K.M. Joseph, J.
1. ARBA No.40/2010 is directed against the order OP (Arb) No.21/2009 passed by the District Court, Kollam. The OP was filed under Sec.34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act) by the appellants to set aside the arbitral award dated 14.1.2009. ARBA No.41/2010 is filed against the order passed in OP (Arb) 231/2008 filed by the respondent under Sec.9 of the Act to secure the award amount that was likely to be passed in his favour.
2. The respondent company which is incorporated at Singapore is doing business in species, edible oil, nut etc. The appellant is a cashew exporter. Purchase confirmation note dated 2.5.2007 containing admitted signature of the appellant was issued agreeing to export cashew kernel to the respondent. Likewise, confirmation note dated 25.5.2007 was admittedly issued by the appellant. So also, confirmation note dated 6.7.2007 also containing the admitted signature of the appellant was issued agreeing to export cashew to the respondent.
3. On the one hand, the respondent would contend that contracts dated 3.5.2007, 25.5.2007, and 9.7.2007 containing the arbitration agreement were executed by the appellant relatable to the three purchase confirmation notes referred to above respectively, the appellant would dispute the case of the respondent and contend that the signatures of the Managing Partner of the appellant are Forged. The following alleged arbitration clause.
“Arbitration : As per A.F.I. CENTA Terms and Conditions.”
4. Under the heading “other conditions” it is stated, inter alia, that arbitration jurisdiction is in India. It is not in dispute that on 27.8.2008 the counsel for the respondent issued notice calling upon the appellant and others to pay a sum of Rs.1,05,32,500/- within 7 days being the market difference of the value of the cashew kernel on 5.5.2008. According to the respondent, in breach of the contracts the appellant had failed to deliver the quantity of cashew as agreed and consequently it had suffered damages and was suing for the difference in market price. On the same day, on 27.8.2008, the respondent filed the OP under Section 9 of the Act before the District Court, Kollam which allowed conditional attachment of immovable properties owned by the appellant. On 30.9.2008 the appellant was informed by the counsel for the respondent that Mr. Neil Hyde (hereinafter called the Arbitrator), a Member of the Arbitrators Panel maintained by Combined Edible Nut Trade Association (hereinafter referred to as CENTA) was appointed as the sole Arbitrator. The appellant was called upon to nominate his Arbitrator within 14 days as per the regulation of CENTA. According to the appellant, on detection of the forged signature of the Managing Partner of the appellant in the three contracts, on 10.10.2008 a notice was issued to the counsel for the respondent to withdraw the action before CENTA and also the OP under Section 9 of the Act and pay a sum of Rs.37,28,385/- being the amount due to them under several heads in respect of the transactions. On 17.10.2008, according to the appellant, the appellant had filed a petition before the Superintendent of Police, Kollam against the Managing Director, Vice President of the respondent and 3 officers of its subsidiary at Kollam. On 18.10.2008 Crime No.113/2008 under Sec.120B, 465, 467, 420 read with sec.34 of the IPC was registered by the Kollam East police station against the officers of the respondent. On 28.10.2008 the Arbitrator informed the appellant about his nomination and the appellant was asked to make its comments about the dispute specifically by 4.11.2008. On 29.10.2008 the appellant by fax informed the Arbitrator about the apprehension of bias entertained by the appellant. It is specifically stated that the contra relied on were forged and that even under the forged contracts, CENTA is not having exclusive jurisdiction. On 30.10.2008, the Arbitrator addressed a fax communication to the appellant wherein he does admit his business relationship between him and the respondent, but assured his integrity. The appellant was also asked to nominate its Arbitrator by 14.11.2008. On 31.10.2008 there was again correspondence by the appellant by issuing 2 separate communications to the controlling body of CENTA and the Arbitrator raising objections and also suggesting that if CENTA is having any machinery to have the disputed signature to be examined, that should be done. It is also requested to advise the Arbitrator to stop the proceedings till a report from Police Lab or any Government Lab in UK is obtained. Appellant sought time to locate suitable defence expert. On 31.10.2008 CENTA addressed communication to the appellant stating that the matter is being attended to. On 4.11.2008 the Arbitrator rejected the request for one month and granted time till 18.11.2008. The Arbitrator would say that the jurisdiction issue will be taken up as the first issue and if it is found in favour of the appellant, the arbitration would end. On 5.11.2008 there was a further communication issued by the appellant to the Arbitrator reiterating the apprehension of bias. It is also stated in the letter that if the police experts rule out forgery, he would submit to the Arbitrator without any demur. There are further communications dated 13.11.2008 and 17.11.2008 addressed to CENTA voicing its grievances and to the Arbitrator pointing out, inter alia, that arbitration jurisdiction was in India and requesting to conduct arbitration in Kerala respectively. There are certain further communications which need not detain us. Suffice it to say, the Arbitrator passed the Award on 14.1.2009 directing payment of 243068 Dollars by the appellant to the respondent besides fees.
5. Finding of Arbitrator
(i) There is no requirement for an arbitration agreement to be signed and, therefore, even if Shatha’s (appellant) signature was not present in the contract, it would not follow that there was no arbitration agreement.
(ii) The Arbitral Tribunal is entitled to rule on its own jurisdiction, to hear the substantive dispute including determination whether or not there was any forgery.
(iii) “I am of the opinion that the parties intended the disputes to be arbitrated in accordance with the CENTA Rules of Arbitration.” Reasons are given.
(iv) It was further found that the contention of the appellant that the Detailed Contract (DC) was invalid because it was not approved properly signed by them that the detailed contract is indeed valid even without a signature from the seller, as the purchase confirmation note which is admitted by the appellant, agrees in all material ways to the detailed contract contains the clause that the detailed contract and shipping instructions will follow. The appellant was accordingly found to be fully aware that a detailed contract would follow and what it would say concerning the disputed arbitration clause from the previous contracts transacted between the parties. Reference is made to the communication dated 10.10.2008 by the Advocate for the appellant to the Advocate of the respondent wherein reference is made, inter alia, to the previous sale contracts containing the arbitration clause. It is also found that in answer to the respondent’s communication on 26.10.2007 which contained the detailed contract numbers in full plus shipment grade, quantity and price, the appellant by communication dated 29.10.2007 advised “with reference to your letter dated 26.10.2007, we hereby enclose the shipping schedule for our pending contracts.” It is found that no mention was raised about the validity of the listed contracts which was forthcoming, nor any protest made by the seller at that time. The Arbitrator has also proceeded to hold that he could not assess any dramatic difference in the disputed signature between the purchase confirmation note and the detailed contract.
(v) It is further found that CENTA has jurisdiction even though it was stated “as per AFI/CENTA terms and conditions.” It is further found that the allegation of bias on the part of the Arbitrator based on trading from time to time with the buyer was taken up and answered by the CENTA Secretary who consulted with other independent CENTA General Committee Members on the subject. Reference is made to the communication sent to the appellant wherein it is, inter alia, stated that it is a relatively small trade association and it is quite likely that a Member or a non-Member Company claiming arbitration, may well appoint an Arbitrator from the Panel of Arbitrators with which that claimant or defendant party had a business relationship either now or in the past. It is further found that “all our Panel are required to enter into arbitration proceedings in a totally unbiased capacity and issue an Award after obtaining and considering any submissions from the parties involved and as much other information as they feel is necessary.” It is further found that the appellant had, despite opportunities being provided, not nominated any Arbitrator and accordingly, the Arbitrator was obliged to proceed with the arbitration as a sole Arbitrator. It was also found that no submission either had been received concerning the base contracts where quantity, grade, possession and price are not in dispute. Yet, no shipment had been made against them by the seller and finally the appellant is liable to pay the difference between the contract price and the market price.
6. Findings of the Court:
Execution of the purchase confirmation notes produced by the respondent is admitted. The Purchase Confirmation Notes contained a Note “Detailed Contract and Instructions will follow.” That shows that the parties had agreed to have one contract and shipping instructions. The contracts contained a column “Arbitration” and the Arbitration Clause was extracted. Though the Purchase Notes contained an entry that “detailed contract and instruction will follow”, the appellant had no case of having made a contract. It is profitable to bear in mind that the case of the appellant is that in all Purchase Notes prior to and after these, there were contracts which contained clauses stipulating for settlement by arbitration. It has to be borne in mind that the appellant has a specific case that these Purchase Notes were on the specific understanding that there will be no arbitration clause in the contract. If so, they will have to explain and produce those documents where there is no arbitration clause, which is not done. As of now, prima facie, there are materials to conclude that there is an agreement and that agreement provided for arbitration. The question is whether the agreement produced is a forged one or not. Documents produced show that the police complaint alleging forgery stands closed. Certified copy of the UN Report filed by the Sub Inspector of Police, Kollam East on 28.9.2009 shows that police is of the view that the allegation of the appellant that the contracts were forged and the offences allegedly committed under various offences could not be established. Reference is made to the power of the Arbitral Tribunal under Section 16 of the Act to rule on the jurisdiction including whether there was a valid arbitration agreement. Thereafter, the court proceeded to consider whether the application under Section 34 was maintainable. Reference is made to the Rules of Arbitration and the Appeal of the CENTA and that it provides for an Appeal and the Forum to decide the Appeal is the Executive Committee. Reliance was placed on the decision of this Court in Abbas Cashew v. M/s. Bond Commodities (ARBA 7/2010). On the basis of the said decision, the court finds that the petition under Section 34 is premature and it is to be dismissed as premature. It is found that the Award shows that the Arbitrator had deliberated on the aspect of the arbitration agreement and has arrived at a conclusion. The court further finds that in view of the court’s findings, it is not making any enquiry or entering any finding as regards the allegation of bias and impropriety alleged to have been committed by the Arbitrator. Thereafter, as far as O.P.No.231/08 is concerned, it is noted that it is only filed to secure the amount in dispute in arbitration and the court found that it is only just and proper to confirm the attachment made by allowing the same subject to the final decision in the Appeal, if any, by the appellant. Thereafter, the court, no doubt, refers to E.P.No.209/09 to enforce the Award. The court finds that it is kept in the dark as regards the power of the Appeal Board to condone delay. The court directed the E.P. to be kept pending for two months and if during the said period any valid Appeal is filed and entertained, it was directed that the E.P. will not be proceeded with by the respondent. Accordingly, O.P.No.231/08 was allowed and OP No.21/09 was dismissed.
