistra ITCL

27
India Ltd. , which have considered most of the earlier decisions on the
point.

115. In this backdrop, as learned counsel have proceeded

systematically, point by point, it would be advantageous to deal with
the rival contentions in seriatim.

Re : Contention of petitioner that no delivery of the aircraft, within the

meaning of the Lease Deed, as taken place

116. Mr. Gautam Narayan, arguing for the petitioner, has submitted
that there has been no delivery of the aircraft, as contemplated by the
Lease Deed. He submits that the aircraft was required to be delivered
accompanied by all requisite documentation, so as to ensure that it
could be registered with the DGCA in India, and could be utilised, in
commercial operations, by the petitioner. He has emphasised the fact
that both parties were aware, throughout, that the petitioner intended
to engage the aircraft in commercial flying operations.

th
117. Apart from Clause 3.5 of the CAR, dated 10 September, 1998,
dealing with airworthiness, the requirement of production of a
certificate of de-registration, from the previous registering authority, in
order for an aircraft to be registered in India, is also spelt out, in so
many words, in Clause 2 under the head “Delivery of Aircraft” in the

CAR dated 25th November, 2014, which is also on record. Additionally,

Clause 3.2 of the CAR also stipulates that no aircraft, which is already
validly registered in any country, shall be registered in India.

118. As against this, Mr. Kamath sought to submit that all requisite
documents had been provided to the petitioner, and that the
contention, of Mr. Gautam Narayan, to the contrary, was devoid of
substance.

119. To my mind, the submission of Mr. Gautam Narayan, prima facie,

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has merit.

120. Clause 4.1 of the Lease Deed specifically required the lessor, i.e.
the respondent, to provide all necessary documentation, as may be
required by the lessee, for registering the aircraft, with the DGCA, in
th
India. Clause 3.5 of the CAR, dealing with airworthiness, dated 10
September, 1998, specifically includes a certificate of de-registration,
from the previous registering authority, as one of the documents to be
presented to the DGCA, in order for the aircraft to be registered in
India for commercial operations.

121. It is not in dispute that, till date, no certificate of de-registration

of the aircraft, issued by the IOMAR, or any other document, to the
effect that the aircraft was no longer registered with the IOMAR, was
provided to the petitioner by the respondent.

122. As such, the respondent cannot be said to have supplied, to the

petitioner, all requisite documentation, on the basis of which the
petitioner could obtain registration of the aircraft in India.

123. Mr. Kamath did not, either in his oral or in his written
submissions, dispute the fact that the certificate of de-registration was
a mandatory document, for registering the aircraft in India, though it
was submitted that the relevant documents were the certificate of CoR

and CoA. The applicability of Clause 3.5 of the CAR, of 10th September,
1998, dealing with the airworthiness, has also not been questioned.

124. Rather, the written submissions of the respondent, as reproduced

in para 84 hereinabove, also acknowledges that the certificate of de-
registration, from the previous registering authority, was one of the
documents required, for obtaining registration of the aircraft with the
DGCA.

125. The only response of Mr. Kamath, to this contention of Mr.

Gautam Narayan, is that the respondent was unable to obtain a
certificate of de-registration from the IOMAR, till filing of the Bill of
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Entry by the petitioner. Much, in fact, has been made, by Mr. Kamath,
on the fact that filing of the Bill of Entry was also a mandatory
requirement for registering the aircraft with the DGCA and that the
petitioner has not, till date, filed the Bill of Entry.

126. I am not inclined to agree, prima facie, with Mr. Kamath.

127. No material, whatsoever, was placed on record, or even adverted

to, by Mr. Kamath, to support his submission that, till a Bill of Entry
was filed in India, no certificate of de-registration could be obtained
from IOMAR. The written submissions, filed by the respondent, after
conclusion of hearing, too, do not refer to any material, to support this
submission. The record does not disclose, either, a single
communication, from the respondent, to the petitioner, stating that
certificate of de-registration could not be obtained from the IOMAR
owing to non-filing of Bill of Entry by the petitioner. Indeed, the
repeated emphasis, by Mr. Kamath, that the import of the aircraft was
not complete as no Bill of Entry had been filed by the petitioner, does
not find reflection in any communication addressed by the respondent
to the petitioner.

