MANU/SC/0517/2021

Equivalent/Neutral Citation: AIR2021SC 3836, 2021(4)ARBLR241(SC ), 2021 INSC 392, 2021(3)RC R(C ivil)786, 2021(9)SC ALE439,
(2022)1SC C 753, 2021 (6) SC J 710, [2021]7SC R957

IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 8343-8344 of 2018 and 8345-8346 of 2018
Decided On: 10.08.2021
Gemini Bay Transcription Pvt. Ltd. Vs. Integrated Sales Service Ltd. and Ors.
Hon'ble Judges/Coram:
Rohinton Fali Nariman and B.R. Gavai, JJ.
Counsels:
For Appellant/Petitioner/Plaintiff: K.V. Vishwanathan, Sr. Adv., Kuber Dewan, Sharath
Sampath, Advs., Manikya Khanna, AOR, Apoorv Singhal, Pratyaksh Sharma, Aditya
Krishna, Advs., Harish N. Salve, Sr. Adv., Anuradha Dutt, Adv., B. Vijayalakshmi Menon,
AOR, Wilson Mathew, Suman Yadav and Trisha Raychaudhri, Advs.
For Respondents/Defendant: Arif Bookwala, Sr. Adv., Gagan Sanghi, Devendra V.
Chauhan, M. Bharath, Advs. and Rameshwar Prasad Goyal, AOR
Case Category:
ARBITRATION MATTERS - SLPS CHALLENGING ARBITRATION MATTERS
Case Note:
Arbitration - Foreign Award - Binding Effect - Non-signatories to Agreement -
Enforceability - Determination thereof - Sections 47, 48(1)(c) to (e) of the
Arbitration and Conciliation Act, 1996 (Act) - Ld. Single Judge while hearing
plea of enforcement held award to be not enforceable against non-signatories
- In challenge Division Bench set aside the above finding vide impugned
judgment - Hence, the present appeal - Whether foreign award could be made
enforceable against non-signatories to arbitration agreement?
Facts:
In the instant case, a representation agreement was entered into between
Integrated Sales Services Ltd. (ISS/Respondent No. 1), a company based in
Hong Kong and DMC Management Consultants Ltd. (DMC), a company
registered in India. By this agreement, ISS was to assist DMC to sell its goods
and services to prospective customers, and in consideration thereof was to
receive commission. Certain disputes arose between the parties, which were
eventually referred for arbitration. Award was passed. Respondent applied for
enforcement of award. Ld. Single Judge held that the agreement and the
arbitration Clause cannot be enforced against persons who are non-
signatories, even though such non-signatories may participate in the
arbitration, as no acquiescence or estoppel can apply to issues relatable to
jurisdiction. However, Award was held to be enforceable against DMC as it
was a party to the agreement.Division Bench of the High Courtobserving that
the foreign award had not been challenged in the USA, held that the award
could only be challenged under Section 48 if the Delaware law has not been

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followed on the alter ego principle. Being satisfied that the Arbitrator had
properly applied the Delaware law on the facts of this case, the Court held
that none of the grounds contained in Section 48 would apply so as to resist
enforcement of the foreign award in this case. It was held that the Appellants
miserably failed to "prove" that any of the grounds contained in Section 48
were attracted. As a result, the Division Bench allowed the appeal and set
aside the judgment of the Single Judge by the impugned judgment. A review
petition was also subsequently dismissed. Hence, the present appeal.
Held, while dismissing the Appeal:
As per Section 44 of the Arbitration and Conciliation Act, 1996, there are six
ingredients to an award being a foreign award under the said Section. First, it
must be an arbitral award on differences between persons arising out of legal
relationships. Second, these differences may be in contract or outside of
contract, for example, in tort. Third, the legal relationship so spoken of ought
to be considered "commercial" under the law in India. Fourth, the award must
be made on or after the 11th day of October, 1960. Fifth, the award must be a
New York Convention award-in short it must be in pursuance of an agreement
in writing to which the New York Convention applies and be in one of such
territories. And Sixth, it must be made in one of such territories which the
Central Government by notification declares to be territories to which the
New York Convention applies.[29]
In regard to Section 47, as the marginal note indicates, Section provides that
the pre-requisites for the enforcement of a foreign award are: (1) the original
award or a copy thereof duly authenticated in the manner required by the law
of the country in which it is made; (2) the original agreement for arbitration
or a duly certified copy thereof, and; (3) such evidence as may be necessary
to prove that the award is a foreign award.[34]
Thus, all the requirements of Sub-section (1) are procedural in nature, the
object being that the enforcing court must first be satisfied that it is indeed a
foreign award, as defined, and that it is enforceable against persons who are
bound by the award. Section 47(1)(c) being procedural in nature does not go
to the extent of requiring substantive evidence to "prove" that a non-
signatory to an arbitration agreement can be bound by a foreign award. As a
matter of fact, Section 47(1)(c) speaks of only evidence as may be necessary
to prove that the award is a foreign award. This Section only has reference to
the six ingredients of a foreign award outlined above, which are contained in
the definition section, namely, Section 44. Section 47(1)(c) would apply to
adduce evidence as to whether the arbitration agreement is a New York
Convention agreement.Also, the requisite Central Government notification can
be produced under Section 47(1)(c), so that Section 44(b) gets satisfied. [37]
Given that foreign awards in convention countries need to be enforced as
speedily as possible, the same logic would apply to Section 48, as a result of
which the expression "proof" in Section 48 would only mean "established on
the basis of the record of the arbitral tribunal" and such other matters as are
relevant to the grounds contained in Section 48.[39]
The New York Convention, which Act has adopted, has a pro-enforcement

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bias, and unless a party is able to show that it's case comes clearly within
Sections 48(1) or 48(2), the foreign award must be enforced. Also, the
grounds contained in Sections 48(1)(a) to (e) are not to be construed
expansively but narrowly. [40]
There can be no doubt that a non-party to the agreement, alleging that it
cannot be bound by an award made under such agreement, is outside the
literal construction of Section 48(1)(a). Also, it must not be forgotten that
whereas Section 44 speaks of an arbitral award on differences between
"persons", Section 48(1)(a) refers only to the "parties" to the agreement
referred to in Section 44(a). Thus, to include non-parties to the agreement by
introducing the word "person" would run contrary to the express language of
Section 48(1)(a), when read with Section 44. Also, it must not be forgotten
that these grounds cannot be expansively interpreted as has been held above.
The grounds are in themselves specific, and only speak of incapacity of parties
and the agreement being invalid under the law to which the parties have
subjected it. To attempt to bring non-parties within this ground is to try and
fit a square peg in a round hole.[42]
Given the fact that the foreign award gives reasons on facts in this case to
apply the alter ego doctrine, it would not be possible to re-appreciate these
facts especially when the burden lies on the Appellants to establish the
grounds made out in Section 48(1), none of which go to the merits of the
case.[57]
Section 48 does not contain any ground for resisting enforcement of a foreign
award based upon the foreign award being contrary to the substantive law
agreed to by the parties and which it is to apply in reaching its conclusion. As
a matter of fact, whether the award is correct in law (applying Delaware law),
would be relevant if at all such award were to be set aside in the State in
which it was made and that too if such law permitted interference on the
ground that the arbitral award had infracted the substantive law of the
agreement. Arbitral award in this case was not challenged in the State of
Missouri. Hence, the Division Bench's foray into this line of reasoning is
wholly incorrect.[71]
Appeals dismissed.[81]

JUDGMENT
Rohinton Fali Nariman, J.
1 . These appeals raise interesting questions relatable to Part II of the Arbitration and
Conciliation Act, 1996 [the "Arbitration Act, 1996"] which provisions deal inter alia with
recognition and enforcement of foreign awards. The facts necessary to appreciate the
points raised in these appeals are as follows.
2 . On 18th September, 2000, a representation agreement was entered into between
Integrated Sales Services Ltd. ["ISS"/Respondent No. 1], a company based in Hong
Kong and DMC Management Consultants Ltd. ["DMC"], a company registered in India,
whose principal business address is at Nagpur. By this agreement, ISS was to assist
DMC to sell its goods and services to prospective customers, and in consideration
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thereof was to receive commission. The relevant clauses of the agreement are Clauses 2
and 3 which read as follows:
2. Duties of Representative
Representative shall assist Company with its efforts to sell its Goods and
Services to prospective customers. Secondly, where acceptable to the Company,
identify potential sources of investment and Investors, and assist Company in
negotiating the terms of purchase, sale and/or investment.
3. Validity
The right of representation under this Agreement is not limited by time.
Compensation is due Representative as defined under "Payment" hereinafter.
However, if Company finds Representative's efforts to be unsatisfactory, it will
state so in writing with specific and, reasonable guidelines which, if
accomplished within six months, shall constitute satisfactory performance, If
Representative is unable to substantially-satisfy these guidelines, then Company
may cancel this Agreement forthwith. However, compensation for existing or
potential customers identified by the Representative, shall continue according to
the Payment Clause below.
3. The commission payable is then referred to in Clause 4. The agreement under Clause
8(d) which is "General" then states as follows:
(d) Interpretation, Amendment, Law, Arbitration, and Assignments
(i) This Agreement is subject to the laws of the State of Missouri,
U.S.A.
(ii) In the event a dispute arises in connection with this Agreement,
such dispute shall be referred to a single arbitrator in Kansas City,
Missouri, U.S.A. to be appointed by agreement between the parties
hereto, or failing agreement to be appointed according to the Rules of
the American Arbitration, Association the same Rules under which any
dispute which any dispute shall be decided.
(iii) In the event a dispute is committed to arbitration, the party
deemed at fault shall reimburse the full cost of the arbitration and legal
process to the aggrieved party.
(iv) The Agreement shall not be amended in any way other than by
agreement in writing, signed by both parties.
4. It is important to note that this agreement was signed by one Shri Rattan Pathak as
Managing Director of DMC, and by one Shri Terry Peteete, Director of ISS. Though this
agreement was entered into on 18th September, 2000, it came into force on 3rd
October, 2000. A first amendment to this representation agreement was made between
the aforesaid parties, which was signed by one Shri Arun Dev Upadhyaya [Appellant in
CA No. 8345-8346/2018] on behalf of DMC, and Terry Peteete on behalf of ISS. We are
not directly concerned with the changes made by this first amendment except to
indicate that Arun Dev Upadhyaya, one of the Appellants before us, was a signatory on
behalf of DMC. Likewise, a second amendment agreement was entered into on 1st
January, 2008, again with effect from 3rd October, 2000, in which various amendments

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were made to the original representation agreement. We are concerned, with Sub-clause
(4) of this amendment, which reads as follows:
4 . In modification of Clause 8(d)(1) of the Agreement, this Agreement is
subject to the laws of the State of Delaware, U.S.A., and shall survive the
expiration of any other clauses in this Amendment.
5. Disputes arose between the parties, as a result of which a notice for arbitration dated
22nd June, 2009 was sent by ISS to Arun Dev Upadhyaya. Ultimately, a statement of
claim dated 22nd June, 2009, was filed before the learned Arbitrator naming Arun Dev
Upadhyaya, DMC (India), DMC Global (company registered in Mauritius), Gemini Bay
Consulting Limited (company registered in the British Virgin Islands) and Gemini Bay
Transcription Private Limited ["GBT"/Appellant in CA No. 8343-8344/2018] as
Respondents. The statement of claim alleged as follows:
6 . DMC Management Consultants, through the Chairman (Upadhyaya) and/or
with his family, in turn owns or controls all the stock of DMC Global, which has
assumed the obligations of DMC Management Consultants under the agreement
referred to below, including the agreement for arbitration; and the Chairman
controls and dominates the activities of DMC Global. Both DMC Management
Consultants and the Chairman have disregarded the corporate form of DMC
Global to effect the wrongs complained of herein, in such a manner and to such
an extent that DMC Global should be bound as a party to this arbitration.
7 . Gemini Bay Consulting Limited ("GBC") is a company formed in the British
Virgin Islands, which is owned and/or controlled and dominated by the
Chairman, who has disregarded its corporate form to effect the wrongs
complained of herein, and GBC has been used by the Chairman among others
as a continuation corporation of DMC Management Consultants and DMC Global
to divert funds away from ISS as complained of herein, in such a manner and
to such an extent that GBC should be bound as a party to this arbitration.
8 . Gemini Bay Transcription Private Limited ("GBT") is a company formed in
India, with a registered office at the same address as that of the Chairman,
which is owned and/or controlled and dominated by the Chairman, who has
disregarded its corporate form to effect the wrongs complained of herein, and
GBT has been used by the Chairman among others as a continuation
corporation of DMC Management Consultants and DMC Global to divert funds
away from ISS as complained of herein, in such a manner and to such an extent
that GBT should be bound as a puny to this arbitration.
xxx xxx xxx
13. As the relationship developed, Claimant ISS as Representative brought to
the Company two substantial "PC" customers, identified as MedQuist
Transcriptions Ltd., of Mt. Laurel, New Jersey ("MedQuist"), and AssistMed, Inc.
of Los Angeles, California ("AssistMed") (sometimes hereinafter collectively
referred to as the "Customer"). ISS acted as representative of the company with
the Customers.
1 4 . Under the original terms of the Representation Agreement, ISS was to
receive commission of 20% of the gross revenues to Company from these
Customers for so long as they continue to be customers.