7. Heard the learned senior counsel Sri. V. Chithambaresh for the appellant instructed by Shri B. Suresh Kumar and Sri. T.R. Aswas, learned counsel appearing on behalf of respondent.
8. Sri. V. Chithambaresh would contend as follows:
This is a case where the existence of the very arbitration agreementis disputed as the case of the appellant is that the signature of the appellant has been forged. He would contend that the court below has clearly erred in holding that the police authorities have found that the documents produced show that the police complaint alleging forgery stands closed. He would point out that in fact the police authorities have reported that the accused have committed the offences and sought time to file final report. He would submit that the contrary finding that certified copy of the UN Report filed by the Sub Inspector of Police on 28.9.2009 shows that the police is of the view that the allegations of forgery cannot be established, is not correct. He relied on the contents of the UN Report. He would also take us through the Award and point out that though the appellant contended before the Arbitrator that the alleged arbitration agreement was forged, the findings entered on the same are clearly unsustainable. Next he would contend that the court has clearly erred in relying on the judgment of this Court in Abbas Cashes v. M/s. Bond Commodities (“ARBA 7/2010). He would contend that was a case where there was no dispute about the execution of the arbitration agreement. It was in the said circumstances this Court took the view that since in terms of the agreement between the parties the appeal lay to the Appellate Board, the parties were to be relegated to the appellate forum. In this case, on the other hand, he would submit that the very arbitration agreement itself is disputed. Therefore, he would point out that the court has erred in holding that the appellant can approach it only after exhausting the remedy of appeal. He would further point out that a comparison of the admitted signatures of the appellant in the purchase confirmation notes with the disputed signatures in the alleged contract notes would bear out his contention that the signature have been forged. He would further submit that the conduct of the respondent in not producing the original of the document containing the alleged arbitration agreement which is mandatory, may be noted and also an adverse inference drawn. He would submit that the provisions of Part I of the Act would be applicable even in an international arbitration unless the parties by express or implied contract excluded the same. In this case there is no such exclusion. He would submit that Section 34 which falls in Part I of the Arbitration Act is applicable and it is certainly open to the appellant to maintain application under Section 34 of the Act and the court below was not justified in relegating the appellant to prefer appeal. In this regard, he would point out that even under the English Arbitration Act, under Section 30 thereof, the decision of the Arbitral Tribunal on substantive jurisdiction is challengeable either by available arbitral provisions or by an application for setting aside the Award. He would point out that Section 72 is the saving clause with regard to a party who is not taking part in the proceedings and the prohibition in Section 70 of the Act that an application or Appeal cannot be brought, inter alia, unless the applicant or appellant has not first exhausted any available arbitral process of appeal will not apply. It is contended that there is no deemed participation and right from the beginning the appellant was contending that CENTA has no jurisdiction and none of the correspondence should be treated as a submission to arbitration. Emphasis is placed on the words “without prejudice” “sans prejudice” etc. in the correspondence. It is pointed out that the Indian Court’s jurisdiction is not excluded as one of the contracting parties is an Indian Company. Further, the obligations are to be performed in India. The arbitration jurisdiction is specifically stated in the contracts relied on by the respondent to be in India. Objection is taken to the Arbitrator basing his finding on a legal opinion. It is also contended that the legal opinion is palpably unreliable. It is, in fact, the case of the appellant that the purchase confirmation notes which are admitted by it, are concluded contracts by themselves in itself and there was no other contract. It is further pointed out that the appellant filed I.A.No.2324/09 in O.P. (Arbitration) No.231/08 for directing the respondent to produce the original contracts. The Court by order dated 11.11.2009 directed production of the originals within one month. The respondent, it is contended, filed objection on 21.12.2009 stating that originals in its true meaning are not in the possession of the respondent. It is contended that having regard to Section 2(1)(d) and Sections 7 and 8(2) of the Act and Rule 4(d) of the Kerala Rules, the petition is not maintainable. It is further complained that the case was decided on preliminary objection alone and none of the documents produced either parties were marked by the court. It is their case that the CENTA Rules cannot apply in the facts. It is contended that the signatures of the Managing Partner of Shastha Enterprises in all the three contract notes are forged. It is pointed out that of the contracts produced as original contracts, one does not contain even the signature of the respondent. The signatures of the respondent in two other contracts are different. It is also contended that the contracts do not contain the seal of either the appellant or the respondent. It is contended that under the Rules of CENTA and also the English Arbitration Act, and the Act, the contracting parties were free to opt for the particular legal system and the particular country as venue. It is contended that there are several agreements between the parties with and without arbitration clause and even in cases where there is arbitration clause, it is not CENTA alone. It is contended that the alleged arbitration clause in fact says AFI/CENTA. It is contended further that there is no provision in the Act, which makes it mandatory that arbitral remedies have to be exhausted before appointing the court. The complaint of bias of the Arbitrator is reiterated.
9. He would further submit that when the arbitration agreement is disputed it becomes the bounden duty of the court to consider the question and decide as to whether there exists an arbitration agreement or not. He would point out that this is a case where the appellant has taken such a contention in the application under Section 9 files by the respondent and therefore it was the duty of the court to decide the issue which has not been done by the court. He would submit that this is a clear case where the Arbitrator was biased as he has dealings with the respondent and the court below should have dealt with it. He would rely on the following case law:
In Bhatia International v. Bulk Trading S.A. (AIR 2002 SC 1432), the Apex Court held that the provisions of Part I of the Act are applicable to international commercial arbitrations held outside India unless any or all such provisions have been excluded by agreement between the parties expressly or by implication. In SBP and Co. v. Patel Engineering Ltd. And Another (2005 KHC 1909) (hereinafter referred to as the SBP’s case) the Apex Court held that while functioning under Section 11(6) of the Act, a Chief Justice or a person or institution designated by him is bound to decide whether he has jurisdiction to entertain the request and whether there is a valid arbitration agreement and whether the party making the request is a party to the arbitration agreement and there is a dispute subsisting which is capable of being arbitrated upon. It was held further that the Chief Justice can either proceed on the basis of Affidavits and documents produced or take such evidence or get such evidence recorded as may be necessary. It was held further that normally the decision cannot be said to be purely administrative. In Venture Global Engineering v. Satyam Computer Services Ltd. And Another (AIR 2008 SC 1061), the Apex Court reiterated that provisions of Part I of the Act are applicable to international commercial arbitration. More importantly, it was held that a foreign award can be challenged under Section 34 on the ground of violation of public policy. In Prakash K. V. M/s. Sriram Transport Finance Co. Ltd. And Another (2008 (3) KHC 604), a learned Single Judge of this Court took the view that the court has to decide whether the agreement executed was valid and not vitiated by fraud, before referring the parties to arbitration. It was held that when the existence of a valid arbitration agreement is disputed by any one of the parties, the court is bound to consider whether it was executed by the parties including the validity of the agreement and if the validity is questioned on the ground of fraud, the same must be considered. In Parallel Citation(s) Infowares Limited v. Equinox Corporation (2009 (7) SCC 220), Justice V.S. Sirpurkar was dealing with an application under Section 11(5) of the Act. It was an international arbitration. The Court proceeded to allow the application overruling the contention of the respondent that, as the governing law, it was agreed between the parties, say foreign law, then essentially, the question of appointment of Arbitrator also falls in the realm of the said foreign law and not under the Act. The decision in Indtel Technical Services Private Limited v. W.S. Atkins Rail Limited (2008) 10 SCC 308) also reiterates the principles that the provisions of Part I of the Act, unless excluded by agreement between the parties, would apply. In Waverly Jute Mills Co. Ltd. and Another v. Raymon and Co. (India) Pvt. Ltd. (AIR 1963 SC 90), the Apex Court was dealing with a case under the Arbitration Act, 1940. The Apex Court held as follows:
“If a contract is illegal and void, an arbitration clause which is one of the terms thereof, must also perish along with it and a dispute relating to the validity of a contract is in such cases for the Court and not for the arbitrators to decide. AIR 1962 SC 1810. Foll………… An agreement for arbitration is the very foundation on which the jurisdiction of the arbitrators to act rests, and where that is not in existence at the time when they enter on their duties, the proceedings must be held to be wholly without jurisdiction. And this defect is not cured by the appearance of the parties in those proceedings, even if that is without protest, because consent cannot confer jurisdiction.”
10. Per contra, Sri. Aswas, learned counsel for the respondent would submit as follows:
Admittedly, the appellant has executed three purchase confirmation notes. A perusal of the purchase confirmation notes would show that detailed contract and instructions will follow. It is according; that the detailed instructions (contracts) were issued containing the arbitration agreement and which was very much signed on behalf of the appellant. He would further submit that the conduct of the appellant and the correspondence indulged in by parties would also clearly show that there is no forgery and that the agreements containing arbitration clause was excluded by the appellant. He would submit that this is a case where in terms of the arbitration agreement the matter was referred to the arbitrator without approaching the court. He would submit that the arbitrator under the new dispensation is entitled to rule on questions including whether there was an arbitration agreement. The appellant participated in the arbitration proceedings. He refers to the correspondence in this regard. The arbitrator dealt with the issue as he was very much empowered to. Sri. Aswas would submit that it is totally incorrect to characterize the arbitrators as biased. He would submit that the decision in Abba’s case applies and the remedy of the appellant was to prefer appeal. He would also submit that every effort should be made by the courts to support the award passed by the arbitrator as the very success of the Act lies in speedy disposal of arbitration matters. He would contend that the appellant is not correct in contending that Section 34 of the Act is available. He would refer us to the provisions of the contract containing the arbitration agreement and its terms to contend that it is the English law which applies and remedy of the appellant is determined by English law and referred us to the provisions of the English Arbitration Act.