128. The repeated emphasis, by Mr. Kamath, on the non-filing of bill

of entry by the petitioner, in my view, essentially obfuscates the issue
in controversy.

129. The question before the court is whether, there had, prima facie,
been a breach, on the part of the respondent, of the covenants of the
Lease Deed.

130. Clause 4.1 of the Lease Deed, which required the respondent to
provide all necessary documentation for registration of the aircraft,
with the DGCA, prima facie, has been breached. The issue of whether,
without filing of Bill of Entry, the petitioner would be able to obtain
registration of the aircraft, has nothing to do with the covenants of
Lease Deed.
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131. The obligation of the respondent, under the Lease Deed, was to
provide all documentation necessary, for the petitioner to obtain
registration of the aircraft in India. Having defaulted in that regard,
the respondent cannot be heard to contend, in defence, that the
petitioner had also defaulted in filing the Bill of Entry, without which
the aircraft could not be registered.

132. The arbitral tribunal, if and when constituted, is not required to

opine on the registration of the aircraft, or how such registration could
be obtained. It would be required to examine whether there has, or
has not, been a breach, by the respondent, of the covenants of the
Lease Deed, as alleged by the petitioner. That, prima facie, has taken
place.

133. Prima facie, therefore, there is merit in the submission of Mr.

Gautam Narayan that the plea of non-filing of the Bill of Entry has
been advanced, by the respondent, only to cover up the default, on the
part of the respondent, in providing the certificate of de-registration of
the aircraft. In view thereof, I am not inclined to enter, for the
purposes of the present order, into the factual dispute of whether the
petitioner has, or has not, filed the Bill of Entry.

Re : Alleged unilateral termination of the Lease Deed

134. Mr. Gautam Narayan has also disputed the stand, of the
respondent, that there had been a “unilateral” termination of the Lease
Deed, by the petitioner, and, on this aspect, too, I am inclined to
agree with him. There is no e-mail, from the petitioner, to the
respondent, terminating the Lease Deed. Rather, it was the respondent
th
who, in its e-mail dated 5 March, 2020, to the petitioner, stated that
it was “fine to terminate the agreement right away”. Thereafter,

commencing the email dated 9th March, 2020, addressed to the

petitioner, the respondent consistently adopted a stance that the
petitioner had unilaterally terminated the Lease Deed.
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135. I do not find this stance to be supported by any of the

communications addressed by the petitioner to the respondent.

136. The oblique reliance, by Mr. Kamath, on the concluding remark,

in the email dated 5th March, 2020, from the petitioner to the
respondent, stating “demand full refund and close”, can hardly amount
to a “unilateral termination” of the Lease Deed by the petitioner.

137. This contention of the respondent is, in fact, in the teeth of

Clause 7 of the Lease Deed, read with Clause 26.1 thereof.

138. All circumstances, in which the Lease Deed could be terminated

stand exhaustively delineated in the various sub-clauses of Clause 7.
Clause 7.1 provides for “Early Termination” of the Lease Deed. For this
purpose, the lessee has to issue a six months' notice, and pay early
termination fee of US $ 300,000. The Early Termination fee of US $
300,000 is exempt only if 24 continuous months of lease have been
completed. Clause 7.2 deals with termination by the lessor, for breach
by the lessee and is, therefore, of no application. Clause 7.3 deals with
the termination of the lessee, for breach of the Lease Deed by the
lessor. This Clause would apply where a notice, in writing, is issued by
the lessee to the lessor, setting out the breaches on the part of the
lessor, and the lessor would, in that case, have the right to remedy the
breach within 60 days from the date of receipt of such notice.