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 15. Throughout the relationship between ISS and Respondents, the principal
representative of ISS has been Terry Peteete, a resident of Kansas City,
Missouri.
1 6 . Throughout the same period, the principal representative of DMC
Management Consultants and DMC Global has been the Chairman, Respondent
Arun Dev Upadhyaya. In that regard, the Chairman has made regular trips from
India to the United States, approximately 4 trips per year, for business and
personal reasons.
17. Those trips have included at least four trips to Kansas City, Missouri, to
conduct business with ISS representative Terry Peteete, regarding the subject
matter of this arbitration. Therefore, he has purposely availed himself of this
jurisdiction, and requiring his participation in this arbitration in Kansas City,
Missouri does not offend traditional or constitutional notions of justice and fair
play.
xxx xxx xxx
3 0 . From September 18, 2000, until approximately June 30, 2008, the
relationship among the parties proceeded agreeably. ISS performed its
obligations, and upon information and belief, both DMC Management
Consultants and DMC Global performed their obligations.
xxx xxx xxx
3 8 . On July 22, 2008, DMC Management Consultants gave notice by email
entitled "Contract Termination Notice," to the two "PC" Customers, MedQuist
and Assistmed, of its intention to terminate the Customer contracts 90 days
later. (Note that the Customer Contract with MedQuist had been signed by DMC
Global, but was terminated by DMC Management Consultants). DMC
Management Consultants requested the Customers "begin the ramping down
process 15 days from now," and further that the "ramping down be completed
within a period of 90 days.
3 9 . This purported "ramping down" of the Customer Contracts by DMC
Management Consultants and DMC Global in fact never took place. Upon
information and belief, as part of the scheme to divert funds from DMC
Management and evade payment to ISS of commissions Respondents caused
new contracts to be executed by the Customers with Respondent Gemini Bay
Consultants (GBC). During the same time, the Chairman caused a new company
Respondent Gemini Bay Transcriptions (GBT) to be set up as the company that
actually performed the work for both PC Customers, and continues to do so
today. The employees of both DMC Management employees Consultants and
DMC Global became GBT, and work in the same facilities, using the same
equipment, and managed by the same management team. These two July 22,
2008, email termination notices were part of a scheme by Respondents to divert
the business from the Customer Contracts away from DMC Management
Consultants and DMC Global to GBC and GBT.
41. The primary purpose of doing so was to evade the contractual obligations
of the Respondents under the Representation Agreement to pay ISS its
commissions for revenues earned from these Customers.

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 42. At all times, DMC Management Consultants and DMC Global acted under the
direct instruction of the Chairman in furthering this scheme to deprive ISS of its
commissions.
4 3 . The Chairman dominated and manipulated the activities of DMC
Management Consultants and DMC Global for his personal and business
advantage, for the sole improper purpose of harming ISS and breaching his
personal obligations and the obligations of his two companies to ISS under the
Representation Agreement.
44. The Chairman used the companies as alter egos of himself, and he ignored
the corporate forms of both DMC Management Consultants and DMC Global to
achieve his improper purpose of breaching the Representation Agreement.
6 . Based on these averments, damages were claimed on the basis of "Accounting for
Lost Commissions" as follows:
64. Upon information and belief, the revenues being paid to Respondents by
the "PC" Customers since October 22, 2008, continue at a rate such that the
commissions payable under the Representation Agreement for the period since
October 22, 2008, is approximately $100,000 per month.
65. Upon information and belief, the amount of lost commissions, past, present
and reasonably certain to occur in the future, are determined at a rate of
$100,000 per month for the period of 48 months following the termination date
of October 22, 2008, aggregates $4.8 million due and to become due to ISS
from Respondents due to their breach of contract.
7. It was then averred:
74. By making its claims pursuant to the Representation Agreement and the
corporate law of Delaware in this arbitration, Claimant ISS is not making, and
hereby specifically reserves: (i) all claims which may arise in the future, under
the Representation Agreement, for commissions which may become payable in
a manner other than as described above, and (ii) all claims for any additional
right, title, interest and other matters ISS may make at another time or in
another forum against any of these Respondents based in tort, fraud, abusive
conduct, or any other wrongful conduct under the law of any of the United
States. India. Mauritius, or any other jurisdiction, whether for equitable relief,
compensatory damages, punitive or exemplary damages, moral damages, or
otherwise.
8. To this statement of claim, objections were filed by GBT and Arun Dev Upadhyaya, in
which all the aforesaid averments were denied. Meanwhile, a suit was filed by GBT
against ISS before the Civil Judge, Senior Division, Nagpur, with the following prayers:
(i) Pass a decree of declaration in favour of the Plaintiff and against the
Defendants, their agent, servants and all other persons claiming through or
under them, declaring therein that the Arbitration Agreement entered into
between the Defendant No. 1 and Defendant No. 3, is not binding or
enforceable against the Plaintiff and therefore the Defendant Nos. 1 & 2 cannot
prosecute/proceed with any proceeding against the Plaintiff or any one claiming
through or under the Plaintiff, in any manner whatsoever, in the peculiar facts
and circumstances of the present case;
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 (ii) Pass a decree of permanent injunction in favour of the Plaintiff and against
the Defendants, their agent, servants and all other persons claiming through or
under them, restraining them from prosecuting or proceeding or continuing
with any arbitration proceedings against the Plaintiff, based on the so-called
Arbitration Agreement entered into between the Defendant No. 1 and Defendant
No. 3, the same being not binding or enforceable against the Plaintiff, in the
peculiar facts and circumstances of the case and in the interest of justice;
(iii) Pass a decree of Rs. 10,00,000/(Rupees Ten Lacs only) towards
compensation in favour of the Plaintiff and against Defendant Nos. 1 and 2, in
the peculiar facts and circumstances of the case;
(iv) Award costs of the suit against the Defendant Nos. 1 & 2;
(v) And be further pleased to pass such order/orders and grant such other
reliefs, as this Hon'ble Court may deem fit in the given facts and circumstances
of the case.
9 . Though a temporary injunction was prayed for, it was rejected on 25th January,
2010.
10. On 23rd December, 2009, the learned Arbitrator raised four issues in a preliminary
award as follows:
1) The determination of applicable law; and
2) The jurisdiction of this tribunal over non-signatory parties; and
3) Whether facts warrant piercing the corporate veil of certain corporations;
and
4) Whether certain non-signatory parties to the original agreement should be
excluded from this arbitration.
Only ISS and DMC filed briefs. DMC's brief addressed only the issue of
applicable law and in spite of the arbitrator's numerous warnings, other
Respondents and non-signatory parties failed to file relevant briefs on the
matters and submitted affidavits.
11. Issues 1 and 2 were answered stating that Delaware law is the substantive law
which controls the agreement and its interpretation and that, since neither the claimant
nor the Respondent challenged the validity of the agreement or the validity of the
arbitration clause, the Arbitrator has jurisdiction to decide whether a non-signatory to
the representation agreement can be bound by the award. The other two issues were
stated to require an in-depth review and analysis of factual, testimonial and
documentary evidence as a result of which the decision on these two issues was
"postponed".
12. The learned Arbitrator in his final award dated 28th March, 2010, set out the issues
that were to be adjudicated as follows:
I THE UNDERSIGNED ARBITRATOR, Alain Frecon, (the "tribunal") having been
designated in accordance with the arbitration agreement entered into by ISS
and DMC Management Consultants Limited, dated September 18, 2000, having
been duly sworn, having given the parties full and complete opportunity to
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 present their respective case, and having heard all the proofs and allegations of
the parties, including all the witnesses and reviewed all the documents,
demonstrative evidence and submissions presented in this case, do hereby
Award as follows:
TO BE DECIDED
1) Does the "alter ego" doctrine warrant piercing the corporate veil?
2) Was there a breach of the Representation Agreement and by whom?
3) Should damages be awarded, and if the answer is yes, how much?
13. After describing the parties and the claim made, Issue 1 which was styled "Alter
ego doctrine and piercing of the corporate veil" was answered as follows:
Before piercing a corporate veil, this tribunal must carefully review a complex
set of factual, documentary and testimonial evidence. As Professor William W.
Park (Boston University Law Faculty) points out in his well-known (among
international arbitrators) Article "Non Signatories and International contracts:
an arbitrator's dilemma" (1, Belinda MacMahon, ed, Oxford University Press
(2009), the proverbial devil in the details lurks in the complex fact patterns
underlying most situations that might justify extension of arbitration clauses
and arbitrators must consider "un faisceau d'indices" (a bundle of criteria)
before reaching such a decision (See page 8).
Having found that Delaware law was the applicable law (see Order # 4), we
must follow the precedents of the Delaware Court of Chancery.
To determine whether the "alter ego" doctrine applies to his case and whether
the corporate veil should be lifted, we must consider [the] "bundle of criteria"
including control, whether the corporate form was used as a facade to commit a
fraud, and the timing of these events.
The control of DMC by Mr. Upadhyaya, the timing of events and coordination of
efforts between him and Mr. Pathak clearly demonstrate that the transfer of the
medical business from DMC to Gemini Bay simply was not, and could not be,
the result of mere coincidence. Their combined actions and conducts facilitated
and orchestrated the use of the corporate forms of DMC and Gemini Bay to
achieve, through deceit, a result which eliminated an otherwise valid and
enforceable contract. Mr. Upadhyaya totally controlled the business operations
of DMC (a family majority owned business) and his minority shareholding did
not prevent him from running the business as he deemed fit (we received for
example no evidence whatsoever that Mr. Upadhyaya's decisions were ever
reviewed/challenged nor even questioned by the board of directors of DMC).
Whatever Mr. Upadhyaya decided, whether in coordination with, or with the
cooperation of Mr. Pathak and the Board of DMC, that is what DMC would do,
and the board always voted in line with Mr. Upadhyaya's recommendations. He
was as a result, the sole decision maker. The total control and domination of
�MC by Mr. Upadhyaya is therefore not questionable, in spite of his
minority shareholding.
The correlation existing between DMC and Gemini Bay is also, not the result of
mere coincidence. Not only did the very existence of Gemini Bay germinate

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 within the confines of DMC (but for Mr. Pathak's position as "Managing
Director" of DMC, he would have never known about Medquist or AssistMed),
but both companies shared (even if ever so temporarily) the same employees,
address, telephone numbers, e-mail addresses, SVPs, customers (primarily
Medquist and AssistMed), and shared almost identical contracts with the same
customers.
Respondents' affirmations that DMC's corporate formalities were respected and
that some of these facts were only temporary, are simply not convincing or
credible and, in totality, we find that the control of DMC by Mr. Upadhyaya, and
the collusion with Mr. Pathak and the use of the corporate forms of DMC and
Gemini Bay were simply a "facade" used to shield or cover-up the unjust result
of eliminating ISS. The alter ego doctrine is therefore an appropriate
justification for lifting the corporate veil.
14. Under the head "Breach of the representation agreement", it was recorded that the
agreement was not challenged by either party and is therefore valid and enforceable. It
was then held:
To determine that question, we must turn to the Representation Agreement.
That Agreement was not challenged by either party and is therefore a valid and
enforceable Agreement. It is clear and not ambiguous and therefore not subject
to interpretation.
ISS's obligations under that Agreement are also clear. ISS must I) sell its
Goods and Services (which means the "products and services being offered for
sale by the company" (i.e. DMC) and 2) "Where acceptable to the Company (i.e.
DMC), identify potential sources of investment and investors, and assist the
company in negotiating the terms, purchase, sale and/or investment" (See
Clause #2).
The Agreement did not specify how many customers, how often. Neither did it
specify how many investors, at what price, by what date and since it was for an
indefinite term ("is not limited by time" See Clause # 3), it is not legally
sustainable to justify the termination of the ISS/DMC business relationship
based on the fact that ISS did not find an investor.
DMC could terminate that Agreement if "the Company (DMC) was not satisfied
with the Representative efforts provided that it determined "specific and
reasonable guidelines" (See Clause # 3). Respondents failed to prove by
reliable and relevant evidence that any such "specific and reasonable
guidelines" were ever established by the Board of DMC or Mr. Upadhyaya or Mr.
Pathak. More importantly, even if DMC could prove that such guidelines had
been established, it could not escape the obligation of Clause # 4 of the
Agreement which specifically provides that "this Clause (payment of
commissions) survives cancellation of this Agreement for any reason".
15. Under the head "Did DMC/Gemini Bay try to avoid/eliminate thepayment of such
commissions to ISS?", the oral and documentary evidence was referred to as follows:
In this respect, Ms. Parker best summarized the situation in her testimony (See
Parker's/deposition at p. 16 lines 7 through 16). Her statement at page 18
(lines II through 25) further demonstrates the purpose and intent of DMC'S
decision to abandon the medical transcription business, for the benefit of
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 Gemini Bay minus the payment of commissions to ISS. Her statement was even
acknowledged by Mr. Pathak himself when she asked him if the purpose of
DMC's termination was "to cut out the Peteetes" (ISS) he responded." In
essence that's what it does". (See Parker's deposition at pages 19 lines 18
through 20).
Even though we agree with Respondents that DMC had no obligation to remain
in the medical transcription business, it could only do so by respecting the
terms of the Representation Agreement by making sure that the "compensation
for existing or potential customers identified by the Representative, shall
continue according to the Payment Clause" (See Clauses #3 and #4 of the
Representation Agreement).
The decision by DMC to abandon such business for the stated purpose (ISS
failure to find an investor) does conflict with the terms of the Representation
Agreement which did not give DMC an option to terminate it under such
rationale and certainly not by refusing (or avoiding) the payment of
commissions in violation of Clause # 4 of the Representation Agreement.
Had DMC really and totally left the medical transcription business (without
helping any other company to get that business) we could have found a
justifiable rationale for it but the payment of commissions could not be avoided
(or voided as DMC attempted to do).
In spite of DMC's announcement to abandon the medical transcription business,
Mr. Upadhyaya and Mr. Pathak engaged in a pattern of well-timed efforts and
actions which resulted in Gemini Bay receiving that business through an
orchestrated chain of events, to the detriment of ISS and avoiding, through
deceit, the payment of commissions.
Since Gemini Bay "inherited" the Medquist and AssistMed's business from DMC,
it did so inheriting also the terms and conditions of the ISS/DMC
Representation Agreement. To that effect, Gemini Bay is subrogated to DMC and
therefore DMC's breach can be inputted to all Respondents.
We therefore find that Mr. Upadhyaya, DMC and Gemini Bay colluded together
and find them jointly and severally liable for breaching the Representation
Agreement by terminating it abruptly in violation of the indefinite term of that
contract and by refusing to pay commissions as obligated under the
Representation Agreement.
16. In deciding what damages should be paid, the learned Arbitrator found:
Respondents DMC, Mr. Arun Dev Upadhyaya and Gemini Bay's failure to fully
cooperate with certain discovery requests of Claimant, rendered the task of
proving damages with any reasonable certainty, almost impossible.
DMC biased the discovery process by refusing to make its books and records
available for inspection by ISS's agent, Mr. Gupta (See Exhibit 169 page II and
following). Mr. Upadhyaya and Gemini Bay further biased the discovery process
by refusing to participate directly in the arbitration process.
Claimant's failure to use an independent expert on damages is not a relevant
argument because in the absence of documentary proof, no independent expert

