ENERCON (INDIA) LTD. & ORS. v. ENERCON GMBH & ANR.

60. If the Supreme Court in India were, in due course, to B consider that the Bombay High Court was wrong in its conclusion as to the seat of the arbitration or that there was a prima facie valid arbitration or that the English court had concurrent supervisory jurisdiction, it would be a recipe for confusion and injustice if, in the meantime, the c English court were to conclude that England was the seat of the putative arbitration, and to assume jurisdiction over EIL and the putative arbitration, and to conclude that there was a valid arbitration agreement, whether on the basis of a good arguable case or the balance of probabilities. Further, for it to exercise its powers, whether under s. 2(1) or 2(4) or s. 18 of the Arbitration Act in appointing a third arbitrator, would create real problems, should the Supreme Court decide differently.

61. These are the very circumstances which courts must strive to avoid in line with a multitude of decisions of high authority, from the Abidin Daver [1984} AC 398 onwards, including E. I. Dupont de Nemours v. Agnew [1987]2 Lloyd's Rep 585. The underlying rationale of Eder J. 's judgment leads inexorably, in my view, to the conclusion that the issues to be determined in India, which could otherwise fall to be determined here in England, must be decided first by the Indian courts and that, despite the delay and difficulties involved, the decision of the Indian Supreme Court should be awaited. G

62. It is also fair to point out in this context that, even if I were to decide the seat issue here on the basis of full argument (which I have not heard) whether in the way that Eder J. did or otherwise, the possibility or likelihood of H one side or another wishing to appeal with subsequent

ENERCON (INDIA) LTD. & ORS. v. ENERCON GMBH 945 & ANR. [SURINDER SINGH NIJJAR, J.]

delay might then arise in the context of the English A proceedings. But, if I did make such a decision, in line with Eder J., I would be making a determination which is directly contrary to that of Savant J. and it seems to me that that is inappropriate as a matter of comity, whether or not there is any issue estoppels. B

63. Moreover, it would be a recipe for confusion and injustice, and to back it up with an anti-suit injunction would merely fan the flames for a continued battle, which is contrary to the principles of comity when the position is unclear and the agreement itself is governed by Indian law."

129Copy pinpoint129. In our opinion, these observations of Justice Cooke foresee the kind of intricate complexities that may arise in case the Courts of India and England were to exercise the concurrent jurisdiction in these matters.

130Copy pinpoint130. We are unable to agree with the conclusion reached by Justice Savant that the Courts in England would exercise .concurrent jurisdiction in the matter. Having concluded that the seat of arbitration is in India, the conclusions reached by the Bombay High Court seem to be contrary in nature. In Paragraph 45, it is concluded that the law relating to arbitration agreement is the Indian Arbitration Act. Interpreting Clause 18.3, it is observed as follows:- F "45 .................... The said clause provides that the provisions of the Indian Arbitration and Conciliation Act, 1996 shall apply. If the said clause is read in the ordinary and natural sense, the placement of the words that "the Indian Arbitration and Conciliation Act shall apply" .in the G last clause 18.3 indicates the specific intention of the parties to the application of the Indian Arbitration Act, not only to the Arbitration Agreement but also that the curial law or the Lex Arbitri would be the Indian Arbitration Act. The application of the Indian Arbitration Act therefore can H

946 SUPREME COURT REPORTS [2014] 2 S.C.R.

A be said to permeate clause-18 so that in the instant case laws (2) and (3) are same if the classification as made by the learned authors is to be applied. The reference to the Indian Arbitration Act is therefore not merely a clarification . as to the proper law of the arbitration agreement as is B sought to be contended on behalf of the Respondents. It has to be borne in mind that the parties are businessmen and would therefore not. include words without any intent or object behind them. It is in the said context, probably that the parties have also used the word "venue" rather than the word "see?t" which is usually the phrase which is used c in the clauses encompassing an Arbitration Agreement. There is therefore a clear and unequivocal indication that the parties have agreed to abide by the Indian Arbitration Act at all the stages, and therefore, the logical consequence of the same would be that in choosing D London as the venue the parties have chosen it only as a place of arbitration and not the seat of arbitration which is a juristic concept." ·

131Copy pinpoint131. This conclusion is reiterated in Paragraph 46 in the following words:-

"46. The proposition that when a choice of a particular law is made, the said choice cannot be restricted to only a part of the Act or the substantive provision of that Act only. The choice is in respect of all the substantive and curial law provisions of the Act. The said proposition has been settled by judicial pronouncements in the recent past. ...... "

132Copy pinpoint132. Having said so, learned Judge further observes as follows:- G "49. Though in terms of interpretation of Clause 18.3, this Court has reached a conclusion that the lex arbitri would be the Indian Arbitration Act. The question would be, whether the Indian Courts would have exclusive jurisdiction. H The nexus between the "seat" or the "place" of arbitration

ENERCON (INDIA) LTD. & ORS. v. ENERCON GMBH 947 & ANR. [SURINDER SINGH NIJJAR, J.] vis-a-vis the procedural law i.e. the lex arbitri is well settled A by the judicial pronouncements which have been referred to in the earlier part of this judgment. A useful reference could also be made to the learned authors Redfern and Hunter who have stated thus :- 8 "the place or seat of the arbitration is not merely a matter of geography. It is the territorial link between the arbitration itself and the law of·the place in which that arbitration is legally situated .... "

The choice of seat also has the effect of conferring C exclusive jurisdiction to the Courts wherein the seat is situated."

Here the Bombay High Court accepts that the seat carries with it, usually, the notion of exercising jurisdiction of the Courts 0 where the seat is located.