139. The respondent does not contend that, by following the discipline
and the rigor of any of the sub-clauses of Clause 7, the Lease Deed
had been terminated by the petitioner.

140. No “unilateral termination”, as is stated to have been effected by

the petitioner, is contemplated by the Lease Deed. As such, prima
facie, there is merit in the contention of Mr. Gautam Narayan that the
respondent is using the argument of “unilateral termination” as a
pretext to avoid its obligations under the Lease Deed.

141. No termination of the Lease Deed has, therefore, taken place.

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Re : Non-installation of CDSS

142. Mr. Kamath has sought to contend that the Lease Deed did not
require installation of CDSS on the aircraft and that, therefore, even
assuming the aircraft had been supplied without pre-installed CDSS,
no breach of the Lease Deed could be alleged to have taken place on
that count. He has also sought to draw sustenance from Clause 6.3 of
the Lease Deed, which required the aircraft to be delivered to the
lessee, i.e. the petitioner in “as is” condition. Mr. Kamath seeks to
contend, by relying on this clause, that the petitioner had covenanted
to receive the aircraft in the condition in which it had left Vietnam. In
Vietnam, he submits, installation of CDSS was not a mandatory
requirement. As such, according to Mr. Kamath, the respondent was
not required to install the CDSS in the aircraft, before delivering it to
the petitioner.

143. I am not inclined to agree with Mr. Kamath. The fact that the
CDSS was required to be installed on the aircraft, in order for the
aircraft to be registered with the DGCA in India, stands recognized and
th
acknowledged by the respondent itself, in its email dated 16
February, 2020, to the petitioner (reproduced in para 84 supra).
Clause 32.1 of the Lease Deed cannot wish away this
acknowledgement, or reduce the effect thereof. Having accepted, in

the email dated 16th February, 2020, that installation of the CDSS was
mandatory for registration of the aircraft by the DGCA in India, it can
hardly lie in the mouth of the respondent to contend, now, that the
CDSS was not required to be installed on the aircraft.

th
144. Even otherwise, Clause 13.2.3 (b) of the CAR dated 30 October,
2018, dealing with “aircraft operations” specifically stated that all new

aircrafts, imported after 1st January, 2008, were required to have

CDSS installed at the time of import. The requirement of having CDSS
installed also stands expressly spelt out in EASA Standard ORO. SEC.
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100.A(a) and (c)(2), which stands reproduced in para 84 supra. The

th
respondent had, in its email dated 6 December, 2019, specifically
undertaken to supply the aircraft duly compliant with EASA standards.

145. The reliance, by Mr. Kamath, on Clause 6.3 of the Lease Deed, is
also, therefore, in my prima facie opinion, facile.

146. Moreover, Clause 6 of the Lease Deed, which deals with the
delivery of the aircraft, reads thus:

“6. DELIVERY OF AIRCRAFT

6.1. Lessor shall deliver the Aircraft to the Lessee at GMR

Aerospace facility located in the Special Economic Zone (SEZ) at
Hyderabad Airport, India. Lessor shall deliver and Lessee shall
accept the Aircraft with current and valid Certificate of
Airworthiness (COA) issued by Isle of Man Aircraft Registry
(IOMAR).

6.2. Notwithstanding anything contained herein to the

contrary, the Lessor shall deliver the Aircraft to Lessee in
accordance with the terms and conditions of this Deed and
Lessee will accept the Aircraft by execution of the Delivery
Acceptance Certificate, as set forth herein in attached Schedule -
II. (“Delivery Acceptance Certificate”).

6.3. Subject to the generality of the foregoing, the Aircraft to

be leased hereunder shall be delivered to the Lessee in “AS IS”
conditions and subject to each and every disclaimer of warranty
and representation as set forth herein. The Lessee hereby
covenants that it is familiar with the type of Aircraft, its
characteristics, qualities, equipment and condition so far as
reasonable, practicable and provided herein.”