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 could have possibly reached a reliable and non-speculative opinion, Under such
circumstances, Mr. Peteete's intimate understanding of the business was the
only and best available option afforded to Claimant. In the absence of such
reliable documentary evidence, Claimant cannot be penalized for attempting 'to
prove damages the best way possible' under the circumstances. Since Delaware
law accepts the submission of damage testimony by lay opinion so must this
tribunal.
The conduct of Respondents gives us no other alternative but to conclude that
damages should be computed as Claimant proposes. In essence, Respondents
brought this result upon themselves.
Claimant's request for damages focuses on the commissions due for finding
Medquist and AssistMed and for no other reason (Claimant does not claim any
damage for its efforts for trying to find an investor). We find that claim
reasonable.
We must not however assume that the Gemini Bay/Medquist/AssistMed
Agreements would have, could have, lasted any specific amount of time in the
future and we must determine the most reasonable period of duration. There is
no guarantee that either the AssistMed or Medquist contracts would last for the
length of their original 3 year term. The Medquist agreement can be terminated
any time upon a 90 days' notice. The AssistMed contract can be terminated
without cause with a 120 days' advance notice (See Exhibit 5 page 3). This
tribunal therefore concludes that damages should be limited in time and cannot
be assumed to last forever in the future.
Claimant's assumptions that both the Medquist and Assisted contracts would
last until 2012 (they are still in force as of the date of this Award), is not
entirely satisfactory as it leads us to contemplate future damages. Since
however we found a breach of the Representation Agreement, we have a legal
basis to award future damages and find that ending damages in 2012 is
reasonable under the circumstances. Mr. Upadhyaya's testimony (re: C-Bay' and
Mr. Raman Kumar) that the Medquist contract will be terminated in the near
future is self-serving, not substantiated by any relevant or reliable information,
and therefore, not credible.
17. As a result, the Award was as follows:
AWARD
1 . Within thirty (30) days from the date of transmittal of this Award to the
Parties, DMC Management Consultants, Ltd., DMC Global, Inc., Arun Dev
Upadhyaya, Gemini Bay Consulting Limited and Gemini Bay Transcription
Private Limited, hereinafter referred to as Respondents, shall jointly and
severally pay to Integrated Sales Services Ltd., hereinafter referred to as
Claimant, the sum of six million, nine hundred and forty-eight thousand, one
hundred dollars ($6,948,100.00).
2. In the event that the award is not fully paid within thirty days from the date
of this Award, Claimant shall be entitled to also seek recovery of interest
computed from the date of termination of the Representation Agreement (July
22, 2008) on the total sum of the Award at the highest legal rate allowable
under Delaware law.
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 3. The administrative fees and expenses of the International Centre for Dispute
Resolution (ICDR) totalling fourteen thousand dollars ($14,000.00), and the
compensation and expenses of the arbitrator totalling forty-nine thousand, nine
hundred and three dollars ($49,903.00), shall be borne entirely, jointly and
severally by Respondents. Therefore, Respondents shall jointly and severally
reimburse Claimant the sum of sixty-three thousand, nine hundred and three
dollars ($63,903.00), representing that portion of said fees and expenses
(including the Arbitrator's fees and expenses) previously incurred by Claimant.
4. Since the arbitration Clause did not provide for the award of attorneys' fees,
Claimant and Respondents shall be responsible for their own attorneys' fees,
costs and expenses.
5 . As ordered by this tribunal, all the costs and expenses of the video
conference call held on Friday, March 5, 2010 shall be borne exclusively by
Respondents but Claimant shall be responsible for the costs and expenses of its
attorneys present during that call.
6. This award is in full settlement of all claims and counterclaims submitted to
this Arbitration. Any claim or counterclaim not specifically awarded is hereby
denied.
18. To enforce the aforesaid Award, the Respondent first knocked at the doors of the
Principal District Judge, Nagpur, but given the fact that, being a foreign award, a
District Judge would have no jurisdiction to enforce the same, a learned Single Judge of
the High Court of Judicature at Bombay, Nagpur Bench, was then approached. By his
judgment dated 18th April, 2016, the learned Single Judge expressly recorded:
4 . .... The parties have agreed that the question of leading oral evidence in
support of their rival contentions does not at all arise and the pure questions of
law are raised, which can be decided on the basis of the documents which are
admitted and placed on record.
19. After discussing as to whether the ingredients of a foreign award were met, the
learned Single Judge found:
16. It is not in dispute that the Representation Agreements in force containing
Clause 8(d) of arbitration brought into force from 3/10/2000 undertaking to
submit to arbitration all or any differences concerning the subject-matter
capable of settlement by arbitration, are signed by the Director Terry L. Peteete
of the applicant-Company, and by the non-applicant No. 3(i) Rattan Ram Pathak
in his capacity as the Managing Director of the non-applicant No. 1 Company.
There exists a defined legal relationship in writing in the form of the
Representation Agreements. The arbitral award passed on 28/3/2010 by the
International Arbitration Tribunal is on the differences between the parties to
the arbitration agreement. The said award, therefore, satisfies the test of
"foreign award", as defined Under Section 44 of the said Act. The question No.
(1) is answered accordingly.
20. After discussing in detail certain judgments of this Court, the learned Single Judge
held that the agreement and the arbitration Clause cannot be enforced against persons
who are non-signatories, even though such non-signatories may participate in the
arbitration, as no acquiescence or estoppel can apply to issues relatable to jurisdiction.
So holding, the learned Single Judge applied Sections 48(1)(c) to (e) to hold that as
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GBT and Arun Dev Upadhyaya were not parties to the arbitration agreement, the award
would not be enforceable against them. However, turning down a "public policy plea"
by DMC, the learned Single Judge held that the Award would be enforceable against
DMC as it was a party to the agreement.
21. A side skirmish took place as to whether an appeal could be filed from the learned
Single Judge's judgment, and arguments were raised based on the application of
Section 3 of the Maharashtra High Court (Hearing of Writ Petitions by Division Bench
and Abolition of Letters Patent) Act, 1986, to arrive at the conclusion that an appeal
against the learned Single Judge's order would be maintainable (See judgment dated
23rd June, 2016 of the Bombay HC in Arb Appeal No. 3/2015). Vide judgment dated
30th September, 2016 in Civil Appeal No. 8475-76/2016, this Court, after hearing the
parties, then ordered that such appeal would be maintainable but only Under Section 50
of the Arbitration Act, 1996.
22. The Division Bench of the High Court, after stating the facts and after observing
that the foreign award in this case had not been challenged in the USA, then held that
the award could only be challenged Under Section 48 if the Delaware law has not been
followed on the alter ego principle. Being satisfied that the Arbitrator had properly
applied the Delaware law on the facts of this case, the Court held that none of the
grounds contained in Section 48 would apply so as to resist enforcement of the foreign
award in this case. The Division Bench then held that Section 48 required that the
grounds that are pressed to resist enforcement must be "proved". The Division Bench
held that "proof" is of a higher order than mere evidence being adduced and then held
that the Appellants have miserably failed to "prove" that any of the grounds contained
in Section 48 were attracted. As a result, the Division Bench allowed the appeal and set
aside the judgment of the Single Judge by the impugned judgment dated 4th January,
2017. A review petition was subsequently dismissed on 24th February, 2017.
23. When the matter came to this Court, in DMC's Special Leave Petition (SLP (Civil)
No. 20802/2016), special leave was granted by an order dated 11th January, 2017,
subject to DMC depositing a sum equivalent to 2.5 million US Dollars within three
months. If this was not done, leave would automatically stand revoked. DMC defaulted
in depositing the aforesaid amount, as a result of which leave stood revoked, which is
reflected in our order dated 21st August, 2017. As a result, the foreign Award against
DMC is now final and binding.
24. Shri K.V. Vishwanathan, learned Senior Advocate appearing on behalf of GBT, read
Sections 44 and 47 of the Arbitration Act, 1996, and then argued that Under Section
47(1)(c), the burden of proving that a foreign award may be enforced under Part II is
on the person in whose favour that award is made, and that such burden in the case of
a non-signatory to an arbitration agreement can only be discharged by adducing
evidence which would independently establish that such non-signatory can be covered
by the foreign award in question. This not being done in the facts of this case, the
threshold burden of proof requirement is not met, as a result of which the enforcement
petition ought to have been thrown out on this ground alone. The learned Senior
Advocate then drew our attention to Section 48 and in particular Sub-section (1) Sub-
clause (a). According to him, a non-signatory to an arbitration agreement would be
directly covered by Sub-clause (a) as well as Sub-clause (c), and if the Award were to
be read, it would be clear that the reasons given are extremely sketchy and based on
ipse dixit and not on facts, rendering the Award liable to be set aside on these two
grounds. He also added that though Section 48(1)(b) refers to a natural justice ground,
the giving of reasons being part of natural justice ought to be included in this ground,
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and as no proper reasons have been given by the learned Arbitrator, the Award should
be set aside on this ground as well. He then argued that the Award is in any case
perverse, and that the two clients of DMC that were shifted to GBT was vital evidence in
the case, and the non-examination of these two clients would also vitiate the Award. He
cited a number of judgments to buttress these submissions.
2 5 . Shri Vishwanathan also argued that damages were awarded without actual loss
having been proved before the learned Arbitrator contrary to the judgment of the Delhi
High Court in Agritrade International (P) Ltd. v. National Agricultural Coop. Mktg.
Federation of India Ltd., as a result of which the Award stood vitiated on this ground
also.
2 6 . Shri Harish Salve, learned Senior Advocate appearing on behalf of Arun Dev
Upadhyaya, argued that the commission of a tort would be outside contractual disputes
that arise under the Arbitration Agreement and that since the cause of action really
arose in tort, the Award was vitiated on this ground. He also argued relying heavily
upon Dallah Real Estate and Tourism Co. v. Ministry of Religious Affairs of the
Government of Pakistan MANU/UKSC/0075/2010 : [2010] 3 WLR 1472["Dallah"] that a
full review based on oral and/or documentary evidence ought to have been undertaken
which was not done on the facts of this case, the Division Bench merely echoing the
Arbitrator's findings. He then made a distinction between Section 46 and Section 35 of
the Arbitration Act, and argued that Under Section 46, a foreign award is to be treated
as binding only on persons as between whom it was made and not on persons who may
claim under the parties. He also argued that insofar as his client was concerned, there
was no evidence to show his involvement in any manner and that the findings against
his client are unreasoned and perfunctory, and on this ground also the Award stands
vitiated.
27. Shri Arif Bookwala, learned Senior Advocate appearing on behalf of ISS, supported
the Division Bench judgment and took us through the facts pointing out how, as was
correctly held by the learned Arbitrator, the address of Shri Arun Dev Upadhyaya, DMC
and GBT were all at the very same place in Nagpur. He took us painstakingly through
the Award to show that the learned Arbitrator not only applied his mind to the oral and
documentary evidence in this case which consisted of Ms. Parker deposing on behalf of
ISS, and Shri Pathak and Shri Arun Upadhyaya deposing on behalf of DMC, and then
argued that elaborate reasons need not be given in an arbitral award so long as the
award happens to be reasoned. He then countered the submissions of Shri
Vishwanathan and Shri Salve by arguing that their clients had conceded before the
learned Single Judge that only questions of law arose as a result of which no evidence
need be led-which was contrary to the submissions made by Shri Vishwanathan and
Shri Salve before us. He then argued that none of the grounds Under Section 48 had
been made out as neither Section 48(1)(a) nor Section 48(1)(c) would even remotely
deal with non-signatories to an arbitration agreement and that, as no objection qua
enforcement of the Award being contrary to public policy being argued by either
Appellant in the courts below, the appeals should be dismissed. He also referred to
various judgments to buttress his submissions.
28. Having heard the learned Counsel for all the parties, it is important to first set out
the relevant statutory provisions as under:
44. Definition.--In this Chapter, unless the context otherwise requires, "foreign
award" means an arbitral award on differences between persons arising out of
legal relationships, whether contractual or not, considered as commercial under

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 the law in force in India, made on or after the 11th day of October, 1960--
(a) in pursuance of an agreement in writing for arbitration to which the
Convention set forth in the First Schedule applies, and
(b) in one of such territories as the Central Government, being satisfied
that reciprocal provisions have been made may, by notification in the
Official Gazette, declare to be territories to which the said Convention
applies.
xxx xxx xxx
4 6 . When foreign award binding.--Any foreign award which would be
enforceable under this Chapter shall be treated as binding for all purposes on
the persons as between whom it was made, and may accordingly be relied on
by any of those persons by way of defence, set off or otherwise in any legal
proceedings in India and any references in this Chapter to enforcing a foreign
award shall be construed as including references to relying on an award.
47. Evidence.--
(1) The party applying for the enforcement of a foreign award shall, at
the time of the application, produce before the court--
(a) the original award or a copy thereof, duly authenticated in
the manner required by the law of the country in which it was
made;
(b) the original agreement for arbitration or a duly certified
copy thereof; and
(c) such evidence as may be necessary to prove that the award
is a foreign award.
xxx xxx xxx
48. Conditions for enforcement of foreign awards.--
(1) Enforcement of a foreign award may be refused, at the request of
the party against whom it is invoked, only if that party furnishes to the
court proof that--
(a) the parties to the agreement referred to in Section 44 were,
under the law applicable to them, under some incapacity, or
the said agreement is not valid under the law to which the
parties have subjected it or, failing any indication thereon,
under the law of the country where the award was made; or
(b) the party against whom the award is invoked was not given
proper notice of the appointment of the arbitrator or of the
arbitral proceedings or was otherwise unable to present his
case; or
(c) the award deals with a difference not contemplated by or
not falling within the terms of the submission to arbitration, or
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 it contains decisions on matters beyond the scope of the
submission to arbitration:
Provided that, if the decisions on matters submitted to
arbitration can be separated from those not so submitted, that
part of the award which contains decisions on matters
submitted to arbitration may be enforced;
xxx xxx xxx
29. A reading of Section 44 of the Arbitration and Conciliation Act, 1996 would show
that there are six ingredients to an award being a foreign award under the said Section.
First, it must be an arbitral award on differences between persons arising out of legal
relationships. Second, these differences may be in contract or outside of contract, for
example, in tort. Third, the legal relationship so spoken of ought to be considered
"commercial" under the law in India. Fourth, the award must be made on or after the
11th day of October, 1960. Fifth, the award must be a New York Convention award-in
short it must be in pursuance of an agreement in writing to which the New York
Convention applies and be in one of such territories. And Sixth, it must be made in one
of such territories which the Central Government by notification declares to be
territories to which the New York Convention applies.
30. The expression "legal relationships" has been explained in Vidya Drolia v. Durga
Trading Corporation, MANU/SC/0939/2020 : (2021) 2 SCC 1 as follows:
24. ... The expression "legal relationship", again not defined in the Arbitration
Act, means a relationship which gives rise to legal obligations and duties and,
therefore, confers a right. ...
31. Also, the award may deal with differences arising out of breach of contract or tort.
3 2 . Likewise, what is considered to be "commercial" under the law of India is well
explained in the UNCITRAL Model Law as follows:
The term 'commercial' should be given a wide interpretation so as to cover
matters arising from all relationships of a commercial nature, whether
contractual or not. Relationships of a commercial nature include, but are not
limited to, the following transactions any trade transaction for the supply or
exchange of goods or services; distribution agreement; commercial
representation or agency; factoring, leasing, construction of works; consulting,
engineering, licensing investment, financing: banking; insurance; exploitation
agreement or concession, joint venture and other forms of industrial or
business co-operation; carriage of goods or passengers by air, sea, rail, or
road.
33. In R.M. Investment and Trading Co. (P) Ltd. v. Boeing Co., MANU/SC/0246/1994 :
(1994) 4 SCC 541, at page 546, this Court held:
12. [in] construing the expression "commercial" in Section 2 of the [Foreign
Awards (Recognition & Enforcement) Act, 1961] it has to be borne in mind that
the
"Act is calculated and designed to subserve the cause of facilitating
international trade and promotion thereof by providing for speedy