11. We will consider the case law canvassed before us by Sri. T.R. Awas. In Groupe Chimique Tunisien Sa v. Southern Petrochemicals Industries Corpn. Ltd. (2006) 5 SCC 275 the Apex Court was considering a petition under Section 11(4) of the Act. That was a case where the purchase orders stated that all the other terms and conditions are as per Fertilizer Association of India Terms and Conditions for Sale and Purchase of Phosphoric Acid. Clause 15 of the said terms provided for settlement of disputes by arbitration. The contention taken was that the invoice did not contain reference to the FAI terms or arbitration agreements. The Court held that the purchase orders incorporated the arbitration agreement by reference and took the view that the case fell under Section 7(5) of the Act. The Court held that invoice is a document which is prepared with reference to supplies and purchase orders are contracts.
12. In National Thermal Power Corpn. Ltd. V. Siemens Atkeingesellschaft (2007) 4 SCC 451 the Apex Court took the view that the Arbitral Tribunal has the obligation to decide the plea referred to in Section 16(2) or (3) namely the plea relating to jurisdiction and it could continue with the proceedings and make an award. That was a case where an appeal was sought to be maintained under Section 37(2)(a) of the Act against partial award non-suiting the appellant in respect of its counter claims. The Court took the view that the case was really one where the matter had been settled in a meeting. It was a decision of the merits of the claim by the appellant.
13. In Aurohill Global Commodities Ltd. V. Maharashtra STC Ltd. (2007) 7 SCC 120 Justice S.H. Kapadia (as His Lordship then was) was dealing with an application under Section 11(9) read with 11(5) of the Act. The court took the view that the question as to whether draft purchase orders acquired the character of a concluded contract or not is non est and whether necessary party and proper party has been joined can only be decided by the arbitrator. We notice that there is no refereed to the SBP’s case as such.
14. In Alva Aluminium Ltd. Bangkok v. Gabriel India Limited JT 2010 (12) SC 210 Justice T.S. Thakur was dealing with a petition under Section 11(5) and 11(9) of the Act. Respondents contended that there was no valid arbitration agreement. Its case was that the contract document relied on by the petitioner had not been signed on its behalf by authorized person. The learned Judge referred to various case law including SBP case and took the view that when a dispute was raised it has to be decided by the Chief Justice or his designate, as the case may be. Thereafter, the learned Judge proceeded to notice that it is undisputed that there was a written contract containing the arbitration clause and thereafter proceeded to hold that the contract was duly negotiated and signed on behalf of the respondent company. It was done on appreciation of the material before the Court. It included the fact that nothing was shown that disciplinary action was taken against the persons for transgressing his powers and therefore the documents, information and correspondence when taken in total revealed a legally concluded contract with arbitration clause.
15. In Maharshi Dayanand University and another v. Anand Coop. L/C. Society Ltd. and another, (2007) 5 SCC 295 a Bench of two Judges of the Apex Court dealing with a case falling under the pre SBP case dispensation held that the questions relating to existence of validity of arbitration agreement must be left to be decided by the arbitrator.
16. The decision in U.P. State Electricity Board v. Searsole Chemicals Ltd. (2001) 3 SCC 397 is relied upon to show that when two views are possible, the view taken by the arbitrator must prevail.
17. In M/s. Dozco India P. Ltd. V. M/s. Doosan Infra, Co. Ltd. (JT 2010 (12) SC 198) Justice V.S. Sirpurkar was dealing with a application under Section 11(6) of the Act. There, the Court was dealing with a Distribution Agreement between an Indian Company and a Korean Company. It was contended that only Rules of Arbitration of International Chambers of Commerce were to apply and the Apex Court has no jurisdiction as the seat of arbitration was chosen by the parties at Seoul. The Court dealt, inter alia, with Articles 22.1 and 23.1 of the agreement which read as follows:
“Article 22.1: This agreement shall be governed by and construed in accordance with the laws of The Republic of Korea.
Article 23.1: All disputes arising in connection with this Agreement shall be finally settled by arbitration in Seoul, Korea (or such other place as the parties may agree in writing), pursuant to the rules of agreement then in force of the International Chamber of Commerce.”
18. Referring to the objection based on the words ‘or such other place as the parties may agree in writing’ the Apex Court noted that the said words were bracketed. The Court held that the bracketed portion should not be allowed to control the main provision and that it is only meant for the convenience of the arbitral tribunal and/or parties for conducting the proceedings of the arbitration and that it does not change the seat of arbitration. It is relevant to extract the following portions:
“12. On the backdrop of these conflicting claims, the question boils down to as to what is the true interpretation of Article 23. This Article 23 will have to be read in the backdrop of Article 22 and more particularly, Article 22.1. It is clear from the language of Article 22.1 that the whole Agreement would be governed by and construed in accordance with the laws of The Republic of Korea. It is for this reason that the respondent heavily relied on the law laid down in Sumitomo Heavy Industries Ltd. V. ONGC Ltd. and Ors. (supra). This judgment is a complete authority on the proposition that the arbitrability of the dispute is to be determined in terms of the law governing arbitration agreement and the arbitration proceedings has to be conducted in accordance with the curial law. This Court, in that judgment, relying on Mustill and Boyd (the Law and Practice of Commercial Arbitration in England, 2nd Edition) observed in paragraph 15 that where the law governing the conduct of the reference is different from the law governing the underlying arbitration agreement, the Court looks to the arbitration agreement to see if the dispute is arbitrable, then to the crucial law to see how the reference should be conducted and then returns to the first law in order to give effect to the resulting award. In paragraph 16, this Court, in no uncertain terms declared that the law which would apply to the filing of the award to its enforcement and to its setting aside would be the law governing the agreement to arbitrate and the performance of that agreement. The Court relied on the observations in Mustill and Boyd to the effect:
“It may, therefore, be seen that problems arising out of an arbitration may, at least in theory, call for the application of any one or more of the following laws-
1. The proper law of the contract, is the law governing the contract which creates the substantive rights of the parties, in respect of which the dispute has arisen.
2. The proper law of the arbitration agreement, i.e. the law governing the obligation of the parties to submit the dispute to arbitration, and to honour an award.
3. The curia law, i.e. the law governing the conduct of the individual reference.
Xxx xxxx xxxx
1. The proper law of the arbitration agreement governs the validity of the arbitration agreement, the question whether a dispute lies within the scope of the arbitration agreement, the validity of the notice of arbitration; the Constitution of the tribunal; the question whether an award lies within the jurisdiction of the arbitrator; the formal validity of the award; the question whether the parties have been discharged from any obligation to arbitrate future disputes.
2. The curial law governs; the manner in which the reference is to be conducted; the procedural powers and duties of the arbitrator; questions of evidence; the determination of the proper law of the contract.
3. The proper law of the reference governs; the question whether the parties have been discharges from their obligation to continue with the reference of the individual dispute.”
12.1. The following paragraph from Mustill and Boyd is extremely important for the decision of this case: “In the absence of express agreement, there is a strong prima facie presumption that the parties intend the curial law to be the law of the ‘seat’ of the arbitration i.e. the place at which the arbitration is to be conducted, on the ground that is the country most closely connected with the proceedings. So in order to determine the curial law in the absence of an express choice by the parties it is first necessary to determine the seat of the arbitration, by construing the agreement to arbitrate.”
19. In Nimet Resources Inc. and Another v. Essar Steels Ltd. (2000) 7 SCC 497 decided on 27.9.2000 the Court took the view that when there was doubt as to the existence of arbitration agreement and when there had been some transaction but the correspondence, documents or exchange between the parties was not clear as regards the existence of the arbitration agreement, the appropriate course would be for the arbitrator to decide the question under Sec.16 rather than the CJ or his nominee. (It is to be noted that this is in the pre SBP scenario).
20. In Fiza Developers and Inter-Trade P. Ltd. V. AMCI Q) Pvt.Ltd. and another 2010 Arb. W.L.J. 77 (SC) the question before the Apex Court was whether issues had to be framed in a proceedings under Sec.34 of the Act, The Court took the view that the only question that arise in an application under Section 34 of the Act is whether the award is to be set aside on any other grounds specified therein and that they are summary proceedings. The Court inter alia held as follows:
“Application under Section 34 of the Act are summary proceedings with provision for objections by the defendant/respondent followed by an opportunity to the application to ‘prove’ the existence of any ground under Section 34(2). The applicant is permitted to file affidavit of his witnesses in proof. A corresponding opportunity is given to the defendant/respondent to place his evidence by affidavit. Where the case so warrants, the Court permits cross-examination of the persons swearing to the affidavit. Thereafter, Court hears arguments and/or receives written submission and decides the matter. This is of course the routine procedure. The Court may vary the said procedure, depending upon the facts of any particular case or the local rules. What is however, clear is that framing of issues as contemplated under Rule 1 of Order 14 of the Code is not an integral part of the process of a proceeding under Section 34 of the Act.”