147. Clause 6.3 starts with the words “subject to the generality of the
foregoing”. “The foregoing” would include Clause 6.2, which
commences with a non-obstante clause, and required the respondent
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to deliver, to the petitioner, the aircraft in accordance with the terms

and conditions of the Lease Deed. It was only thereafter that the
petitioner was required, as lessee, to accept the aircraft by execution
of the delivery acceptance certificate. The terms and conditions of the
Lease Deed included Clause 4.1, which required the lessor to provide
all necessary documentation, required by the lessee for registering the
aircraft with the DGCA. Evidence of installation of the CDSS in the
imported aircraft would also, therefore, be one of the requirements, in
order for the aircraft to be registered with the DGCA in India. On this
count, too, therefore, the submission of Mr. Gautam Narayan, that the
respondent was in breach of the covenants of the Lease Deed, merits
acceptance.

Re : Liability to pay maintenance reserves

148. There is also, prima facie, substance in the contention, of Mr.

Gautam Narayan, that no liability on the petitioner, to pay
maintenance reserves, existed. Clause 10.6 of the Lease Deed
specifically obligated the lessee, to pay to the lessor, maintenance
reserves on a monthly basis, “for every flight hour or flight cycle, as
the case may be of usage”. The Clause also stipulated that the
maintenance reserves were to be paid in accordance with Schedule III
to the Lease Deed, which specifically stipulated that maintenance
reserves were payable “in respect of hours flown on the aircraft”, and
th
were “payable on the 10 day of each month in respect of hours flown
in the previous calendar month”. As the aircraft had never been flown,
there could be no question of the petitioner being required to pay any
maintenance reserves.

The fallout

149. As a result, I am of the opinion that a prima facie case, meriting

consideration and resolution by the arbitral process, has been made
out by the petitioner. It remains to be considered, then, whether, in
order to secure the corpus of the arbitration, any interim measure of
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protection, under Section 9 of the 1996 Act, deserves to be granted.

150. The prayer clause in this petition, reads thus:

“In the facts and circumstances mentioned above, it is

respectfully prayed thatthis Hon'ble Court may be pleased to:

a. Pass an order restraining the Respondents from creating any

third party interest/right/title on the Aircraft either directly or
indirectly or from selling, transferring or creating encumbrance
in any way; and

b. Pass an order restraining the Respondents from taking the

Aircraft out of India; or, in the alternative,

c. Pass an order directing the Respondents to deposit the amount

of USD 530,000 [INR 4,01,05,736/- as on 20.5.2020] which
corresponds to the amount paid by the Petitioner as per the
Lease Deed along with interest into an escrow account under
this Hon'ble Court's directions;

d. Pass any other orders as this Hon'ble Court may deem fit in
the facts and circumstances of the present case, in the
interest of justice.”

151. After orders were reserved, in these proceedings, the attention of

this Court was invited to the fact that the respondent was making
efforts to dispose of the aircraft, or parts thereof, with a view to render
in these proceedings infructuous. Opining that this amounted to an
attempt at interfering with the administration of justice, especially as
these attempts were made without the consent of this Court, notice
was issued, to the respondent, to show cause as to why action for
contempt be not initiated against it. Further orders were passed by
this bench, resulting in the respondent appealing, before the Division
Bench of this Court, by way of FAO (OS) (COMM) 124/2020 (Ezen
Aviation Pvt. Ltd. v. Big Charter Pvt. Ltd.). Notice was issued, in the
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said appeal, on 12th October, 2020, and the order, of this Court, was
modified, by allowing the respondent to dismantle and shift the
landing gears and other accessories of the aircraft to the warehouse of
M/s. GMR Air Cargo and Aerospace Engineering Ltd., donate the bare
shell of the aircraft, without any accessories of landing gears to the
National Institute of Technology, Warangal, sell the landing gears and
other spare parts and raise an amount of Rs. 4,30,00,000/-, which was
to be deposited with the Registry of this Court. This arrangement, it
was clarified, would be subject to the outcome of these proceedings.