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 settlement of disputes arising in such trade through arbitration and any
expression or phrase occurring therein should receive, consistent with
its literal and grammatical sense, a liberal construction." [See:
Renusagar Power Co. Ltd. v. General Electric Co.
[ MANU/SC/0001/1984 : (1984) 4 SCC 679] (SCC at p. 723-24) and
Koch Navigation Inc. v. Hindustan Petroleum Corporation Ltd.
[ MANU/SC/0336/1989 : (1989) 4 SCC 259, 262 (para 8)]
The expression "commercial" should, therefore, be construed broadly having
regard to the manifold activities which are integral part of international trade
today.
34. We now come to Section 47. As the marginal note indicates, this Section provides
that the pre-requisites for the enforcement of a foreign award are: (1) the original
award or a copy thereof duly authenticated in the manner required by the law of the
country in which it is made; (2) the original agreement for arbitration or a duly certified
copy thereof, and; (3) such evidence as may be necessary to prove that the award is a
foreign award.
35. Section 47 is based on Article IV of the New York Convention which is contained in
Schedule I to the Arbitration Act, 1996. Article IV reads as follows:
Article IV
1 . To obtain the recognition and enforcement mentioned in the preceding
article, the party applying for recognition and enforcement shall, at the time of
the application, supply:
(a) The duly authenticated original award or a duly certified copy
thereof;
(b) The original agreement referred to in Article II or a duly certified
copy thereof.
2 . If the said award or agreement is not made in an official language of the
country in which the award is relied upon, the party applying for recognition
and enforcement of the award shall produce a translation of these documents
into such language. The translation shall be certified by an official or sworn
translator or by a diplomatic or consular agent.
36. In his treatise titled International Commercial Arbitration by Gary B. Born (Wolters
Kluwer, 2nd Edn., 2014) ["Gary Born"], the learned author while discussing Article IV of
the New York Convention has this to say:
Under the convention, it is clear that national arbitration legislation is not
permitted to impose more demanding requirements of proof of the existence of
a foreign or nondomestic award than those contained in Article IV; Article IV
prescribes a maximum standard of proof of an award and Contracting States
may not impose stricter or more onerous requirements of proof.
xxx xxx xxx
Article IV was drafted in order to advance the Convention's general pro-
enforcement policies. As one national court put it:

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 Article IV must be interpreted in accordance with the spirit of the
Convention... The Contracting States wished to reduce the obligation
for the party seeking recognition and enforcement of a foreign arbitral
award as much as possible." [Judgment of 15 April 1999, XXVI Y.B.
Comm. Arb. 863, 866 (Geneva Cour de justice) (2001)]
Consistent with this objective, national courts have generally rejected efforts to
complicate the proof requirements Under Article IV, taking a practical and
relatively flexible approach towards proof requirements.
(at pages 3396-3397)
37. From this, is clear that all the requirements of Sub-section (1) are procedural in
nature, the object being that the enforcing court must first be satisfied that it is indeed
a foreign award, as defined, and that it is enforceable against persons who are bound
by the award. Shri Vishwanathan and Shri Salve's arguments that to prove that a non-
signatory to an arbitral agreement can only be roped in to the aforesaid agreement on
evidence being adduced before the enforcing court as to whether the non-signatory is a
person who claims under a party or is otherwise affected by the alter ego doctrine, is
disingenuous to say the least. Section 47(1)(c) being procedural in nature does not go
to the extent of requiring substantive evidence to "prove" that a non-signatory to an
arbitration agreement can be bound by a foreign award. As a matter of fact, Section
47(1)(c) speaks of only evidence as may be necessary to prove that the award is a
foreign award. This Section only has reference to the six ingredients of a foreign award
that have been outlined hereinabove, which are contained in the definition section,
namely, Section 44. Ingredients 1 to 4 can easily be made out from the foreign award
itself as the award would narrate facts which would show the legal relationship between
the 'persons' bound by the award (who need not necessarily be parties to the arbitration
agreement), and as to whether the award deals with matters that can be considered
commercial under the law in force in India. Equally, the date of the foreign award would
appear on the face of the foreign award itself. Thus, Section 47(1)(c) would apply to
adduce evidence as to whether the arbitration agreement is a New York Convention
agreement. Also, the requisite Central Government notification can be produced Under
Section 47(1)(c), so that Section 44(b) gets satisfied. To argue that the burden of proof
is on the person enforcing the award and that this burden can only be discharged by
such person leading evidence to affirmatively show that a non-signatory to an
arbitration agreement can be bound by a foreign award is outside Section 47(1)(c). This
argument consequently stands dismissed.
38. We now come to Section 48 which deals with enforcement of a foreign award being
refused. It is important to notice that when enforcement of a foreign award is resisted,
the party who resists it must prove to the court that its case falls within any of the Sub-
clauses of Sub-section (1) or Sub-section (2) of Section 48. Since some arguments
were made as to the expression "proof" contained in Section 48(1), it is necessary to
deal with the same. In Emkay Global Financial Services Ltd. v. Girdhar Sondhi,
MANU/SC/0875/2018 : (2018) 9 SCC 49, a question arose under the pari materia
provision contained in Section 34 of the Arbitration Act, 1996 as to what the expression
"proof" means therein. After referring to a number of High Court judgments, and to an
amendment that has now been made to Section 34, in which the expression "furnishes
proof that" is now substituted by "establishes on the basis of the record of the arbitral
tribunal that", this judgment held that the expression "proof" cannot possibly mean the
taking of oral evidence as it will otherwise defeat the object of speedy disposal of
Section 34 petitions. This was so stated as follows:

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 21. It will thus be seen that speedy resolution of arbitral disputes has been the
reason for enacting the 1996 Act, and continues to be the reason for adding
amendments to the said Act to strengthen the aforesaid object. Quite obviously,
if issues are to be framed and oral evidence taken in a summary proceeding
Under Section 34, this object will be defeated. It is also on the cards that if Bill
No. 100 of 2018 is passed, then evidence at the stage of a Section 34
application will be dispensed with altogether. Given the current state of the law,
we are of the view that the two early Delhi High Court judgments [Sandeep
Kumar v. Ashok Hans, MANU/DE/1698/2004 : (2004) 3 Arb LR 306], [Sial
Bioenergie v. SBEC Systems, MANU/DE/1138/2004 : AIR 2005 Del 95], cited
by us hereinabove, correctly reflect the position in law as to furnishing proof
Under Section 34(2)(a). So does the Calcutta High Court judgment [WEB
Techniques & Net Solutions (P) Ltd. v. Gati Ltd.]. We may hasten to add that if
the procedure followed by the Punjab and Haryana High Court judgment
[Punjab SIDC Ltd. v. Sunil K. Kansal,] is to be adhered to, the time-limit of one
year would only be observed in most cases in the breach. We therefore overrule
the said decision. We are constrained to observe that Fiza Developers [Fiza
Developers & Inter-Trade (P) Ltd. v. AMCI (India) (P) Ltd.,
MANU/SC/1485/2009 : (2009) 17 SCC] was a step in the right direction as its
ultimate ratio is that issues need not be struck at the stage of hearing a Section
34 application, which is a summary procedure. However, this judgment must
now be read in the light of the amendment made in Sections 34(5) and 34(6).
So read, we clarify the legal position by stating that an application for setting
aside an arbitral award will not ordinarily require anything beyond the record
that was before the arbitrator. However, if there are matters not contained in
such record, and are relevant to the determination of issues arising Under
Section 34(2)(a), they may be brought to the notice of the Court by way of
affidavits filed by both parties. Cross-examination of persons swearing to the
affidavits should not be allowed unless absolutely necessary, as the truth will
emerge on a reading of the affidavits filed by both parties. We, therefore, set
aside the judgment [Girdhar Sondhi v. Emkay Global Financial Services Ltd.,]
of the Delhi High Court and reinstate that of the learned Additional District
Judge dated 22-9-2016. The appeal is accordingly allowed with no order as to
costs.
39. Given that foreign awards in convention countries need to be enforced as speedily
as possible, the same logic would apply to Section 48, as a result of which the
expression "proof" in Section 48 would only mean "established on the basis of the
record of the arbitral tribunal" and such other matters as are relevant to the grounds
contained in Section 48.
4 0 . It is important to remember that the New York Convention, which our Act has
adopted, has a pro-enforcement bias, and unless a party is able to show that it's case
comes clearly within Sections 48(1) or 48(2), the foreign award must be enforced. Also,
the grounds contained in Sections 48(1)(a) to (e) are not to be construed expansively
but narrowly. Thus, in Ssangyong Engg. & Construction Co. Ltd. v. NHAI,
MANU/SC/0705/2019 : (2019) 15 SCC 131 ["Ssangyong"], it was held:
45. After referring to the New York Convention, this Court delineated the scope
of enquiry of grounds Under Sections 34/48 (equivalent to the grounds Under
Section 7 of the Foreign Awards Act, which was considered by the Court), and
hel d: (Renusagar case [Renusagar Power Co. Ltd. v. General Electric Co.,
MANU/SC/0195/1994 : 1994 Supp (1) SCC 644], SCC pp. 671-72 & 681-82,
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 paras 34-37 & 65-66)
34. Under the Geneva Convention of 1927, in order to obtain
recognition or enforcement of a foreign arbitral award, the
requirements of Clauses (a) to (e) of Article I had to be fulfilled and in
Article II, it was prescribed that even if the conditions laid down in
Article I were fulfilled recognition and enforcement of the award would
be refused if the court was satisfied in respect of matters mentioned in
Clauses (a), (b) and (c). The principles which apply to recognition and
enforcement of foreign awards are in substance, similar to those
adopted by the English courts at common law. (See Dicey & Morris,
The Conflict of Laws, 11th Edn., Vol. I, p. 578.) It was, however, felt
that the Geneva Convention suffered from certain defects which
hampered the speedy settlement of disputes through arbitration. The
New York Convention seeks to remedy the said defects by providing for
a much more simple and effective method of obtaining recognition and
enforcement of foreign awards. Under the New York Convention the
party against whom the award is sought to be enforced can object to
recognition and enforcement of the foreign award on grounds set out in
Sub-clauses (a) to (e) of Clause (1) of Article V and the court can, on
its own motion, refuse recognition and enforcement of a foreign award
for two additional reasons set out in Sub-clauses (a) and (b) of Clause
(2) of Article V. None of the grounds set out in Sub-clauses (a) to (e)
of Clause (1) and Sub-clauses (a) and (b) of Clause (2) of Article V
postulates a challenge to the award on merits.
35. Albert Jan van den Berg in his treatise The New York Arbitration
Convention of 1958: Towards a Uniform Judicial Interpretation, has
expressed the view:
'It is a generally accepted interpretation of the Convention that
the court before which the enforcement of the foreign award is
sought may not review the merits of the award. The main
reason is that the exhaustive list of grounds for refusal of
enforcement enumerated in Article V does not include a mistake
in fact or law by the arbitrator. Furthermore, under the
Convention the task of the enforcement judge is a limited one.
The control exercised by him is limited to verifying whether an
objection of a Respondent on the basis of the grounds for
refusal of Article V(1) is justified and whether the enforcement
of the award would violate the public policy of the law of his
country. This limitation must be seen in the light of the
principle of international commercial arbitration that a national
court should not interfere with the substance of the arbitration.'
(p. 269)
36. Similarly Alan Redfern and Martin Hunter have said:
'The New York Convention does not permit any review on the
merits of an award to which the Convention applies and, in this
respect, therefore, differs from the provisions of some systems
of national law governing the challenge of an award, where an
appeal to the courts on points of law may be permitted.'