In Gas Authority of India Ltd. and Another v. Keti Construction (I) Ltd. (2007) 5 SCC 38 the Court inter alia held as follows:
“Where a party has received notice and he does not raise a plea of lack of jurisdiction before the Arbitral Tribunal, he must make out a strong case why he did not do so if he chooses to move a petition for setting aside the award under Section 34(2)(v) of the Act on the ground that the composition of the Arbitral Tribunal was not in accordance with the agreement of the parties. If plea of jurisdiction is not taken before the arbitrator as provided in Section 16 of the Act, such a plea cannot be permitted to be raised in proceedings under Section 34 of the Act for setting aside the award, unless good reasons are shown.”
This was in a Special Leave Petition filed against the proceedings under Section 34 of the Act. The Court also held as follows:
“The Preamble of the 1996 Act makes it amply clear that Parliament has enacted the Act almost on the same lines as the Model Law, “which was drafted by the United Nations Commission on International Trade Law. The provisions of the Act should be interpreted keeping in mind the Model Law as the concept under the present Act has undergone a complete change. It will, therefore, be useful to take note of the corresponding provisions of the UNCITRAL Model Law. The whole object and scheme of the Act is to secure an expeditious, resolution of disputes. Therefore, where a party raises a plea that the Arbitral Tribunal has not been properly constituted or has no jurisdiction, it must do so at the threshold before the Arbitral Tribunal so that remedial measures may be immediately taken and time and expense involved in hearing of the matter before the Arbitral Tribunal which may ultimately be found to be either not properly constituted or lacking in jurisdiction in proceedings for setting aside the award, may be avoided. Such a plea must be raised before the Arbitral Tribunal right at the beginning and normally not later than in the statement of defence. The commentary on Model Law clearly illustrates the aforesaid legal position.”
21. In Shakti Bhoq Foods Limited v. Kola Shipping Limited (2009) 2 SCC 134 the Court invoked the provision of Section 7 of the Act to hold that an arbitration agreement need not be in writing signed by both parties and the inference as to existence of an agreement could be drawn from the acts of the parties to the agreement by way of their exchange of letters and information through fax, e-mails etc. The Court rejected the contention that the letters, faxes or e-mail etc must contain the arbitration clause in the absence of any agreement having regard to the requirements of Section 7. That was a case where there existed a charter party agreement containing arbitration clause singed by the party in the first page. The Court inter alia held as follows:
“That apart, even if it is assumed that there was no charter party agreement between the parties, it is the responsibility of the appellant to prove a reasoning as to how the vessel responsible for carrying the cargo arrived at the port without any agreement present between the appellant and the respondent. The appellant also needs to explain as to what was the agreement entered into for which it loaded the ship with 1100 MT of the cargo instead of the promised 13,500 MT. If the loading of the cargo by the appellant is not under any charter party agreement as contended by the appellant, but under a different agreement, then the appellant has to show the terms of the other agreement under which the loading of the cargo was done by the appellant, since the stock loaded is not of a small quantity but worth one crore and odd in terms of Indian rupees. For the loading and unloading of cargo as well as to carry it from one port to another, an agreement is certainly required and if the said agreement, is not a charter party agreement, then there has to be some other agreement to that effect. The appellant is supported to provide the details of that agreement in the alternative, which it had not done.”
22. In National Insurance Company Limited v. Boghara Polvfab Private Limited (2009) 1 SCC 267 the Court dealt with categories of cases which would arise under Section 11 of the Act and the course to be adopted by the Chief Justice/his designate. The Court took the view that when a contract contains arbitration clause and a dispute arises and the matter is referred to arbitration without the intervention of the Court, the Arbitral Tribunal can decide the question as to whether there is an arbitration agreement and whether the agreement is valid.
23. In Shanti Budhiya Vesta Patel and Ors. V. Nirmala Jayprakash Tiwari and Ors. (JT 2010 (4) SC 196) the Court was dealing with the question as to challenge to consent decree and the Court held that the burden to prove grounds of coercion and fraud is on the party who alleges fraud and it is for him to plead all material facts and also the mere filing of police complaint may not amount to anything.
24. In State Trading Corporation of India Ltd. V. Jainsons Clothing Corporation and another (AIR 1994 SC 2778) the Court held that in a case relating to invoking of bank guarantee, the plaintiff must plead and produce all necessary evidence in proof of the case of fraud in execution of the contract of guarantee.
25. The decision in Konkan Railway Corpn. Ltd. and others v. Mehul Construction Co. (2000) 7 SCC 201 was rendered by a Bench of three Judges and it was decided on 21.8.2000. Therein the Court held as follows:
“To attract the confidence of the international mercantile community and the growing volume of India’s trade and commercial relationship with the rest of the world after the new liberalization policy of the Government, Indian Parliament was persuaded to enact the Arbitration and Conciliation Act of 1996 on the UNCITRAL Model and, therefore, in interpreting any provisions of the 1996 on the Act, courts must not ignore the objects and purpose of its enactment. A bare comparison of different provisions of the Arbitration Act of 1940 with the provisions of the Arbitration and Conciliation Act, 1996 would unequivocally indicate that the 1996 Act limits intervention of court with an arbitral process to the minimum and it is certainly not the legislative intent that each and every order passed by an authority under the Act would be subject-matter of judicial scrutiny of a court of law.
That was a case where the Court took the view that the power is conferred on the Chief Justice and not Court and the order is an administrative order. Obviously it does not survive the subsequent judgment of the Apex Court in the SBP’s case.
26. In Adhunik Steels Ltd. V. Orissa Manganese and Minerals (P) Ltd. (2007) 7 SCC 125 the Court was dealing with an application under Section 9 which culminated in an appellate order under Section 37 ultimately the Court in fact appointed an arbitrator agreed to by the parties. In the course of the judgment the Court no doubt held that the Court has to rescue arbitration clause providing underlying support and to rescue the system when one party seeks to sabotage it.
27. In Steel Authority of India Limited v. Gupta Brother Steel Tubes Limited (2009) 10 SCC 63. That was a case under the Arbitration Act 1940 and the Court took the view that the view taken by the arbitrators as to meaning of a contractual clause if a possible one and not absurd then irrespective of the correctness or otherwise it is not subject to judicial review.
28. In NandanBoimatrix Limited v. D1 Oils Ltd. (2009) 4 SCC 495 Justice S.H. Kapadia (as his Lordship then was) was dealing an application under Sections 7 and 11 of the Act. The Court, inter alia, held as follows:
“The 1996 Act does not prescribe any form for an arbitration agreement. The court is therefore required to decide whether the existence of an agreement to refer the dispute to arbitration can be clearly ascertained in the facts and circumstances of the case. That, in turn, may depend upon the intention of the parties to be gathered from the correspondence exchanged between the parties, the agreement in question and the surrounding circumstances. What is required is to gather the intention of the parties as to whether they have agreed for resolution of the dispute through arbitration. What is required to be decided in an application on Section 11 of the 1996 Act is: whether there is an arbitration agreement as defined in the said Act.”
There, the supply agreement contained an arbitration clause which read as follows:
“Any dispute that arises between the parties shall be resolved by submitting the same to the institutional arbitration in India under the provisions of the Arbitration and Conciliation Act, 1996.”
The contention of the non-applicant was that the supply agreement did not provide for arbitration by reference to any particular institution, nor did it provide for the rules framed by any particular institution and therefore the words ‘institutional arbitration’ used in the clause was vague and uncertain and/or incapable of being made certain and void under the Contract Act, 1872. There, the Court referred to Section 7 of the Act, the decision of the Apex Court in Smt. Rukminibai Gupta v. Collector, Jabalpur and Others (1980 (4) SCC 556) and the decision in Dayananda Reddy v. A.P. Industrial Infracture Corporation Ltd. and Ors. (1993 (3) SCC 137). The Court proceeded to hold as follows:
“33. The 1996 Act does not prescribe any form an arbitration agreement. The arbitration agreement is not required to be in any particular form. (See Bihar State Mineral Development Corpn. V. Encon Builders (I) (P) Ltd.). What is required is to gather the intention of the parties as to whether they have agreed for resolution of the disputes through arbitration.
34. In my view, in the present case, the parties unequivocally agreed for resolution of the “disputes through institutional arbitration and not through an ad hoc arbitration. Therefore, in my view, there exists a valid arbitration agreement between the parties vide Clause 15.1 in the supply agreement dated 10.8.2004. The first issue is accordingly answered in favour of the applicant and against the non-applicant.”
29. The following questions fall for our consideration:
(i) Whether the court below was right in applying the decision, in Abbas Cashew’s case?
(ii) Whether the Indian Court has jurisdiction to entertain the application under the Act for setting aside the Award?
(iii) Whether the O.P. filed under Section 9 should have been ordered?
As far as the question whether the court below was in error in applying the decision in Abbas Cashew’s case, we must notice the facts in Abbas Cashew’s case. The appellant therein who was an exporter of cashew, entered into an agreement with a British company for the export of cashew through the second respondent Company which was a counter part of the British Company. There, the dispute arose between the parties and an Award was passed. An application was filed under Section 34 of the Indian Arbitration Act. The British Company contended that the appellant Company ought to have approached the Executive Committee of CENTA against the Award. The Court took the view that the terms and conditions of CENTA which the appellant therein had agreed to, inter alia, provided that the contracts shall be construed and governed by the law of England. The Court referred to Section 70(2) of the England Arbitration Act which, inter alia, provided that an application may not be brought, if the applicant has not exhausted any available arbitral process of appeal or review. The Court further noted that the appellant therein had participated in the arbitration and to certain extent its counter claim was upheld by the arbitrators and, therefore, did not find merit in the accusation against the arbitrators by the appellant. The Court found that there was agreement between the parties that both the substantive law governing the contract and the law relating to arbitration proceedings shall be the law of England.