152. In view of these supervening developments, after orders were

reserved, prayers (a) and (b) in the petition do not survive for
consideration.

153. Prayer (c) in the petition is for directing the respondent to

deposit Rs. 4,01,05,736/-, being the amount paid by the petitioner to
the respondent under the Lease Deed, in an escrow account, to be
administered by this Court. This Court has been alive to the fact that,
during the currency of arguments in this petition, and even after
orders were reserved thereon, the respondent has shipped, out of the
country, various parts of the aircraft. That apart, Respondent No. 1 is a
private limited company, registered in Australia, and Mr. Chenna
Reddy, who is the director of Respondent No. 1 as well as Respondent
No. 2, is also residing in Australia. In case the respondent is allowed to
withdraw, from the Registry of this Court, the amount of Rs.
4,30,00,000/-, deposited as per the direction of the Division Bench,
there is every likelihood of recovery of the said amount, from the
respondents, being rendered a formidably uphill task, in the event of
an award being returned, in arbitration, in favour of the petitioner.

154. Drawing analogy from the judgment of the Supreme Court in

28
Raman Tech and Process Engg. Co. v. Solanki Traders and of the
Coordinate Bench of this Court in Tata Advance Systems Ltd. v.

Telexcell Information Systems Ltd.29, and on the basis of the principles

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applicable to Order XXXVIII Rule 5 of the CPC, I am of the opinion

that, in the interests of justice, the amount of Rs. 4,30,00,000/-,
should remain deposited with the Registry of this Court, pending
further orders. The deposit would remain subject to the final award, if
any, to be rendered in the arbitral proceedings between the parties.
The amount shall be retained in an interest bearing fixed deposit, and
shall remain subject to further orders to be passed by this Court.

155. The petition stands allowed to the aforesaid extent.

156. It is clarified that all observations, and findings, in this

judgement, are intended only for the purpose of disposing of the
present petition under Section 9 of the 1996 Act, and should not be
treated as a final expression of opinion, by this Court, on the various
issues in controversy, the merits of which would have to be
determined by the Arbitral Tribunal which would be constituted in the
matter.

157. There shall be no order as to costs.

———

1
(2013) SGCA 16

2
(2011) EWCA Civ 1170

3
(2015) SGHC 311

4
(2004) 2 Arb LR 382 (DB)

5
(2016) 234 DLT 349

6
(2000) 54 DRJ 639

7
(2018) 5 AIR Bom R 317

8
(2012) 9 SCC 552

9
(2013) 9 SCC 32
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10
(2015) 12 SCC 225

11
(2017) 7 SCC 678

12
2019 SCC OnLine SC 929

13
(2020) 4 SCC 234

14
2020 SCC OnLine SC 301

15
Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 649

16
Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 648

17
SLP (C) 27824/2011

18
(2002) 4 SCC 105

19
(2008) 4 SCC 190

20
Blackaby, Partasides, Redfern and Hunter (Eds.), Redfern and Hunter on International

Arbitration (5th Edn, Oxford University Press, Oxford/New York 2009).

21
Datawind Innovations (P) Ltd. v. Indus Mobile Distribution (P) Ltd., 2016 SCC OnLine Del

3744

22
(2007) 1 All ER 591 (Comm)

23
(2014) 5 SCC 1

24
(2019) 13 SCC 472

25
(1981) 3 All ER 182

26
2020 SCC OnLine Del 1526

27
OMP (I) (Comm) No. 177 of 2020, order dated 14-8-2020 (Del)

28
(2008) 2 SCC 302
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29
Arb A (Comm) No. 29 of 2019, order dated 14-5-2020 (Del)

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