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 (Redfern & Hunter, Law and Practice of International
Commercial Arbitration, 2nd Edn., p. 461.)
37. In our opinion, therefore, in proceedings for enforcement of a
foreign award under the Foreign Awards Act, 1961, the scope of
enquiry before the court in which award is sought to be enforced is
limited to grounds mentioned in Section 7 of the Act and does not
enable a party to the said proceedings to impeach the award on merits.
***
65. This would imply that the defence of public policy which is
permissible Under Section 7(1)(b)(ii) should be construed narrowly. In
this context, it would also be of relevance to mention that Under Article
I(e) of the Geneva Convention Act of 1927, it is permissible to raise
objection to the enforcement of arbitral award on the ground that the
recognition or enforcement of the award is contrary to the public policy
or to the principles of the law of the country in which it is sought to be
relied upon. To the same effect is the provision in Section 7(1) of the
Protocol & Convention Act of 1837 which requires that the enforcement
of the foreign award must not be contrary to the public policy or the
law of India. Since the expression "public policy" covers the field not
covered by the words "and the law of India" which follow the said
expression, contravention of law alone will not attract the bar of public
policy and something more than contravention of law is required.
66. Article V(2)(b) of the New York Convention of 1958 and Section
7(1)(b)(ii) of the Foreign Awards Act do not postulate refusal of
recognition and enforcement of a foreign award on the ground that it is
contrary to the law of the country of enforcement and the ground of
challenge is confined to the recognition and enforcement being contrary
to the public policy of the country in which the award is set to be
enforced. There is nothing to indicate that the expression "public
policy" in Article V(2)(b) of the New York Convention and Section 7(1)
(b)(ii) of the Foreign Awards Act is not used in the same sense in
which it was used in Article I(c) of the Geneva Convention of 1927 and
Section 7(1) of the Protocol and Convention Act of 1937. This would
mean that "public policy" in Section 7(1)(b)(ii) has been used in a
narrower sense and in order to attract the bar of public policy the
enforcement of the award must invoke something more than the
violation of the law of India. Since the Foreign Awards Act is concerned
with recognition and enforcement of foreign awards which are
governed by the principles of private international law, the expression
"public policy" in Section 7(1)(b)(ii) of the Foreign Awards Act must
necessarily be construed in the sense the doctrine of public policy is
applied in the field of private international law. Applying the said
criteria it must be held that the enforcement of a foreign award would
be refused on the ground that it is contrary to public policy if such
enforcement would be contrary to (i) fundamental policy of Indian law;
or (ii) the interests of India; or (iii) justice or morality.
(emphasis supplied in Ssangyong)
41. Likewise, in Vijay Karia v. Prysmian Cavi E Sistemi SRL, MANU/SC/0171/2020 :
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(2020) 11 SCC 1 ["Vijay Karia"], this Court held:
2 4 . Before referring to the wide-ranging arguments on both sides, it is
important to emphasise that, unlike Section 37 of the Arbitration Act, which is
contained in Part I of the said Act, and which provides an appeal against either
setting aside or refusing to set aside a "domestic" arbitration award, the
legislative policy so far as recognition and enforcement of foreign awards is
that an appeal is provided against a judgment refusing to recognise and enforce
a foreign award but not the other way around (i.e. an order recognising and
enforcing an award). This is because the policy of the legislature is that there
ought to be only one bite at the cherry in a case where objections are made to
the foreign award on the extremely narrow grounds contained in Section 48 of
the Act and which have been rejected. This is in consonance with the fact that
India is a signatory to the Convention on the Recognition and Enforcement of
Foreign Arbitral Awards, 1958 (hereinafter referred to as "New York
Convention") and intends--through this legislation--to ensure that a person who
belongs to a Convention country, and who, in most cases, has gone through a
challenge procedure to the said award in the country of its origin, must then be
able to get such award recognised and enforced in India as soon as possible.
This is so that such person may enjoy the fruits of an award which has been
challenged and which challenge has been turned down in the country of its
origin, subject to grounds to resist enforcement being made out Under Section
48 of the Arbitration Act. ....
xxx xxx xxx
44. Indeed, this approach has commended itself in other jurisdictions as well.
Thus, in Sui Southern Gas Co. Ltd. v. Habibullah Coastal Power Co. (Pte.) Ltd.
[Sui Southern Gas Co. Ltd. v. Habibullah Coastal Power Co. (Pte.) Ltd.,
MANU/SGHC/0056/2010 : 2010 SGHC 62], the Singapore High Court, after
setting out the legislative policy of the Model Law that the "public policy"
exception is to be narrowly viewed and that an arbitral award that shocks the
conscience alone would be set aside, went on to hold:
48. It is clear, therefore, that in order for SSGC to have succeeded on
the public policy argument, it had to cross a very high threshold and
demonstrate egregious circumstances such as corruption, bribery or
fraud, which would violate the most basic notions of morality and
justice. Nothing of the sort had been pleaded or proved by SSGC, and
its ambiguous contention that the award was "perverse" or "irrational"
could not, of itself, amount to a breach of public policy.
xxx xxx xxx
50. The US cases show that given the "pro-enforcement bias" of the New York
Convention, which has been adopted in Section 48 of the Arbitration Act, 1996-
-the burden of proof on parties seeking enforcement has now been placed on
parties objecting to enforcement and not the other way around; in the guise of
public policy of the country involved, foreign awards cannot be set aside by
second guessing the arbitrator's interpretation of the agreement of the parties;
the challenge procedure in the primary jurisdiction gives more leeway to courts
to interfere with an award than the narrow restrictive grounds contained in the
New York Convention when a foreign award's enforcement is resisted.

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4 2 . Given these parameters, let us examine arguments of the Appellants insofar as
Section 48(1)(a) is concerned. If read literally, Section 48(1)(a) speaks only of parties
to the agreement being under some incapacity, or the agreement being invalid under
the law to which parties have subjected it. There can be no doubt that a non-party to
the agreement, alleging that it cannot be bound by an award made under such
agreement, is outside the literal construction of Section 48(1)(a). Also, it must not be
forgotten that whereas Section 44 speaks of an arbitral award on differences between
"persons", Section 48(1)(a) refers only to the "parties" to the agreement referred to in
Section 44(a). Thus, to include non-parties to the agreement by introducing the word
"person" would run contrary to the express language of Section 48(1)(a), when read
with Section 44. Also, it must not be forgotten that these grounds cannot be
expansively interpreted as has been held above. The grounds are in themselves specific,
and only speak of incapacity of parties and the agreement being invalid under the law to
which the parties have subjected it. To attempt to bring non-parties within this ground
is to try and fit a square peg in a round hole.
43. Quite apart from the fact that Section 48(1)(a) was not put forward either before
the learned Single Judge or the Division Bench, let us examine the judgment in Dallah
(supra) which appears to justify the bringing of a non-signatory to the agreement's
objection to a foreign award Under Section 48(1)(a).
4 4 . In Dallah's case (supra), a Saudi company applied under the United Kingdom's
Arbitration Act, 1996 for leave to enforce an award against a ministry of the
Government of Pakistan. There was no doubt on the facts of that case that the
Government was not a party to the arbitration agreement, which was between Dallah
and the Awami Hajj Trust. The Supreme Court of the United Kingdom found, on a trial
conducted before it, that the agreement containing the arbitration Clause fell to be
decided under French law as the law of the country where the award was made, which
required that there be a common intention between the parties to the agreement that
the Government of Pakistan be bound by the arbitration agreement. It was found,
contrary to the Tribunal's finding, that the agreement had been deliberately structured
to reflect a common intention that only the parties to the agreement were to be bound,
a non-party being an outsider. The Tribunal's award had held on the facts of that case
as follows: (para 146 of Dallah)
Certainly, many of the above-mentioned factual elements, if isolated and taken
into a fragmented way, may not be construed as sufficiently conclusive for the
purpose of this section. However, Dr Mahmassani believes that when all the
relevant factual elements are looked into globally as a whole, such elements
constitute a comprehensive set of evidence that may be relied upon to conclude
that the Defendant is a true party to the agreement with the claimant and
therefore a proper party to the dispute that has arisen with the claimant under
the present arbitration proceedings. Whilst joining in this conclusion Dr Shah
and Lord Mustill note that they do so with some hesitation, considering that the
case lies very close to the line.
45. This was referred to as a "weak conclusion" in para 146, and in any case did not
conform to French law as the doctrine of alter ego was completely different from
common intention of parties to the agreement which was required under French law. As
a result, the arbitral award was set aside Under Section 103(2)(b) of the UK Act, which
is substantially similar to Section 48(1)(a) of the Indian Arbitration Act, 1996.
46. The leading judgment of Lord Mance JSC set out the facts and posed the question

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before the Court thus:
2 ...The tribunal in a first partial award dated 26 June 2001 concluded that the
Government was a true party to the agreement and as such bound by the
arbitration clause, and so that the tribunal had jurisdiction to determine
Dallah's claim against the Government. The central issue before the English
courts is whether the Government can establish that, applying French law
principles, there was no such "common intention" on the part of the
Government and Dallah as would make the Government a party.
4 7 . The learned Judge then noted, in para 11, that the argument made before the
Tribunal was that the Trust was either the alter ego of the Government of Pakistan or
the Government of Pakistan was the successor to the Trust. Since the 'alter ego'
argument found favour with the Tribunal, and since it was not pursued before the
Supreme Court, the conclusion that the award was bad would necessarily follow. In
para 31, Lord Mance JSC made it clear that a court seized of an issue Under Section
103(2)(b) will examine, both carefully and with interest, the reasoning and conclusion
of an arbitral tribunal which has undertaken a similar examination before arriving at its
own conclusion on facts.
48. In a separate concurring judgment, Lord Collins of Mapesbury JSC set out as to
why, in His Lordship's opinion, Article V(1)(a) of the New York Convention (equivalent
to Section 103(2)(b) of the UK Act and Section 48(4)(a) of the Indian Arbitration Act,
1996) would be attracted as follows:
77. Although Article V(1)(a) (and Section 103(2)(b)) deals expressly only with
the case where the arbitration agreement is not valid, the consistent
international practice shows that there is no doubt that it also covers the case
where a party claims that the agreement is not binding on it because that party
was never a party to the arbitration agreement. Thus in Dardana Ltd. v. Yukos
Oil Co. [2002] 2 Lloyd's Rep 326 it was accepted by the Court of Appeal that
Section 103(2)(b) applied in a case where the question was whether a Swedish
award was enforceable in England against Yukos on the basis that, although it
was not a signatory, it had by its conduct rendered itself an additional party to
the contract containing the arbitration agreement. In Sarhank Group v. Oracle
Corporation MANU/FESC/0345/2005 : (2005) 404 F 3d 657 the issue, on the
enforcement of an Egyptian award, was whether a non-signatory parent
company was bound by an arbitration agreement on the basis that its
subsidiary, which had signed the agreement, was a mere shell; and in China
Minmetals Materials Import and Export Co. Ltd. v. Chi Mei Corporation
MANU/FETC/0161/2003 : (2003) 334 F 3d 274 enforcement of a Chinese award
was resisted on the ground that the agreement was a forgery. See also Born,
International Commercial Arbitration (2009), Vol II, pp 2778-2779.
4 9 . Given the conclusion on Section 48(1)(a) when read with Section 44 of the
Arbitration Act 1996, we cannot follow what is stated to be "international practice" in
trying to fit a non-signatory's objection to a foreign award being binding upon it Under
Section 48(1)(a). We therefore distinguish Dallah's case on facts as well as on law-a
non-signatory's objection cannot possibly fit into Section 48(1)(a) as has been held by
us hereinabove. Without delving deep into this problem, it may perhaps be open in an
appropriate case for a non-signatory to bring its case within Section 48(2) read with
Explanation 1(iii), as explained in Ssangyong (supra) (see paras 70 and 76 in
Ssangyong).

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50. Shri Vishwanathan relied on a judgment of the Supreme Court of Victoria, Australia,
in the case of IMC Aviation Solutions Pty Ltd. v. Altain Khuder LLC[2011] VSCA 248 to
submit that, where a party resists enforcement of a foreign award on the ground that it
is not a signatory to the arbitration agreement, the enforcing court is duty bound to
examine the question of jurisdiction by itself.
5 1 . In the said case, the Supreme Court of Victoria, after citing Dallah's case with
approval, held that the foreign award in that case cannot be enforced against a party
who was not a signatory to the arbitration agreement. This decision was premised on
the reasoning that the words 'the arbitration agreement is not valid' appearing in
Section 8(5)(b) of the Australian International Arbitration Act, 1974 ["Australian Act"]
(which is equivalent to Section 48(1)(a) of the Indian Arbitration Act, 1996) includes
the ground that the 'award-debtor was not a party to the arbitration agreement'.
52. What is important to note is that there is a significant difference in the Australian
Act i.e., Section 8(1) of the Australian Act (which is analogous to Section 46 of the
Indian Arbitration Act, 1996) which states that "a foreign award is binding .... on the
parties to the arbitration agreement in pursuance of which it was made".
53. The Supreme Court of Victoria, after initially expressing some doubt on whether
'not being signatory to the agreement' can be a ground that can be canvassed Under
Section 8(5)(b), held that, since Section 8(1) clearly does not intend enforcement of
foreign awards against non-signatories, such a plea can be brought within the ambit of
Section 8(5)(b). The relevant paras are as follows:
135. In our opinion, at stage one, the award creditor must satisfy the Court, on
a prima facie basis, of the following matters before the Court may make an
order enforcing the award:
(a) an award has been made by a foreign arbitral tribunal granting
relief to the award creditor against the award debtor;
(b) the award was made pursuant to an arbitration agreement; and
(c) the award creditor and the award debtor are parties to the
arbitration agreement.
xxx xxx xxx
156. Thirdly, Section 8(1) appears prominently in the scheme of Section 8.
This is not surprising, as it defines the subject matter of Part II of the Act,
namely, that by virtue of the Act, a foreign arbitral award is binding on 'the
parties to the arbitration agreement in pursuance of which it was made'. In thus
identifying that which is binding, Section 8(1) limits the Court's jurisdiction
pursuant to Section 8(2) to enforcing a foreign arbitral award against a party to
the arbitration agreement in pursuance of which it was made.
159. Logically, the expression 'the arbitration agreement is not valid' in Section
8(5)(b) may be inapt to accommodate the ground that a person is not a party
to the arbitration agreement. This is because a person that seeks to establish
that he or she is not a party to an agreement may have no legal or factual basis
for impugning the validity of the agreement. The agreement may be valid as
between the parties to it, and simply not apply to any person that is not a party
to it. A person who establishes that he or she is not a party to an arbitration