31. We must notice that the primary and fundamental objection taken by the appellant in the matter is that there is no arbitration agreement, in the first place. It is their case that, therefore, there is no question of it being driven to file an appeal on the CENTA terms and conditions. The Bench of this Court which decided Abbas Cashew’s case had no occasion to deal with the contention which is raised in this case, namely the effect of the very arbitration agreement being disputed. There is yet another distinguishing feature. In this case, it is specifically stated in the alleged contracts that “arbitration jurisdiction is in India” and such a clause was not present in the contract in Abbas Cashew’s case.
32. We are inclined to agree with the learned senior counsel the appellant that the court was not justified in holding that the document produced show that the police complaint alleging forgery stands closed. There is not much dispute in the Bar that the report does not disclose chat the complaint alleging forgery stands closed and it would rather disclose that the investigation was going on and further time was needed.
33. No doubt, it is the argument of the learned counsel for the respondent that the Court must taken into consideration the facts and circumstances and come to the conclusion, that the contention of the appellant about there being forgery is totally unfounded. According to him, the conduct of the appellant after the commencement of the arbitration proceedings by the Arbitrator itself would foreclose the contention projected before us that there was no arbitration agreement. He would emphasise that the appellant had indeed participated in the arbitration proceedings. He would point out that there was a speaking Award and he would rely on the following circumstances.
It is pointed out that it was the case of the appellant that in 2007 when Kollam based processors were facing foreign Awards, they stopped agreeing to foreign arbitrations. However, he would point out that the appellant continued to submit to foreign arbitration. In this regard, he relied on contracts dated 26.11.2007 and 14.01.2008 and he pointed out that these contracts contained the CENTA arbitration clause and the appellant performed those two contracts for which they were paid. It is also contended that the appellant had executed another contract dated 18.05.2007 with another company which also contained a clause providing for arbitration by CENTA and, therefore, it is contended that the case of forgery is without any basis.
34. The respondent would also in this connection rely on letter dated 16.8.2007 issued by the appellant to it intimating belated shipment schedules. Reference is also made to letter dated 8th October, 2007 issued by the respondent to the appellant tabulating the contract numbers as well as the purchase confirmation notes. It is further pointed out that the receipt of the said letter was denied by the appellant. To prove the receipt, the respondent relied on the Certificate of the Professional Couriers for delivery of the letter. Reference is made to letter dated 24th October, 2007 tabulating the contract and purchase confirmation note, the receipt of which was denied. It is, however, pointed out that in fact, the fact that the appellant had received the same could be established from his reply dated 26.10.2007 while seeking extension of the shipping schedule of 31.12.2007 mentioned in the letter issued by the respondent dated October 24th , 2007. Likewise, again respondent relies on letter dated 26.10.2007 addressed to the appellant tabulating the contract and purchase confirmation note numbers which the appellant explained on the basis that he signed as wanted by the respondent for audit purpose. It is pointed out by the respondent that the appellant has admitted issuance of letter dated 26.10.2007 in the pleadings. Reference is also made to letter dated 17.6.2008 sent by the respondent to the appellant. It is contended that the above communications would clearly prove that the purchase confirmation notes and the contracts were executed by the parties. It is also pointed out that the appellant did not choose to produce the admitted three purchase confirmation notes which he had signed with the respondent, for the reason that the last line in the purchase confirmation note read “the detailed contract and shipping instructions will follow”. It is further pointed out by the respondent that the Arbitrator had the power to decide the question relating to the validity of the agreement including whether it was forged one. The respondent points out that this is not a case where reference was made to the Arbitrator through the medium of Court and when the matter came up before the Arbitrator, it was very well open to the Arbitrator, if a party raises such a plea, to decide the said issue and the appellant had raised the issue about there being no arbitration agreement, and that the signatures was forged and this has been answered by the Arbitrator. It is submitted also that it is settled law that the Arbitrator’s findings would be supported if two views are possible.
35. The parties invited our attention to certain provisions of the English Arbitration Act which we consider appropriate to deal with. The English Arbitration Act, 1996, in Section 2 purports to make the provisions applicable where the seat of arbitration is in England and Wales or Northern England. No doubt, Sections 9 to 11 (stay of legal proceedings and see) and Section 66 (enforcement of arbitration awards) apply even if it is outside England and Wales or Northern England, inter alia. The seat of arbitration is defined to mean the juridical seat of the arbitration designated by the parties to the arbitration agreement or institution or tribunal and in the absence of such designation, having regard to the parties’ agreement and all relevant circumstances. Under section 30, unless otherwise agreed by the parties, the Arbitral Tribunal may rule on its own substantive jurisdiction, inter alia, including as to whether there is a valid arbitration agreement. Section 31 enables challenge to jurisdiction before the Arbitral Tribunal. Section 32 enables the party to move the Court to determine a question relating to substantive jurisdiction. Section 46 declares that the tribunal shall decide the dispute in accordance with the law chosen by the parties as applicable to the substance of the dispute, inter alia. Section 67 provides for challenge to the Award, by applying to the Court. It is mentioned that the party may lose the right to object and the right to apply is subject to the restrictions in Section 70(2) and (3). Section 68 provides for challenge to the Award on grounds of serious irregularity. Serious irregularity had been enumerated in sub-section (2). The right to challenge may be lost under Section 73 and it is also provided to be subject to Section 70(2) and (3). Section 69 provides for an appeal on a question of law. Section 70(2) is extracted hereunder:
“70. Challenge or appeal: supplementary provisions- (1) The following provisions apply to an application or appeal under Sections 67, 68, or 69.
(2) An Application or appeal may not be brought if the applicant or appellant has not first exhausted-
(a) any available arbitral process of appeal or review, and
(b) any available recourse under Section 57 (correction of award or additional award).”
Section 72 reads as follows:
“72. Saving for rights of person who takes no part in proceedings- (1) A person alleged to be a party to arbitral proceedings but who takes no part in the proceedings may question-
(a) whether there is valid arbitration agreement,
(b) whether the tribunal is properly constituted, or
(c) what matters have been submitted to arbitration in accordance with the arbitration agreement by proceedings in the court for a declaration or injunction or other appropriate relief.
(2) He also has the same rights as a party to the arbitral proceedings to challenge an award-
(a) by an application under section 67 on the ground of lack of substantive jurisdiction in relation to him, or
(b) by an application under Section 68 on the ground of serious irregularity (within the meaning of that section) affecting him:
And Section 70(2) duty to exhaust arbitral procedures) does not apply in his case.”
Section 73 deals with the loss of right to object.
There can be no doubt in view of the Judgment in SBP and Co. v. Patel Engineering Ltd. And Another (2005 KHC 1909), that when an opposite party in a petition under Section 9 disputes the existence of the arbitration agreement, the Court must necessarily decide whether there is such an agreement which is valid in law (See the following passage in SBP’ case:
“Similarly Section 9 enables a court, obviously, as defined in the Act, when approached by a party before the commencement of an arbitral proceeding, to grant interim relief as contemplated by the section. When a party seeks an interim relief asserting that there was a dispute liable to be arbitrated upon in terms of the Act, and the opposite party disputes the existence of an arbitrated agreement as defined in the Act or raises a plea that the dispute involved was not covered by the arbitration clause, or that the court which was approached had no jurisdiction to pass any order in terms of Section 9 of the Act, that court has necessarily to decide whether it has jurisdiction, whether there is an arbitration agreement which is valid in law and whether the dispute sought to be raised is covered by that agreement. There is no indication in the Act that the powers of the court are curtailed on these aspects. On the other hand, Section 9 insists that once approached in that behalf, “the court shall have the same power for making orders as it has for the purpose of and in relation to any proceeding before it”. Surely, when a matter is entrusted to a civil court in the ordinary hierarchy of courts without anything more, the procedure of that court would govern the adjudication (see R.M.A.R.A. Adaikappa Chettiar v. R. Chandra Sekhara Thevar).”
In the facts of the present case, the respondent had indeed filed an application under Section 9. The appellant had raised a contention that there is no arbitration agreement valid in the eye of law and the signature amounted to a forgery.
36. The crucial question therefore, is in the nature of the contention taken by the appellant, whether there is an arbitration agreement valid in the eye of law, in view of the contention that the signature of the Managing Partner has been forged in the three contracts. The court below has not entered any specific and conclusive finding on the same. As already noted, what it has stated is that as of now, prima facie, there are materials to conclude that there is an agreement and that agreement provides for arbitration. In arriving at the said conclusion, the court below has placed reliance on the purchase notes containing the entry that “detailed contract and instructions will follow” and the case of the appellant that in all purchase notes prior to and after these, there were contracts which contained clauses stipulating for settlement by arbitration. The court has also relied on the circumstance that the appellant has a specific case that the purchase notes were on the specific understanding that there will be no arbitration clause in the contract and the court proceeds to reason that if so, the appellant have to explain and produce those contracts where there is no arbitration clause which it has not done.
37. The facts and the legal contentions raised by the parties present the following questions before us:
On the one hand, in an international commercial arbitration, even if the arbitration is held outside India, both Section 9 and Section 34 of the Indian Act would apply unless these provisions are excluded by the parties by contract, be it express or implied. However, the fundamental question which is raised by the appellant in this case is that there is no arbitration agreement at all, as the signatures of the Managing Partner of the appellant amounts to forgery. The court below has relegated the appellant to prefer appeal, relying on CENTA Rules and in view of Section 70(2) of the English Act, relying, no doubt, on the principle declared by this Court in Abba’s case. It is to be noted that in Abba’s case, there was no dispute that there was an arbitration agreement. In this case, the fundamental dispute is about the very existence of the arbitration agreement. If there is no arbitration agreement, it is elementary that there cannot be any arbitration and no award can be validly passed. Should the appellant, when it contends that there is no arbitration agreement at all, be driven to prefer an appeal before the appellate body constituted under the CENTA. Can a party be driven on the basis of prima facie finding that there is an arbitration agreement? On the other hand, could it not be said that in every case, even if a party were to raise a totally false and frivolous contention that there is no arbitration agreement, the Indian court should be constrained to entertain the application under Section 34, even though on the basis of the provisions contained in CENTA Rules, there is an exclusion of the Court’s jurisdiction under Section 34 of the Act. Could it be said that in cases like the present, it is open to the Indian Court to decide prima facie that there exists an arbitration agreement and on the said view, relegate the parties to the chosen forum of arbitral appeal, in view of Section 70(2) of the English Act.