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 agreement does not thereby establish that the arbitration agreement is not
valid.
160. Sixthly, a reading of Section 8(5) as a whole indicates that the provision
assumes that the question of whether the person resisting the enforcement of
the award was a party to the arbitration agreement in pursuance of which the
award was made has already been resolved against that person. This is evident
from Section 8(5)(a), which refers to 'a party to the arbitration agreement', and
Section 8(5)(f), which refers to 'the parties to the arbitration agreement'. If
these provisions are read literally, the grounds covered by them are only
available to parties to the arbitration agreement. It is not clear why these
provisions should be so confined if it is the intention of the Act to permit a
person that alleges that he or she is not a party to an arbitration agreement to
resist enforcement of the award Under Section 8(5).
xxx xxx xxx
165. It cannot be said that the ground that the award debtor was not a party to
the arbitration agreement in pursuance of which the award was made is more
significant than, for example, the ground that the arbitration agreement
pursuant to which the award was made was not valid. There is no reason to
think that an award debtor has greater justification to be aggrieved because it
maintains that it was not a party to the arbitration agreement than an award
debtor that maintains that the arbitration agreement was invalid because it was
forged or obtained by fraud. If the forgery or fraud are not apparent on the face
of the arbitration agreement, and an ex parte order is made to enforce the
award, the award debtor would have the onus Under Section 8(5)(b) to
persuade the Court that the arbitration agreement was a forgery or was
obtained by fraud. There is no justification for adopting a different approach
where, on the face of the arbitration agreement, the award debtor was a party
to that agreement.
166. Fourthly, the ordinary and natural meaning of the expression 'the
arbitration agreement is not valid' is that the arbitration agreement is of no
legal effect under the relevant law. A person who asserts that he or she is not a
party to an arbitration agreement is, in substance, asserting that the arbitration
agreement is of no legal effect as against him or her. Accordingly, Section 8(5)
(b) may be taken to include the ground that the award debtor was not a party
to the arbitration agreement in pursuance of which the award was made.
xxx xxx xxx
171. In relation to the question of whether Section 8(5)(b) extends to the
ground that the award debtor was not a party to the arbitration agreement, we
respectfully agree with the approach that has been adopted in the United
Kingdom.
172. In Dallah, Lord Collins JSC said that, notwithstanding that para 1(a) of art
V of the Convention-which is reflected in Section 8(5)(b) of the Act-deals
expressly only with the case where the arbitration agreement is not valid, 'the
consistent international practice shows that there is no doubt that it also covers
the case where a party claims that the agreement is not binding on it because
that party was never a party to the arbitration agreement.' In support of this
proposition, Lord Collins JSC referred to Dardana Ltd. v. Yukos Oil Co. In that
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 case, Mance L J said that '[i]t is clear, and was effectively common ground
before us, that [the UK equivalent of Section 8(5)(b) of the Act] is one vehicle
enabling the present Appellants to challenge the recognition and enforcement of
the Swedish award, by maintaining that they never became party to the
[arbitration agreement]'
xxx xxx xxx
272. It will be recalled from [166] and [171] to [172] above that the words
'the arbitration agreement is not valid' in Section 8(5)(b) of the Act include the
ground that the award debtor was not a party to the arbitration agreement.
(emphasis supplied)
54. This case in inapplicable when construing Section 48(1)(a) of the Arbitration Act,
1996 for the same reason as Dallah is inapplicable.
5 5 . As a matter of fact, the Singapore High Court in Aloe Vera of America, Inc. v.
Asianic Food (S) Pte. Ltd. and Anr., MANU/SGHC/0102/2006 : [2006] SGHC 78, has
arrived at a conclusion, on facts similar to ours, that the equivalent of Section 48(1)(a)
in the Singapore Act would not be attracted.
5 6 . In the facts of this case, Aloe Vera of America, Inc. ["AVA"], a company
incorporated and existing under the laws of Texas, USA, was a manufacturer and
distributor of aloe vera products. One Mr. Chiew was employed by AVA to be an
independent distributor of the aforesaid products. When AVA decided to close its
Singapore office, Mr. Chiew persuaded AVA to let him take over AVA's Singapore
operations. He established Asianic Food (S) Pte. Ltd. ["Asianic"] for this purpose, as a
result of which, an Exclusive Supply, Distributorship and License Agreement was
entered into between AVA and Asianic. Mr. Chiew signed the agreement on behalf of
Asianic. This agreement was subsequently terminated, with AVA commencing arbitral
proceedings against both Asianic and Mr. Chiew. Mr. Chiew took the position that, not
being a party to the agreement, he had not agreed to arbitration or to the laws of
Arizona applying to him personally. However, the learned Arbitrator, in his award,
ordered both Asianic and Mr. Chiew to pay AVA damages, compensation, administrative
fees and expenses. In this fact situation, when Section 31(2)(b) of Singapore's
International Arbitration Act [the "Singapore Act"] (equivalent of Section 48(1)(a) of the
Indian Arbitration Act, 1996) was pressed in support of Mr. Chiew's objection to the
foreign award, the Singapore High Court held:
61. First of all, it should be remembered that Under Section 31(2) of the Act, it
is the party who wishes the court to refuse enforcement of the award who has
the burden of establishing that one of the grounds for refusal exists. Sub-
section (2)(b) calls on the challenger to establish that the arbitration agreement
in question is not valid under the law to which the parties have subjected it. In
this case, the arbitration agreement was subject to the law of Arizona and
therefore Mr. Chiew bore the burden of establishing that it was not valid under
the law of Arizona and that under the law of Arizona the clauses of the
Agreement could not have any application to him. It would not be correct in
this situation for me to construe Clause 13.7 or any other Clause of the
Agreement in the same way as I would be able to if it were subject to
Singapore law in order to establish whether there was a valid arbitration
agreement binding Mr. Chiew.

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 6 2 . The same argument was brought before the assistant registrar who
correctly held that the issue as to whether there was a valid arbitration
agreement had to be determined on the basis of foreign law. He also recognised
that Mr. Chiew had the burden to adduce evidence to establish his contention.
The assistant registrar found that Mr. Chiew had failed to adduce such evidence.
On the contrary, the evidence showed that Mr. Chiew had signed the Agreement
and was also active in running Asianic. The assistant registrar found support
from the reasoning of the US District Court decision in the Sarhank case
[Sarhank Group v. Oracle Corporation reported in Yearbook Comm. Arb'n
XXVIII (2003) p. 1043)]. Batts J who decided it at first instance stated:
[T]he court has been asked to enforce an international arbitral award in
which arbitrability has already been established under the laws of
Egypt. ...
...
[T]he Convention ... does not sanction second-guessing the arbitrator's
construction of the parties' agreement. ... It is well-settled that absent
"extraordinary circumstances", a confirming court is not to reconsider
the arbitrators' findings. ...
...
[The arbitrators'] conclusion of partnership under the contract is one of
"construction of the parties' agreement" and will not be reviewed by the
Court, absent extraordinary circumstances. In the instant case, no such
extraordinary circumstances exist.
Whilst the decision of Batts J may have been reversed by the Court of Appeals
[404 F 3d 657 (2nd Cir, 2005)], I respectfully agree with his observations
which are in line with the general approach taken by an enforcement court to
the decision of the arbitral tribunal in question. They are also consonant with
the views of the court in the Hebei case which underline that the approach
towards the decisions of foreign arbitral tribunals in Convention countries is to
recognise the validity of the same and give effect to them subject to basic
notions of morality and justice. The Court of Appeals in the Sarhank case took a
different view, one that I hope will not be generally endorsed.
57. In the facts of the present case, what this Court is being asked to do, in the guise
of applying Section 48(1)(a), is really to undertake a review on the merits. As has been
pointed out by us hereinabove, the application of the alter ego doctrine under Delaware
law would depend primarily upon the Arbitrator applying the oral and documentary
evidence led before him to arrive at this conclusion on facts. This he has done by not
only adverting to the documentary evidence, but also adverting to the oral evidence of
Ms. Parker of ISS, Mr. Pathak, MD of DMC and Arun Dev Upadhyaya, Chairman of DMC.
Given the fact that the foreign award gives reasons on facts in this case to apply the
alter ego doctrine, it would not be possible for us to re-appreciate these facts especially
when the burden lies on the Appellants to establish the grounds made out in Section
48(1), none of which go to the merits of the case.
58. Shri Vishwanathan also argued that the award is perverse in that vital evidence was
not led in support of the claimant's case before the arbitrator. Perversity as a ground to
set aside an award in an international commercial arbitration held in India no longer
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obtains after the 2015 amendment to the Arbitration Act, 1996. This Court in Ssangyong
(supra) held as follows:
41. What is important to note is that a decision which is perverse, as
understood in paras 31 and 32 of Associate Builders v. DDA,
MANU/SC/1076/2014 : (2015) 3 SCC 49,while no longer being a ground for
challenge under "public policy of India", would certainly amount to a patent
illegality appearing on the face of the award. Thus, a finding based on no
evidence at all or an award which ignores vital evidence in arriving at its
decision would be perverse and liable to be set aside on the ground of patent
illegality. Additionally, a finding based on documents taken behind the back of
the parties by the arbitrator would also qualify as a decision based on no
evidence inasmuch as such decision is not based on evidence led by the parties,
and therefore, would also have to be characterised as perverse.
42. Given the fact that the amended Act will now apply, and that the "patent
illegality" ground for setting aside arbitral awards in international commercial
arbitrations will not apply, it is necessary to advert to the grounds contained in
Sections 34(2)(a)(iii) and (iv) as applicable to the facts of the present case.
(emphasis supplied)
59. The judgment in Ssangyong (supra) noted in para 29 that Section 48 of the Act has
also been amended in the same manner as Section 34 of the Act. The ground of "patent
illegality appearing on the face of the award" is an independent ground of challenge
which applies only to awards made under Part I which do not involve international
commercial arbitrations. Thus, the "public policy of India" ground after the 2015
amendment does not take within its scope, "perversity of an award" as a ground to set
aside an award in an international commercial arbitration Under Section 34, and
concomitantly as a ground to refuse enforcement of a foreign award Under Section 48,
being a pari materia provision which appears in Part II of the Act. This argument must
therefore stand rejected.
6 0 . The Appellants then pressed Section 48(1)(c) into operation. As can be seen,
Section 48(1)(c) relates to an award which deals with a difference not contemplated by
or not falling within the terms of the submission to arbitration, or it contains decisions
on matters beyond the scope of the submissions to arbitration. Given the fact that the
expression 'submission to arbitration' would refer primarily to the arbitration agreement
(see Olympus Superstructures (P) Ltd. v. Meena Vijay Khetan, MANU/SC/0359/1999 :
(1999) 5 SCC 651 at para 19), Sub-clause (c) only deals with disputes that could be
said to be outside the scope of the arbitration agreement between the parties-and not to
whether a person who is not a party to the agreement can be bound by the same. In
fact, the proviso to Section 48(1)(c) makes this even clearer, in that it states that an
award may be partially enforced, provided that matters which are outside the
submission to arbitration can be segregated, thereby again showing that the thrust of
the provision is whether the dispute between parties are qua excepted matters for
example, or are otherwise outside the scope of the arbitration agreement. In Ssangyong
(supra), this Court narrowed the scope of the challenge contained in Section 34(2)(a)
(iv), which is pari materia with Section 48(1)(c) as follows:
58. So far as this defence is concerned, standard textbooks on the subject have
held that the expression "submission to arbitration" either refers to the
arbitration agreement itself, or to disputes submitted to arbitration, and that so
long as disputes raised are within the ken of the arbitration agreement or the
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 disputes submitted to arbitration, they cannot be said to be disputes which are
either not contemplated by or which fall outside the arbitration agreement. The
expression "submission to arbitration" occurs in various provisions of the 1996
Act. Thus, Under Section 28(1)(a), an Arbitral Tribunal "... shall decide the
dispute submitted to arbitration ...". Section 43(3) of the 1996 Act refers to "...
an arbitration agreement to submit future disputes to arbitration ...". Also, it
has been stated that where matters, though not strictly in issue, are connected
with matters in issue, they would not readily be held to be matters that could
be considered to be outside or beyond the scope of submission to arbitration.
....
xxx xxx xxx
67. In State of Goa v. Praveen Enterprises, MANU/SC/0812/2011 : (2012) 12
SCC 581 (Praveen Enterprises), this Court set out what is meant by "reference
to arbitration" as follows: (SCC pp. 587-88, paras 10-11)
1 0 . "Reference to arbitration" describes various acts. Reference to
arbitration can be by parties themselves or by an appointing authority
named in the arbitration agreement or by a court on an application by a
party to the arbitration agreement. We may elaborate:
(a) If an arbitration agreement provides that all disputes
between the parties relating to the contract (some agreements
may refer to some exceptions) shall be referred to arbitration
and that the decision of the arbitrator shall be final and
binding, the "reference" contemplated is the act of parties to
the arbitration agreement, referring their disputes to an agreed
arbitrator to settle the disputes.
(b) If an arbitration agreement provides that in the event of
any dispute between the parties, an authority named therein
shall nominate the arbitrator and refer the disputes which
required to be settled by arbitration, the "reference"
contemplated is an act of the appointing authority referring the
disputes to the arbitrator appointed by him.
(c) Where the parties fail to concur in the appointment of the
arbitrator(s) as required by the arbitration agreement, or the
authority named in the arbitration agreement failing to
nominate the arbitrator and refer the disputes raised to
arbitration as required by the arbitration agreement, on an
application by an aggrieved party, the court can appoint the
arbitrator and on such appointment, the disputes between the
parties stand referred to such arbitrator in terms of the
arbitration agreement.
11. Reference to arbitration can be in respect of all disputes between
the parties or all disputes regarding a contract or in respect of specific
enumerated disputes. Where "all disputes" are referred, the arbitrator
has the jurisdiction to decide all disputes raised in the pleadings (both
claims and counterclaims) subject to any limitations placed by the
arbitration agreement. Where the arbitration agreement provides that
all disputes shall be settled by arbitration but excludes certain matters
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 from arbitration, then, the arbitrator will exclude the excepted matter
and decide only those disputes which are arbitrable. But where the
reference to the arbitrator is to decide specific disputes enumerated by
the parties/court/appointing authority, the arbitrator's jurisdiction is
circumscribed by the specific reference and the arbitrator can decide
only those specific disputes.
68. A conspectus of the above authorities would show that where an Arbitral
Tribunal has rendered an award which decides matters either beyond the scope
of the arbitration agreement or beyond the disputes referred to the Arbitral
Tribunal, as understood in Praveen Enterprises, the arbitral award could be said
to have dealt with decisions on matters beyond the scope of submission to
arbitration.
69. We therefore hold, following the aforesaid authorities, that in the guise of
misinterpretation of the contract, and consequent "errors of jurisdiction", it is
not possible to state that the arbitral award would be beyond the scope of
submission to arbitration if otherwise the aforesaid misinterpretation (which
would include going beyond the terms of the contract), could be said to have
been fairly comprehended as "disputes" within the arbitration agreement, or
which were referred to the decision of the arbitrators as understood by the
authorities above. If an arbitrator is alleged to have wandered outside the
contract and dealt with matters not allotted to him, this would be a
jurisdictional error which could be corrected on the ground of "patent
illegality", which, as we have seen, would not apply to international commercial
arbitrations that are decided under Part II of the 1996 Act. To bring in by the
backdoor grounds relatable to Section 28(3) of the 1996 Act to be matters
beyond the scope of submission to arbitration Under Section 34(2)(a)(iv) would
not be permissible as this ground must be construed narrowly and so
construed, must refer only to matters which are beyond the arbitration
agreement or beyond the reference to the Arbitral Tribunal.
61. In the Aloe Vera of America case (supra), the Singapore High Court adverted to
Section 31(2)(d) of the Singapore Act (which is the equivalent to Section 48(1)(c) of
the Indian Arbitration Act, 1996), and then held:
6 4 . Under Section 31(2)(d), enforcement of the Award may be refused if it
"deals with a difference not contemplated by, or not falling within the terms of,
the submission to arbitration or contains a decision on the matter beyond the
scope of the submission to arbitration".
6 5 . Mr. Loh submitted that the Award should not be enforced in Singapore
because it contains a decision on matters that are beyond the scope of the
submission to arbitration-the arbitration agreement was between AVA and
Asianic and the submission to arbitration was restricted to those parties only.
Joining Mr. Chiew and entering an award against him went beyond the scope of
the submission to arbitration. Javor v. Francoeur [2003] BCJ No 480 was cited
in support. Additionally, Mr. Loh said certain academics (though he referred me
to only one article, that by Prof Wedam-Lukic, "The Jurisdictional Problems of
Arbitration" (1994) 1 Croatian Arbitration Yearbook 51) were also of the view
that an award seeking to bind non-parties to an arbitration agreement was a
ground for refusal of enforcement Under Article V(1)(c) of the Convention (the
equivalent of Section 31(2)(d) of the Act).

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 66. On behalf of AVA, Mr. Dhillon submitted that Section 31(2)(d) dealt with
the grounds of excess of power or authority of the arbitrator. He cited para
20.145 of Halsbury's Laws of Singapore vol 2 (LexisNexis, 2003 Reissue) where
the author stated that this ground of challenge assumed that the tribunal had
jurisdiction over the parties and that the excess of jurisdiction should be looked
at in relation to the scope of the arbitration agreement and not be restricted to
the pleadings filed in the arbitration. The author added that when the court
examined such a challenge, it should be cautious that in doing so it did not go
into the merits in the case raised before the arbitrator, including any issue of
law.
67. Mr. Dhillon further submitted that Section 31(2)(d) did not overlap with
Section 31(2)(b) which was the proper Section to invoke when a challenge was
being made on the basis that a person was not a party to the arbitration
agreement. He pointed out that in Peter Cremer GmbH & Co. v. Cooperative
Molasses Traders Ltd. [1985] ILRM 564, the Appellant had argued that there
was no binding contract between the parties and that therefore there could not
be a binding agreement to submit disputes to arbitration. Dealing with this
argument in the Irish Supreme Court, Finlay CJ held at 573 that:
I am not satisfied that this issue can properly be made the subject
matter of a defence pursuant to either Section 9(2)(d) or Section
9(2)(f) of the Act of 1980. Section 9(2)(d) clearly, in my view, refers
to a situation where there is an undoubted submission to arbitration ...
If, as is contended by the Appellants in this case, there was no binding
agreement containing an arbitration Clause then, by definition, there
could be no submission to arbitration and in the absence of a
submission to arbitration there could be no issue as to whether an
award dealt with differences not contemplated or falling within the
terms of a submission or went beyond the scope of the submission.
In Peter Cremer, no challenge was mounted on the basis of the Irish equivalent
of Section 31(2)(b) but it is quite clear that the court did not consider that a
challenge, premised on the argument that a person was not a party to an
agreement, could be made Under Section 31(2)(b).
68. In any event, Mr. Dhillon submitted that in order to determine whether the
award dealt with matters that were beyond the scope of the submission to
arbitration, the law to be applied would have to be the governing law of the
arbitration agreement since that law would control the way in which the
arbitration agreement was construed. Accordingly, where a Convention award is
to be enforced, the foreign law of the award would be applicable. In this case,
Mr. Chiew had brought no evidence based on Arizona law to prove that the
Award contained a decision on a matter beyond the scope of the submission to
arbitration. As for Javor v. Francoeur, this case was distinguishable on its facts
as the arbitrator there had held that the Respondent was liable without finding
him to be a party to the arbitration agreement.
69. Having considered Mr. Dhillon's arguments, I accept them. I agree with the
assistant registrar that this ground of challenge relates to the scope of the
arbitration agreement rather than to whether a particular person was a party to
that agreement. Mr. Chiew has not established that this ground avails him in
this instance.

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62. We think this judgment states the law correctly.
63. Shri Vishwanathan then pressed the ground that since the Arbitrator's Award in the
present case contained reasoning which was perfunctory in nature, it would not pass
muster and it would be a breach of natural justice, 'reasons' being a part of natural
justice as understood in this country. For this, he referred to Section 48(1)(b) of the
Arbitration Act, 1996. Section 48(1)(b) does not speak of absence of reasons in an
arbitral award at all. The only grounds on which a foreign award cannot be enforced
Under Section 48(1)(b) are natural justice grounds relatable to notice of appointment of
the arbitrator or of the arbitral proceedings, or that a party was otherwise unable to
present its case before the arbitral tribunal, all of which are events anterior to the
making of the award. Section 48(1)(b) has in any case been narrowly construed in the
case of Vijay Karia (supra) as follows:
81. Given the fact that the object of Section 48 is to enforce foreign awards
subject to certain well-defined narrow exceptions, the expression "was
otherwise unable to present his case" occurring in Section 48(1)(b) cannot be
given an expansive meaning and would have to be read in the context and
colour of the words preceding the said phrase. In short, this expression would
be a facet of natural justice, which would be breached only if a fair hearing was
not given by the arbitrator to the parties. Read along with the first part of
Section 48(1)(b), it is clear that this expression would apply at the hearing
stage and not after the award has been delivered, as has been held in
Ssangyong. A good working test for determining whether a party has been
unable to present his case is to see whether factors outside the party's control
have combined to deny the party a fair hearing. Thus, where no opportunity
was given to deal with an argument which goes to the root of the case or
findings based on evidence which go behind the back of the party and which
results in a denial of justice to the prejudice of the party; or additional or new
evidence is taken which forms the basis of the award on which a party has been
given no opportunity of rebuttal, would, on the facts of a given case, render a
foreign award unenforceable on the ground that a party has been unable to
present his case. This must, of course, be with the caveat that such breach be
clearly made out on the facts of a given case, and that awards must always be
read supportively with an inclination to uphold rather than destroy, given the
minimal interference possible with foreign awards Under Section 48.
6 4 . This judgment also expressly referred to arbitral awards which may be poorly
reasoned as follows:
24. .... Also, it would only be in a very exceptional case of a blatant disregard
of Section 48 of the Arbitration Act that the Supreme Court would interfere with
a judgment which recognises and enforces a foreign award however inelegantly
drafted the judgment may be. ...
83. Having said this, however, if a foreign award fails to determine a material
issue which goes to the root of the matter or fails to decide a claim or
counterclaim in its entirety, the award may shock the conscience of the Court
and may not be enforced, as was done by the Delhi High Court in Campos Bros.
Farms v. Matru Bhumi Supply Chain (P) Ltd., MANU/DE/1526/2019 : (2019)
261 DLT 201 on the ground of violation of the public policy of India, in that it
would then offend a most basic notion of justice in this country. It must always
be remembered that poor reasoning, by which a material issue or claim is

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 rejected, can never fall in this class of cases. ....
65. This argument also stands rejected.
66. Shri Salve argued that since damages were given in tort in the present case, they
would be outside the scope of the arbitration agreement. The arbitration agreement in
this case reads as follows:
(ii) In the event a dispute arises in connection with this Agreement such dispute
shall be referred to a single arbitrator in Kansas City, Missouri, U.S.A. to be
appointed by agreement between the parties hereto, or failing agreement to be
appointed according to the Rules of the American Arbitration, Association the
same Rules under which any dispute which any dispute shall be decided.
(emphasis supplied)
67. As has been noticed by us earlier in this judgment, Section 44 recognises the fact
that tort claims may be decided by an arbitrator provided they are disputes that arise in
connection with the agreement. Thus in Renusagar Power Co. Ltd. v. General Electric
Co., MANU/SC/0001/1984 : (1984) 4 SCC 679, this Court held:
3 9 . As regards the third claim of compensatory damages it is true that
Renusagar is being saddled with this liability as tortfeasor, a stake-holder
and/or a constructive trustee, but, in our view, that aspect by itself will not
justify a conclusion that the same is not covered by the arbitration Clause
because the question is not whether the claim lies in tort but the question is
whether even though it has lain in tort it "arises out of" or is "related to" the
contract, that is to say, whether it arises out of the terms of the contract or is
consequential upon any breach thereof. As explained earlier, this claim is based
on and is consequential upon and by way of corollary to the non-payment of
the two detained amounts by Renusagar to G.E.C. in breach of the terms of the
contract. In other words, it is clear that before adjudicating upon this claim the
adjudicating authority will have first necessarily to adjudicate upon first two
claims preferred by G.E.C. and only if it is found that G.E.C. is entitled to
receive the first two amounts which ought to have been paid by Renusagar
under the terms of the contract but which Renusagar had failed to pay that this
third claim could, if at all, be allowed to G.E.C. In the real sense, therefore, this
claim is directly, closely and inextricably connected with the terms and
conditions of the contract, the payments to be made thereunder and the
breaches thereof and as such will have to be regarded as a claim "arising out
of" or "related to" the contract. As we shall point out presently this Court in one
of its decisions has laid down the test for determining the question in such
cases and the test is whether recourse to the contract, by which both the parties
are bound, would be necessary for the purpose of determining whether the
claim in question was justified or otherwise and this test, as indicated above, is
clearly satisfied with regard to the third claim in the instant case.
40. We may, at this stage, refer to a passage in Russell on Arbitration and a
few decided cases which fortify our aforesaid conclusion. In Russell on
Arbitration (Twentieth Edn.) the following statement of law occurs at p. 90:
Claims in tort may be so intimately connected with a contract that a
Clause of appropriate width designed primarily to make contractual
disputes arbitrable will nevertheless render such claims in tort
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 arbitrable as well.
41. In Woolf v. Collis Removal Service [(1947) 2 All ER 260: (1948) 1 KB 11:
177 LT 405 (CA)] the Defendants had contracted to remove Plaintiff's furniture
and effects from London to their store in Marlow and there safely to keep and
take care of them, but, according to the Plaintiff, the Defendants had, in breach
of the contract, removed the goods to a different destination where some were
lost and other damaged. Alternatively the Plaintiff claimed that the goods were
lost and damaged owing to the negligence of the Defendants in using an
unsuitable place in which to store them and guarding them inefficiently. The
Clause providing for arbitration ran: "If the customer makes any claims upon or
counter-claim to any claim made by the contractors" the same shall be referred
to the decision of the two arbitrators. The question was whether the claim for
damages was covered by this clause. The Court of Appeal held that even if the
claim in negligence was a claim in tort and not under the contract yet there was
a sufficient close connection between that claim and the transaction to bring the
claim within the arbitration clause. This authority clearly shows that even
though a claim may not directly arise under the contract which contains an
arbitration clause, if there was sufficient close connection between that claim
and the transaction under the contract it will be covered by the arbitration
clause.
4 2 . In Astro Vencedor Compania Naviera SA of Panama v. Mabanaft GmbH
[MANU/UKWA/0019/1971 : (1971) 2 All ER 1301 (QBD & CA)] the arbitration
Clause contained in a contract of charter-party ran: "any dispute arising during
the execution of this charter-party" shall be settled by two arbitrators, one to be
appointed by the owners and the other by the charterers. The relevant
charterers ordered the vessel to a Dutch port not named in the bill of lading
whereby satisfactory bills of lading were not available in time and disputes
arose as to unloading. By action of the relevant charterers the vessel was
arrested and released on a bank guarantee. Later, under a charter quite
unconnected with the relevant charterers the vessel happened to be again in a
Dutch port and was arrested again as a result of disputes as to the satisfactory
nature of the original bank guarantee. The owners arbitrated a claim for
damages in respect of each of the two arrests of the vessel. The charterers
argued that these were claims in tort and outside the arbitrator's jurisdiction.
The Court held that arbitrator had jurisdiction (1) over the first arrest as it was
closely connected with the dispute under the contract, and was indeed a direct
consequence of a claim for damages under the contract, and (2) over the
second arrest as it was part and parcel of the original arrest.
xxx xxx xxx
4 4 . In Alliance Jute Mills Co. Ltd. v. Lalchand Dharamchand
[ MANU/WB/0006/1978 : AIR 1978 Cal 19] disputes between the parties to a
commercial contract were arbitrable under the bye-laws of the East India Jute &
Hessian Exchange Association and the relevant bye-law ran thus: "All matters,
questions, disputes, difference and/or claims arising out of and/or concerning
and/or in connection with and/or in consequence of or relating to this contract
shall be referred to arbitration...." Under the commercial contract Respondent 1
had sold, through a broker, certain quantities of fibre to the Appellant Mill and
after effecting delivery of the goods Respondent 1 had submitted bills to the
Appellant Mill again through the broker; the Appellant Mill, however, claimed
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 reduction in price on account of shortage in weight and submitted claims in that
respect. Since the price was not paid, Respondent 1 referred the claim to the
arbitration of Bengal Chamber of Commerce and Industry. The Appellant Mill
informed the Chamber of Commerce and Industry that it had filed a suit upon
the whole of the subject-matter of the reference and served a notice Under
Section 35 of the Arbitration Act. In the suit so filed against Respondent 1 and
the broker apart from the declaration sought that the broker had no claims
against the Appellant Mill in respect of the contract or in respect of the bills
submitted by the broker for the price of goods sold and delivered the Appellant
Mill had also claimed a decree for Rs. 50,000 as damages for the alleged libel
published by Respondent 1 and the broker. In an application for stay of the suit
Under Section 34 of the Arbitration Act, 1940, one of the questions raised was
whether the arbitration Clause was wide enough to include the claim for
damages for the alleged libel. The High Court held that the claim in damages
for defamation arose "out of" and "in connection with" the non-payment of the
bills of Respondent 1 and in going into the question of tort the Court would
necessarily have to go into the terms and conditions of the contract relating to
payment and that the claim in tort was directly and inextricably connected with
the terms and conditions of the contract and as such came within the scope of
the arbitration Clause which was wide enough to cover the same. In this view
of the matter Court stayed the suit Under Section 34 of the Arbitration Act.
xxx xxx xxx
4 6 . As stated earlier since this third claim for compensatory damages is
directly, closely and inextricably connected with the terms and conditions of the
contract, the payments to be made thereunder and the breaches thereof and
since for adjudication thereof recourse to the contract would be necessary it
will have to be held that it is a claim "arising out of" and in any event "related
to" the contract.
xxx xxx xxx
48. Having regard to the aforesaid discussion we are clearly of the view that all
the three claims referred by G.E.C. to the Court of Arbitration of I.C.C. do "arise
out of" and are "related to" the commercial contract in fact the first two claims
arise "under the contract") and squarely fall within the widely worded
Arbitration Clause being Article XVII contained in the commercial contract. It is
also clear that the Arbitration Clause embraces even the question of its effect
(scope), that is to say, it embraces the issue of the arbitrability of the three
claims Questions whether in law, namely, the law of the Forum, the arbitrators
will have jurisdiction and power to decide the arbitrability of the claims or not
and whether Renusagar's suit is liable to be stayed or not will be considered by
us next but at this stage we are categorically negativing the contentions of
counsel for Renusagar that on merits the three claims are beyond the scope or
purview of the Arbitration Clause or that the Arbitration Clause on its own
language does not embrace the issue of arbitrability of the three claims.
68. In Tarapore & Co. v. Cochin Shipyard Ltd., MANU/SC/0002/1984 : (1984) 2 SCC
680, this Court held:
39. Phrases such as "claim arising out of contract" or "relating to the contract"
or "concerning the contract" on proper construction would mean that if while