38. Even in an international commercial arbitration, which is held outside India, the provisions of Part I would apply, unless the parties have by their agreement, either express or implied, excluded any of the provisions. Section 9 and 34 of the act fall in Part I of the Act. Therefore, if the argument of the respondent is that is a case which represents exclusion of Part I, both the Applications under Sections 9 and 34 may not be maintainable. But, Shri T.R. Aswas, learned counsel for the respondent does not dispute that the Supreme Court has in its decision in Venture Global Engineering v. Satyam Computer Services Ltd. and Anr (AIR 2008 SC 1061), inter alia, held as follows:
“The very fact that the judgment holds that it would be open to the parties to exclude the application of the provisions of Part I by express or implied agreement, would mean that otherwise the whole of Part I would apply. In any event, to apply Section 34 to foreign international awards would not be inconsistent with Section 48 of the Act, or any other provision of Part II as a situation may arise, where, even in respect of properties situate in India and where an award would be invalid if opposed to the public policy of India, merely because the judgment-debtor resides abroad, the award can be enforced against properties in India through personal compliance of the judgment-debtor and by holding out the threat of contempt as is being sought to be done in the present case. In such an event, the judgment-debtor cannot be deprived of his right under section 34 to invoke the public policy of India, to set aside the award. As observed earlier, the public policy of India includes (a) the fundamental policy of India; or (b) the interests of India; or (c) justice or morality; or (d) in addition, if it is patently illegal. This extended definition of public policy can be by-passed by taking the award to a foreign country for enforcement.
No doubt, he would point out that doubting the correctness of the same, the issue may be considered by a Larger Bench. But, he is not in a position to dispute that as things stand, even if there is an exclusion of Section 34 in an international commercial arbitration, the party would be in a position to approach the Court under Section 34 and impugn the Award on the ground of public policy. Of course, it is his case that there is no ground made out by the appellant to overturn the Award at all. As far as Section (9) is concerned, he contends that despite the CENTA Rules and the Arbitration Rules, as per which the English Law is applicable, as it is a grey area, the respondent can maintain the application under Section 9, in view of Clause (9) of the UNCITRAL which permits parties to approach the Court under Section (9). He would also “point out that even if the Application under Section 9 is rejected on the basis that the Court accepts the position that the provisions of Section 9 stand excluded or that the decision thereon is bad for the reason that the Court has not considered the question as required under the SBP’s decision (supra), the respondent would be entitled to proceed with the E.P. against the appellant.
39. We must also not overlook the fact that this is a case where the Court was considering the Application under Sections 9 and 34 together. As far as the Application under Section 9 was concerned, going by the decision in SBP’s case in which have expressly referred to, it is incumbent on the Court to decide finally the question as to whether there was an arbitration agreement. No doubt, the learned counsel for the respondent would contend that this is a case where an Award has been passed and, therefore, it was not incumbent on the part of the Court to decide the issue as to whether there was an arbitration agreement. It is also pointed out that the Arbitrator has power to decide the issue relating to jurisdiction, including whether there was an arbitration agreement which the Arbitrator in this case has done, and the appellant has not succeeded in proving the existence of any ground to disturb the findings of the Arbitrator. He would point out that this being a case where reference to arbitration was done without involving the Court under Section 11 and having regard to the findings of the Arbitrator, the appellant has not made out a case for interference even in proceedings under Section 9. But, we find that no relief could be granted, without finding that there existed a valid arbitration agreement.
Section 7 of the Act, in fact, inter alia, provides as follows:
“7. Arbitration agreement-(4): An arbitration agreement is in writing if it is contained in-
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or
(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.”
Learned counsel for the appellant would contend that in an international commercial agreement, it is not necessary that there should be a signed agreement and the correspondence, the conduct of the parties and surrounding circumstances can also be taken into consideration to decide whether there is an arbitration agreement.
40. The case of the respondent further is that the Court must find that the contracts were indeed signed having regard to the following circumstances:
“(c) on verification of the documents thus received, it was found that the three contracts bearing Nos. 07/P/5149/A(KT/014)dated 3-5-07, 07/P/52271/C(KT066) dated 25-5-07 and 07/P/53489/A/B/C/D (KT 076) dated 9-7-07 were forged documents in which the signatures of the 2nd respondents were forged. It is submitted that the 2nd respondent was doing very heavy business with the petitioner and through their counter part in Kollam M/s. Olam Exports (India) Ltd. The petitioner company is managed and it’s day to day operations more especially with the 2nd respondent were done by Mr. Sunny Varghese, it’s Managing Director and Sri. Ashok Krishan, it’s business Head. The petitioner company is operating in Kollam through their local counter parts (subsidiary) which is managed by Mr. K. Cheeran (Business Manager). Mr. K.P. Thomas, Senior Manager and Mr. V.J. Yesudasan, Officer. Mr. Yesudasan was frequenting the respondent’s office bringing communications, taking letters from the respondents etc. with regard to contracts especially export contracts, the 1st step was signing of a purchase confirmation note which is virtually an offer embodying all the necessary terms and conditions and an independent self contained document. This would be signed already by the petitioner when brought to the respondent. The respondent used to affix his seal and signature to the said offer in token of having accepted the offer and a contract was thus concluded and one copy was delivered to Mr. Yesudasan himself for onward transmission to the petitioner. These confirmation notes were followed by a contract in a stereotyped format which also used to be signed by the 2nd respondent on several earlier occasions prior to the contracts involved in this case. Such contracts contained an arbitration clause also. But, however, during 2007, several of the Kollam based exports were involved in arbitration proceedings abroad and huge amounts were seen awarded by such foreign Tribunals in view of their partisan attitude and also in view of the fact that the local exporters were not in a position of effective defence abroad. Therefore, the 2nd respondent declined to sign such contract with the petitioner, containing arbitration clauses. The petitioner also agreed that he need not sign such contracts containing arbitration clause.”
But, he points out that this is patently incorrect, as, in fact, the appellant has entered into contract with the respondent and also another person wherein there was an arbitration clause as per CENTA Rules. Next, the respondent relied on the documentary evidence produced by the parties and submitted as follows:
Admittedly, there were three purchase confirmation notes dated 2.5.2007, 25.5.2007 and 6.7.2007. The dispute projected relates to the corresponding contracts alleged to be executed and denied as already referred to. The number noted in the purchase confirmation note dated 2.5.2007 is Olam/KT/014, the number noted in purchase confirmation note dated 25.5.2007 is KT/006 and lastly the number noted in the purchase confirmation note dated 6.7.2007 is KT/076. Going by the document No.4 produced by the respondent along with the Section 9 petition, it is a letter dated 16.8.2007. It is stated to be sent by the appellant to the respondent and it contains the shipping schedule. Document No.5 produced by the respondent is a letter dated 8.10.2007 issued by the respondent to the appellant tabulating the contract numbers as well as the purchase confirmation note numbers. No doubt, the receipt of the same by the appellant is denied. But, according to the respondent, they have produced Annexure R3 which purports to be the courier receipt and certificate of the professional couriers for delivery of the letter. Then, we have document No.6 produced by the respondent which purports to be a letter dated 24.10.2007 tabulating the contract and purchase confirmation note numbers and addressed by the respondent to the appellants. In the same, it is stated as follows, inter alia,:
“The above mentioned contracts are pending from June, 2007. As per their request and considering our long term business relationship, we hereby agree to pay six cents per Lbs. for the above referred 11 FC LS, provided all the above contracts gets executed on or before 31.12.2007. The difference amount will be transferred to your Account at the end of every month for the completed shipments. Kindly confirm this agreement and sent us the shipping schedule today itself.
Awaiting your confirmation.”
Apparently, receipt of this letter is denied by the appellant. However, there is letter dated 26.10.2007 sent by the appellant to the respondent. It is worthwhile to extract the letter. It reads follows:
“while thanking your for appreciating our problem that accrued unexpectedly at the production site, we would request to properly evaluate the situation. Due to reasons beyond our control, our Nedumpana factory had to be disposed off. There were also sudden outburst of labour strikes at our Baranikavu and Onnambalam factories. These three are our major factories with substantial processing capacity. On account of the unexpected dwindling down of the production capacity, we got stuck and despite our earnest attempts, production only lambing back to normalcy.
However, we are confident of completing the entire shipment by the end of January, 2008, as we would request you to extend the completion period till January, 2008, instead 31.12.2007.”