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 entertaining or rejecting the claim or the dispute in relation to claim may be
entertained or rejected after reference to the contract, it is a claim arising out of
contract. Again the language of Clause 40 shows that any claim arising out of
the contract in relation to estimates made in the contract would be covered by
the arbitration clause. If it becomes necessary to have recourse to the contract
to settle the dispute one way or the other then certainly it can be said that it is
a dispute arising out of the contract. And in this case the arbitration Clause so
widely worded as disputes arising out of the contract or in relation to the
contract or execution of the works would comprehend within its compass a
claim for compensation related to estimates and arising out of the contract. The
test is whether it is necessary to have recourse to the contract to settle the
dispute that has arisen. [ (See Russel on Arbitration, Twentieth Ed., page 85)]
69. It then specifically referred to Astro Vencedor Compania Naviera S.A. of Panama v.
Mabanaft GmbH [MANU/UKWA/0019/1971 : (1971) 2 QB 588 as follows:
42. In Astro Vencedor Compania Naviera S.A. of Panama v. Mabanaft GmbH
[MANU/UKWA/0019/1971 : (1971) 2 QB 588 : (1971) 2 All ER 1301 : (1971) 3
WLR 24] a question arose whether a claim in tort would be covered by the
arbitration clause? It was admitted that the claim for wrongful arrest is a claim
in tort. And it was contended that a claim in tort cannot come within the
arbitration clause. The Court of Appeal speaking through Lord Denning held
that the claim in tort would be covered by the arbitration clause, if the claim or
the issue has a sufficiently close connection with the claim under the contract.
70. As a result, this contention has no legs on which to stand.
71. Shri Salve argued relying upon three judgments of this Court, namely, Indowind
Energy Ltd. v. Wescare (India) Ltd., MANU/SC/0300/2010 : (2010) 5 SCC 306, Chloro
Controls India (P) Ltd. v. Severn Trent Water Purification Inc., MANU/SC/0803/2012 :
(2013) 1 SCC 641, Cheran Properties Ltd. v. Kasturi & Sons Ltd., MANU/SC/0427/2018
: (2018) 16 SCC 413 that a comparison between Sections 35 and 46 of the Arbitration
Act, 1996 would show that the legislature circumscribed the power of the enforcing
court Under Section 46 to persons who are bound by a foreign award as opposed to
persons which would include 'persons claiming under them' and that, therefore, a
foreign award would be binding on parties alone and not on others. First and foremost,
Section 46 does not speak of "parties" at all, but of "persons" who may, therefore, be
non-signatories to the arbitration agreement. Also, Section 35 of the Act speaks of
"persons" in the context of an arbitral award being final and binding on the "parties"
and "persons claiming under them", respectively. Section 35 would, therefore, refer to
only persons claiming under parties and is, therefore, more restrictive in its application
than Section 46 which speaks of "persons" without any restriction. Quite apart from
this, another important conundrum arises from the Division Bench judgment in the
present case. The Division Bench judgment applied Delaware law to satisfy itself that
such law had indeed been followed to apply the alter ego doctrine correctly, as a result
of which the foreign award would have to be upheld. We wish to indicate that this
approach is completely erroneous. First and foremost, Section 48 does not contain any
ground for resisting enforcement of a foreign award based upon the foreign award
being contrary to the substantive law agreed to by the parties and which it is to apply in
reaching its conclusion. As a matter of fact, whether the award is correct in law
(applying Delaware law), would be relevant if at all such award were to be set aside in
the State in which it was made and that too if such law permitted interference on the
ground that the arbitral award had infracted the substantive law of the agreement. As
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has been pointed out hereinabove, the arbitral award in this case was not challenged in
the State of Missouri. Hence, the Division Bench's foray into this line of reasoning is
wholly incorrect.
72. As a matter of fact, if an international commercial arbitration were to be held in
India, Section 28(1)(b) recognises that an arbitral tribunal can decide the dispute in
accordance with the Rules of law designated by the parties as applicable to the
substance of the dispute which, in turn, has a direct nexus to the substantive law of the
country whose laws are said to apply. There is no ground in the pari materia provisions
of Section 34 to set aside such award on the ground that the substantive law of that
country has been infracted. Indeed, the only ground on which such award could
possibly be interfered with is if such award, valid under the law which it applied, could
be held to be contrary to the public policy of India. Gary Born (supra) has this to say on
this aspect:
Despite the potentially expansive and unruly character of "public policy," courts
in most jurisdictions have been very reluctant to invoke the exception to deny
recognition to foreign awards. Rather, they have underscored the narrow,
exceptional character of the public policy defense in recognition proceedings,
emphasizing that the exception is not satisfied merely because foreign law or
foreign tribunal reached a different result, or even an entirely opposite result,
from that provided by domestic law. One leading Swiss judicial decision sums
up this approach as follows:
The Appellant forgets that the enforcement court does not decide on
the arbitral award as an appellate instance; the merits of the award
cannot be reviewed under the cover of public policy. [Judgment of 9
January 1995, Inter Maritime Mgmt SA v. Russin & Vecchi, XXII Y.B.
Comm. Arb. 789, 796 (Swiss Federal Tribunal)]
Other courts have also repeatedly made clear that "erroneous legal reasoning or
misapplication of law is generally not a violation of public policy within the
meaning of the New York Convention. That result has been repeatedly and
squarely affirmed by decisions in U.S., Swiss, French, English, German,
Austrian, Singaporean, Hong Kong, Indian, Korean and other courts. Thus, the
fact that an arbitral tribunal applies a law that is different from that of the
recognition forum's law, or wrongly applies the recognition forum's laws, or
reaches a result that is contrary to that which the recognition forum's courts
would reach when applying their own (or a foreign) law, is not a basis for
finding a violation of public policy Under Article V(2)(b).
The same principle is even more clearly applicable with regard to factual
findings by an arbitral tribunal ...
(at pages 3667-3669)
xxx xxx xxx
It is frequently said that conduct involving violations of certain types of criminal
prohibitions implicates national and international public policies, crimes of
terrorism, piracy, slave-trading, drug smuggling, torture, murder, kidnapping
and robbery are all typically identified as examples of public policy. As
discussed above, in the context of arbitration agreements:

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 The English court would not recognise an agreement between ...
highwaymen to arbitrate their differences any more than it would
recognise the original agreement to split the proceeds. [Soleimany v.
Soleimany [1999] QB 785, 797 (English Ct. Appl)]
Equally, neither an English court nor courts of most other states would
recognize awards that split the proceeds of a criminal enterprise or that
otherwise facilitated serious criminal activities, whether highway robbery,
terrorism, drug smuggling, slave-trading, human-trafficking, or similar crimes.
In practice, however, it is highly unusual for criminals involved in such
enterprises to come anywhere close to either lawyers or arbitrators; other forms
of alternative dispute resolution are used in almost all such settings. As a
consequence, there are very few national court decisions involving the text-
book cases of serious criminal activities.
(at pages 3672-3693)
73. Thus, if in a given case the substantive law of a foreign country were to recognise a
narcotic drug as being legal based upon which an award for the supply of such drug is
then ordered, such award may possibly be resisted in India on the ground that it would
be contrary to the fundamental policy of Indian law to give effect to such agreement in
a case in which the Narcotic Drugs and Psychotropic Substances Act, 1985 prohibits
import of such a drug. A foreign award cannot be set at naught Under Section 48 on the
ground that it has infracted the substantive law of the agreement.
74. The final argument that the damages that have been awarded have been awarded
on no basis whatsoever would again not fall within any of the exceptions contained in
Section 48(1). In order to attract Section 48(2) read with Explanation 1(iii), this Court
in Ssangyong (supra) has held that it is only in exceptional cases which involve some
basic infraction of justice which shocks the conscience of the court that such a plea can
be entertained. This Court held:
7 0 . The expression "most basic notions of ... justice" finds mention in
Explanation 1 to Sub-clause (iii) of Section 34(2)(b). Here again, what is
referred to is, substantively or procedurally, some fundamental principle of
justice which has been breached, and which shocks the conscience of the Court.
....
xxx xxx xxx
76. However, when it comes to the public policy of India, argument based upon
"most basic notions of justice", it is clear that this ground can be attracted only
in very exceptional circumstances when the conscience of the Court is shocked
by infraction of fundamental notions or principles of justice. ....
7 5 . The Arbitrator correctly held that as nothing was forthcoming from any of the
Appellants, he would have to make a best judgment assessment for damages. In making
that assessment, he took into account the commission that was being earned by GBT
from the two clients of DMC and arrived at a figure of 100,000 USD per month and then
found, on a reasonable estimate, that they would continue to be clients for a period of
four years, as a result of which the figure of 6,948,100 USD was reached.
76. That such 'guesstimates' are not a stranger to the law of damages in the U.S. and
other common law tradition nations has been established very early on in a judgment of

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Asutosh Mookerjee, J. reported as Frederick Thomas Kingsley v. The Secretary of State
for India MANU/WB/0258/1922 : AIR 1923 Cal 49. In this judgment, a learned
Division Bench of the Calcutta High Court put it thus:
It may be conceded that though every breach of duty arising out of a contract
gives rise to an action for damages, without proof of actual damage, Marzetti v.
Williams [(1830) I B & Ad. 415: 35 R.R. 329], Embery v. Owen [(1851) 6 Exch.
353 : 86 R.R. 331], the amount of damages recoverable is, as general rule,
governed by the extent of the actual damage sustained in the consequence of
the Defendant's act, Hiort v. L.N.W. Ry. Co. [(1879) 4 Exch. Div. 188]. In cases
admitting proof of such damage, the amount must be established with
reasonable certainty, The Commerce [(1850) 3 W. Rob. 283]. But this does not
mean that absolute certainty is required, nor in all cases, is there a necessity
for direct evidence as to the amount. Damages are not uncertain for the reason
that the loss sustained is incapable of proof with the certainty of mathematical
demonstration or is to some extent contingent and incapable of precise
measurement. As Harlan J. observed in delivering the judgment of the Supreme
Court of the United States in Heztel v. Baltimore and O.R. Co. [(1897) 169 U.S.
26 (38)], certainty to reasonable extent is necessary, and the meaning of that
language is that the loss of damage must be so far removed from speculation or
doubt as to create in the minds of intelligent and reasonable men the belief that
it is most likely to follow from the breach of the contract and was a probable
and direct result thereof. To the same effect is the decision in Morris v. U.S.
[174 U.S. 291.] that where absolute certainty is impossible, judgment of fair
men as to damages directly resulting governs.
(at pages 50, 51)
7 7 . Significantly, this judgment referred to and relied upon U.S. Supreme Court
judgments to arrive at this conclusion.
78. However, Shri Viswanathan relied upon Agritrade International (P) Ltd. v. National
Agricultural Coop. Mktg. Federation of India Ltd., (supra) and para 24 in particular,
which states:
24. There is also merit in the submissions made on behalf of NAFED that there
was no material produced before the Arbitral Tribunal by Agritrade to show that
it had, in fact, suffered any loss as a result of NAFED not opening an L/C for the
quantity of 5000 MT of CPO. In its final Award dated 14th January 2008, the
Arbitral. Tribunal merely accepted the default date as 7th October 2004 and
proceeded to determine the "close out price" to assess the damage. Unless
there was actual proof of loss suffered by Agritrade, awarding of any
differential between the contracted price and close out price must also be held
to be based on no evidence.
79. The facts in this case are far removed from the facts in the aforesaid High Court
Judgment. There can be no doubt whatsoever that as a result of the machinations of
Upadhyaya and Pathak, as found by the arbitral tribunal, ISS was deprived of
commission legitimately due to it under the representation agreement. This being so,
there can be no doubt that, on facts as proved before the arbitral tribunal, actual loss
can be said to have been occasioned to ISS.
80. In any case, the damages so awarded in the facts of this case cannot even remotely
be said to shock the conscience of this Court so as to clutch at "the basic notion of
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justice" ground contained in Section 48(2) Explanation (1)(iii).
81. The result is that the appeals are dismissed for the reasons given by us without any
order as to costs.
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