This was produced by the respondent as document No.8. The respondent sent letter dated 26.10.2007, i.e. on the same day as the letter referred to above wherein they confirm extension of the shipment schedule period till the end of January, 2008. This letter was written with reference to the letter dated 26.10.2007 sent by the appellant to the respondent which we have referred to. The respondent requested the appellant to send its acceptance together with the shipping schedule for the contracts which are referred to in the letter. There is the signature of the appellant in the letter sent by the respondent to it. No doubt, the case of the appellant is that it was signed as wanted by the respondent. Then, there is letter dated 29.10.2007 sent by the appellant to the respondent. Therein, referring to the letter of the respondent dated 26.10.2007, the appellant enclosed the shipping schedule for the pending contracts. There are eleven containers. It is also pertinent note in this context the specific case set up by the appellant before the court, it is pointed out. In respect of the letter dated 26.10.2007 which we have referred to, sent by the appellant to the respondent, it is specifically stated that the respondent wanted formal extension request letters from them for their audit purpose and accordingly, the appellant affixed the seal and signature. Case of the appellant, in fact, is that in the said letter dated 26.10.2007, the numbers related to the confirmations notes. The appellant admits sending letter dated 29.10.2007. The appellant also says in its objection that it had addressed communications dated 16.8.2007 and 26.10.2007 which are produced as documents Nos 4 and 8 and which we have also referred to. However, the appellants would say that to the best of memory and information of the second appellant, who is the Managing Partner of the first appellant, that he had never received letter dated 17.6.2008, 24.7.2007 or 8.10.2007 which are produced as document Nos. 10, 6 and 5 along with the petition and they are alleged to be cooked up. It is pointed out that it is pertinent to note also that theappellant denies having received letter dated 24.10.2007. It is in the letter dated 24.10.2007 that the respondent informs the appellant about the pendency of various contracts from June, 2007 and mentions 31.12.2007 as the date by which all the contracts may be executed and an offer also was made. Appellant had sent letter dated 26.10.2007. Therein, he would seek extension till January, 2008, instead of 3.12.2007. It is pointed out that this letter would show that the appellant had indeed received letter dated 24.10.2007, as otherwise, there was no occasion to seek extension till January, 2008 instead of 31.12.2007.
41. Per contra, learned counsel for the appellants would submit that the matter may be remanded for reconsideration. He would submit that the statement in the objection of the appellant that the appellant did not sign the contract containing the arbitration clause in view of several Kollam based exporters being involved in arbitration proceedings abroad and huge amounts being awarded by such foreign tribunals, was only a mistake. He would further point out that it may be true that in the correspondence referred to by the respondent, there were reference to contract numbers. But the appellants were not really fully aware of the significance of those numbers or that a forgery was committed. Learned counsel for the appellant would submit that the last sentence in the purchase confirmation notes, namely “kindly send back the copy duly signed by you” may be borne in mind.
42. There is no oral evidence in this case before the court be Learned counsel for the appellants would in fact contend that the matter was not posted at all evidence. Learned counsel for the respondent would point out that having regard to the fact that proceedings under Section 34 are of a summary nature and in view of the findings in the Award, there can be no question of the Court treating the application under Section 34 as an appeal.
43. As far as the question whether the contract was in existence is concerned, we must consider that there are two proceedings, one is under Section 9. In the proceedings under Section 9, when the existence of the arbitration agreement is disputed, it is well settled that the burden to show the existence of the agreement is on the applicant. On the other hand, in a proceeding under Section 34 of the Act, we would think that the burden of proving the case is clearly on the person who challenges the award. In fact, in this case, in the award, the Arbitrator has also given his ruling regarding the agreement. We are of the view that in the circumstances of this case it must be held that there were contracts signed containing the arbitration clause as contended by the respondent. We see merit in the contention of the respondent that there were valid arbitration agreements. This is for the following reasons:
Apparently the appellants and the respondent were engaged is business for quite some time. The practice was apparently the Purchase Confirmation Notes would be issued. They would be followed up by contracts which contain an arbitration clause also (see the following statement in the Objections submitted by the appellants in O.P. (Arb) 231 of 2008:
“These confirmation notes were followed by a contract in a stereo type format which also used to be signed by the second respondent on several earlier occasions prior to the contract involved in this case. Such contracts contained an arbitration clause also.”
44. The further case of the appellants was that during 2007, in view of the huge amounts awarded by such foreign tribunal, the appellant declined to sign such contract with the respondent containing the arbitration clauses. However, as pointed out by the respondent, admittedly the appellants have entered into a contract with the respondent which contained an arbitration clause providing for arbitration under the AFI/CENTA Rules. There is also another contract with another person where there was arbitration clause. Further more, we cannot also ignore the fact that there was indeed correspondence between the parties showing that the appellant was notified of the numbers of the contracts which are also reflected in the contracts which were later on produced, which we have elaborated earlier. Therein also, the case the appellant was that in none of the correspondence received there is reference to the contract numbers. Going by the correspondence which we have referred to this does not appeal to be correct.
45. One of the contentions of the appellant is that even the respondent has not signed in one of the contracts. Learned counsel for the respondent refuted the said contention. We looked into the documents produced by the respondent. We notice that in all the contracts there is the signature of the authorized signatory of the respondent. No doubt, it may be true that there is no seal. It is also, no doubt, that there may be some variations in the signatures. In this context, we would think that even in the admitted signatures of the appellant in the purchase confirmation notes, there appears to be some difference in the signature. We must in this connection note that the appellants did not take any steps in the court below to challenge the signatures and prove their case. It is further to be noted that clearly the parties, going by their past conduct and also subsequent conduct, did enter into contracts embodying the terms of the agreement. As held by the court below, if there was any contract which was executed which did not contain the arbitration clause, that would have been produced by the appellants. Of course, the case of the appellants is that the purchase confirmation notes embodied the entire terms of the contract. Even there, we notice that there are several conditions in the contracts which are not to be found in the purchase confirmation notes. Having regard to the nature of judicial review in particular, we would think that it is more probable that the appellants had entered into the contracts which they dispute.
46. The further question would be what is the effect of the arbitration clause contained in the agreement. On the one hand, it is stated that it is as per AFI/CENTA terms and conditions. No doubt, among the other conditions, it is mentioned that arbitration jurisdiction is in India. As per the CENTA terms and conditions, the following are relevant:
“(ii). Contracts wherever made or to be performed and whatever the nationality or residence of the parties, shall be construed and governed by the law of England.
(iii). Any dispute arising out of a contract subject to these terms and conditions including any question of law arising in connection therewith, shall be referred to arbitration in London or elsewhere if so agreed. Such arbitration to be carried out in accordance with the association terms and the Arbitration Act, 1996, or any statutory modification or re-enactment thereof for the time being in force”.
There are also Rules of Arbitration and the appeal providing for details regarding the procedure in relation to appointment, awards. It is in Clause X that it is provided that any party to the award shall have a right of appeal to the Executive Committee within twenty eight consecutive dates of the award, which is to be accompanied by the amount awarded, a deposit of 400 Pounds together with an amount equal to the fees paid to the Arbitrators.
47. The question that would arise is whether in the light of the said provisions, there is an exclusion of Part I of the Act. The further question would be whether if the said provision evince an intention to exclude the provisions of Part I, will the Clause in the contract that “arbitration jurisdiction is in India” make a difference. What is the law in regard to the same?
48. We would like to refer to a few decisions on this aspect. In NTPC v. Singer Company and others (1992 Vol.III SCC 551) the Apex Court elaborately dealt with the concepts of proper law of contract, in a case relating to an international commercial arbitration agreement. The Court, inter alia, held that the proper law of contract refers to the legal system by which the parties to the contract intended their contract to be governed. It was further held that the proper law of arbitration agreement is normally the same as the proper law of contract and it is only in exceptional cases that it is not so even where the proper law of contract is expressly chosen by the parties. The Court further held that there is rebuttable presumption that where there is no express choice of the law governing the contract as a whole or the arbitration agreement as such, the law whereby arbitration is agreed to be held is the proper law of arbitration agreement.
49. The next important decision to be notice in this regard is the decision in Bhatia International’s case. In that case, the contract provided that arbitration was to be as per the Rules of International Chamber of Commerce (ICC). The parties had agreed that the arbitration be held in Paris, France. The first respondent applied under Section 9 of the Act. The Court found that it was a case of International Commercial Arbitration which was being held outside India. The Court further held that even in respect of an International Commercial Arbitration being held outside India, the provisions of Part I would apply unless that parties have by express or implied agreement, decided to exclude the whole or any of the provisions. The Court proceeded to refer to Article 23 of the ICC Rules which contemplated parties applying to any competent judicial authority for interim reliefs. The Court proceeded to hold that in such circumstances, the application can be made under Section 9 of the Act. The said decision came to be followed in Indtel Technical Services Pvt. Ltd. V. W.S. Atkins Rail Ltd., (2008 (10) SCC 308). In the said case, the Court was dealing with an applicant for appointment of an Arbitrator under Section 11 of the Act. The Court proceeded to follow the ratio in Bhatia International’s case. Clause 13.1 of the Contract reads as follows:
“This agreement, its construction, validity and performance shall be governed by and constructed in accordance with the Laws of England and Wales.”
The Court held that the decision in Bhatia International was relevant. It was further held that it is settled law that when an arbitration agreement is silent as to the law and the procedure to be followed in implementing the arbitration agreement, the law governing the said agreement, would ordinarily be the same as the law governing the contract itself. However, the Court proceeded to follow the decision in Bhatia International’s case and hold that Section 11 is applicable. The next decision to be noticed in this regard is the decision of the Apex Court in Info Wares Ltd. V. Equinox Corporation (2009) 7 SCC 220). It was an application under Section 11(5) of the Act. Clause-10 was the arbitration clause. Clause 10.1 provided that the agreement was to be governed by and interpreted in accordance with the laws of California, USA and the matters of dispute, if any, relating to this agreement or its subject matter shall be referred for arbitration to a mutually agreed Arbitrator. Thereafter, the Court referred to Bhatia International and Indtel and found that the situation is identical and the Court repelled the contention of an implied exclusion of Part I. It is further held that it may not be forgotten that one of the contracting parties is the Indian Party and the obligations under the contract were to be completed in India. The Court also proceeded to refer to other case law and proceeded to hold that the application is maintainable. However, we must notice the decision of the Apex Court in Videocon Industries Ltd. V. Union of India (2011 (5) Scale 678). Therein the contract, inter alia, provided that subject to Article 34.12, the contract was to be governed and interpreted in accordance with the laws of India. The relevant clause was 34.12:
“The venue of sole expert, conciliation or arbitration proceedings pursuant to this Article, unless the parties otherwise agree, shall be Kuala Lumpur, Malaysia and shall be conducted in the English language. In so far as practicable, the Parties shall continue to implement the terms of this Contract, notwithstanding the initiation of arbitral proceedings and any pending claim or dispute. Notwithstanding the provisions of Article 33.1, the arbitration agreement contained in this Article 34 shall be governed by the laws of England.”
The application was filed under Section 9. The Apex Court after referring to Bhatia International, Dozco India and Venture Global, proceeded to hold as follows:
“19. In the present case also, the parties had agreed that notwithstanding Article 33.1 the arbitration agreement contained in Article 34 shall be governed by laws of England. This necessarily implies that the parties had agreed to exclude the provisions of Part I of the Act. As a corollary to the above conclusion, we hold that the Delhi High Court did not have the jurisdiction to entertain the petition filed by the respondents under Section 9 of the Act and the mere fact that the appellant had earlier filed similar petitions was not sufficient to clothe that high Court with the jurisdiction to entertain the petition filed by the respondents.”
50. We are of the view that in the facts of this case there can be no dispute that the parties have clearly agreed that the proper law of contract is the English law. A perusal of Clause 3 of the CENTA Rules which we have already extracted, would further appear to make clear that the parties are agreed that the seat of arbitration is to be in London. The manner of carrying out the arbitration is also specifically stated to be in accordance with the association terms and the English Arbitration Act. In our view, therefore, we would think that it is the decision in Videocon which would be applicable to this case and, therefore, the application under Sections 9 and 34 must be treated as impliedly excluded by the parties. Then the question arises, will this conclusion of ours require alteration in view of the Clause in the contracts that the arbitration jurisdiction is in India. In this context, it is emphasized before us by the learned counsel for the appellants that in the subsequent contract dated 26.11.2007, the words “arbitration jurisdiction is in India” is absent.
51. The circumstances which, no doubt, are in favour of holding that Part I is not excluded by the parties are as follows:
“(i) It is expressly provided that arbitration jurisdiction is in India.
(ii) One of the parties, namely the appellant is in India.
(iii) The obligations are to be performed in India.”
The last two aspects were, in fact relied upon by the Apex Court in its decision in Info Wares Ltd. (supra) to hold that Part I was not excluded.
52. In fact, the Arbitration in this case has noted this aspect and found that having regard to the CENTA Rules as also the Arbitration Rules, the parties could not have intended such an ambiguous clause to take precedence over the comprehensive method of dispute resolution provided in the CENTA Arbitration Rules and that the words “arbitration jurisdiction in India” are a reference to where the arbitration will physically take place if necessary although the seat remains in London.
53. We are not, of course, impressed by the contention of counsel for the respondent that the words “arbitration jurisdiction is in India” do not hold significance as it is bracketed. Apparently, support is sought to be drawn from the decision of the Apex Court in Dozco India Ltd. (supra). In this case, however, the clause “arbitration jurisdiction is in India” is not bracketed. It is found under the clause “other conditions”.
54. The learned counsel for the appellant would also draw our attention to a very recent decision in Civil Appeal No.7562/2011 decided on 01.09.2011 (Yoga Raj Infrastructure Ltd. V. Ssang Yong Engineering and Construction Company Ltd.,) wherein, the Apex Court took the view that the decision in Bhatia International, Venture Global and Info Wares will not apply. In the said case the arbitration was to take place in Singapore and conducted in the English language in accordance with the Singapore International Arbitration Centre Rules (SIAC). It was further provided that the agreement was subject to the laws of India. The Court, inter alia, held that the curial law which regulates the procedure to be adopted in conducting the arbitration would be the SIAC Rules. Parties had agreed to make Singapore as the seat of arbitration. The Court took the view further that it was no longer available to the appellant to contend that the proper law of the agreement (which was apparently Indian Law) would apply to the arbitration proceedings. It was further found that since the parties had specifically agreed that the arbitration proceedings would be conducted in accordance with the SIAC Rules, which includes Rule 32, the decision in Bhatia International’s case would not apply.
55. We are of the view that this is a case where clearly the proper law of contract was the English Law. We also find seat of arbitration was treated as London. The Law of Arbitration was also to be the Arbitration Rules and further the English Arbitration Act. Since the English Arbitration Act provided for elaborate procedure relating to challenging the award, we would think that necessarily and impliedly, the corresponding provision in the Indian Act, namely Section 34 must be treated as impliedly excluded by the contract between the parties. We are not impressed by the contention of the counsel for the appellant that even in Clause 3 of the CENTA Rules, arbitration may be held elsewhere and therefore, the seat of arbitration cannot be treated as London. Obviously, it is an international commercial arbitration. It is certainly open to the Arbitrator to hold the arbitration any where and more particularly, in India. But, at the same time, that would not alter the seat of arbitration.
56. We are also not impressed by the argument of the learned counsel for the appellants based on the condition that arbitration jurisdiction is in India. We are inclined to think that having regard to the entirety of the CENTA Rules by which the English Arbitration Act becomes applicable, providing for challenge to an Award, besides the Arbitration Rules of CENTA, we would think that it may not be open to the appellants to contend that the said words would confer jurisdiction on the Indian Court under Section 34 of the Arbitration Act also.
57. We are not impressed by the contention of the counsel for the appellants that the arbitration clause provides AFI/CENTA. According to the appellants, if the arbitration is to be done as per AFI Rules, there must be a clause providing for arbitration, which must appear on the front of the contract or at least on the side which is signed by both the parties (See clause 2 of Section 1 of the Arbitration Rules of AFI).
58. It is contended by the counsel for the appellant that it is not clear how the CENTA Rules were applied. We do not think that there may be justification for the appellants on this score. The arbitration can be conducted either under the CENTA Rules or under the AFI Rules and therefore, we see no illegality in arbitration being done under the CENTA Rules.
59. The further question, however, to be considered is if it is found that Part I would not apply what is the effect of the decision in Abbas case? In Abbas case, admittedly there was an arbitration agreement. In Abbas case, no doubt, a Bench of this Court had taken the view that the party must pursue the appellate remedy as provided in the Arbitration Rules and thereafter, may apply under Section 34. In fact, we notice that it was contended before the Court that having regard to the decision in Venture Global, the foreign award could be challenged under Section 34 and the CENTA Rules do not have the power to oust the jurisdiction of the Indian Courts, and that Section 70(2) of the English Arbitration Act which contains the prohibition against challenging the award without approaching the Court is applicable only when the party approaches the English Court. In fact, the very same contentions are raised in this case also by the learned counsel for the appellants. They also have a case that under Section 72 it must be treated as a case where they had not participated in the proceedings before the Arbitrator. Actually we would have thought that when the Apex Court has laid down that it is open to a party in India to invoke Section 34 on the ground of violation of public policy, even if the parties have agreed in an International Commercial Contract to exclude Part I of the Indian Act, we may not be inclined to subscribe to the view that in view of the contract and the provision of the English Act, the party must approach the appellate forum and then only he can approach the Indian Court under Section 34 of the Act. There is considerable merit in the contention the appellants that in the first place the embargo arises under Section 70(2) of the English Act. Section 70(2) in fact is an embargo against any application or appeal under Sections 67, 68 or 69 of the English Act without availing the appellate remedy. We would have thought that the said provision would not possibly prohibit consideration of an application under Section 34 of the Indian Act based on the principle enunciated by the Apex Court in Venture Global. When the Apex Court has laid down that application under Section 34 will lie even when it is excluded by contract between the parties, the exclusion of the similar provisions in the English Act by the contract between the parties without exhausting an inhouse appellate remedy would certainly not apply to oust the Courts’ jurisdiction in India. However, we do not think it is necessary for us to refer the matter to a Larger Bench, in view of the fact that we feel that it is otherwise distinguishable, as according to us the decision at least partly turned on the fact that there was an admitted arbitration agreement under which parties had participated on the merits and courted an award wherein, part of the counter claim of the appellant therein was even allowed in his favour. On the other hand, in this case, we notice that the appellants have right from the very beginning disputed the existence of any agreement and they have indulged in correspondence questioning the jurisdiction and contended that there is no arbitration agreement. Admittedly, they have not even filed defence statement. If that is so, we would think that the decision in Abbas case need not apply.
60. Resultantly, we are of the view that the matter requires to be remitted back on the basis that there was a valid arbitration agreement entered into as alleged by the respondent. Necessarily Sections 9 and 34 will stand excluded, but however, in view of the fact that the Apex Court has held in Venture Global that even in such a situation, application under Section 34 would lie on the ground of violation of public’ policy.
61. We allow Arb. Appeal No.40 of 2010 and remand back the matter to the District Court, Kollam. The parties shall appear before the court below on 15.10.2011. The District Court shall proceed to consider the application under Section 34 of the Act in terms of the judgment of the Apex Court in Venture Global, that is to say, it will consider the application under Section 34 on the ground that the award is in violation of the public policy. We also direct that the Appeal shall be disposed of on or before 31.01.2012.
62. We are not impressed by the contention of the respondent that the respondent could have approached the Court under Section 9 on the strength of Article 9 of the UNCITRAL. Any such contention will be in the teeth of the Judgments of the Supreme Court which we have already adverted to. In such circumstances, the impugned order under Section 9 must necessarily be set aside. Accordingly, we allow Arb. Appeal No.41 of 2010 and set aside the impugned order.