133Copy pinpoint133. Having said so, the High Court examines the question whether the English Courts can exercise jurisdictions in support of arbitration between the parties, in view of London being the venue for the arbitration meetings. In answering the aforesaid question, the High Court proceeds on the basis that there is no agreement between the parties as regards the seat of the arbitration, having concluded in the earlier part of the judgment that the parties have intended the seat to be in India. This conclusion of the High Court is contrary to the observations made in Shashoua (supra) which have been approvingly quoted by this Court in Balco in (Paragraph 110). On the facts of the case, the Court held that the seat of the arbitration was in England and accordingly entertained the challenge to the award. G

134Copy pinpoint134. In A Vs. 8 38 again the Court of Appeal in England observed that:-

38. [2007] 1 Lloyds Report 237. H

948 SUPREME COURT REPORTS [2014] 2 S.C.R.

A " ..... an agreement as to the seat of an arbitration is analogous to an exclusive jurisdiction clause. Any claim for a remedy ...... as to the validity of an existing interim or final award is agreed to be made only in the courts of the place designated as the seat of arbitration." B (emphasis suppl.ied}

135Copy pinpoint135. In our opinion, the conclusion reached by Justice Savant that the Courts in England would have concurrent jurisdiction runs counter to the settled position of law in India C as well as in England and is, therefore, not sustainable. The Courts in England have time and again reiterated that an agreement as to the seat is analogous to an exclusive jurisdiction clause. This agreement of the parties would include the determination by the court as to the intention of the parties. o In the present case, Savant, J. having fixed the seat in India erred in holding that the courts in India and England would exercise concurrent jurisdiction. The natural forum for all remedies, in the facts of the present case, is only India.

Issue Cviil/Re: Anti-Suit Injunction: E -

136Copy pinpoint136. Having held that the Courts in England would have concurrent jurisdiction, the Bombay High Court on the basis thereof concludes as follows:-

"ln view of the conclusion that this Court has reached, F namely that the English Courts would have concurrent jurisdiction to act in support of arbitration, the case of the Appellants for an anti suit injunction does not stand to scrutiny. However, in so far as the aspect of forum non- conveniens is concerned, in my view, since the Appellants G have agreed to London as the venue for arbitration, they cannot be heard to complain that the Courts at London are forum non-conveniens for them. The Appellants have appeared before the said Courts, and therefore, the case . of forum non- conveniens is bereft of any merit." H

ENERCON (INDIA) LTD. & ORS. v. ENERCON GMBH 949 & ANR. [SURINDER SINGH NIJJAR, J.]

137Copy pinpoint137. The aforesaid conclusion again ignores the principle A laid down by this Court in Oil & Natural Gas Commission Vs. Western Company of North America (supra), wherein it is held as follows:-

"As per the contract, while the parties are governed by the 8 Indian Arbitration Act and the Indian Courts have the exclusive jurisdiction to affirm or set aside the award under the said Act, the Respondent is seeking to violate the very arbitration clause on the basis of which the award have been obtained by seeking confirmation of the award in the C New York Court under the American Law. This amounts to an improper use of the forum in American (sic) in violation of the stipulation to be governed by the Indian law, which by necessary implication means a stipulation to exclude the USA Court to seek an affirmation and to seek it only under the Indian Arbitration Act from an Indian Court. D If the restraint order is not granted, serious prejudice would be occasioned and a party violating the very arbitration clause on the basis of which the award has come into existence will have secured an order enforcing the order from a foreign court in violation of that very clause .. " E

138Copy pinpoint138. Again in the case of Modi Entertainment Network & Anr. (supra), it was held that :- "24(1 ). In exercising discretion to grant an anti-suit F injunction the court must be satisfied of the following aspects: (a) the defendant, against whom injunction is sought, is amenable to the personal jurisdiction of the court; (b) if the injunction is declined, the ends of justice will be defeated and injustice will be perpetuated; and (c) G the principle of comity - respect for the court in which the . commencement or continuance of action/proceeding is sought to be restrained - must be borne in mind."

139Copy pinpoint139. In Paragraph 24(2) of the same decision, this Court further observed that :- H

950 SUPREME COURT REPORTS [2014) 2 S.C.R.

A "24(2). In a case where more forums than one are available, the court in exercise of its discretion to grant anti- suit injunction will examine as to which is the appropriate forum {forum conveniens) having regard to the convenience of the parties and may grant anti-suit B injunction in regard to proceedings which are oppressive or vexatious or in a forum non-conveniens."

140Copy pinpoint140. Examining these aspects, Eder, J. in fact also came to the conclusion that the anti-suit injunction granted by the C English Court needed at-least to be stayed during the pendency of proceedings in India. The reasons given by Eder, J. in support of the conclusions are as under:- "48. Bearing these general principles in mind and recognising the permissive nature of CPR Part 62.5, the important point, in my view, is that the claimants did not pursue their applications in the original proceedings that they issued in this court in _March 2008. On the contrary, they engaged fully (albeit perhaps reluctantly) in the Indian proceedings before the Daman court. When they lost at first instance before Judge Shinde, they appealed to the DCC with the result indicated above. That is the choice they made. Having made that choice and now some years down the line, it seems to me that lhe English court should at least be extremely cautious to intervene at this stage - F and, in Mr Edey QC's words, to "wrest" back the proceedings to England. To do so at this stage when those proceedings are, in effect, still pending would give rise to - the "recipe for confusion and injustice" which Lord Diplock specifically warned against in The Abidin Daver as referred to in the passage of the judgment of Hobhouse J G . which I have quoted above. For that reason alone, I have decided somewhat reluctantly that I should follow the course suggested by Mr Edey QC ie that these proceedings should be stayed at least for the time being pending resolution of the Writ Petitions currently before the H

ENERCON (INDIA) LTD. & ORS. v. ENERCON GMBH 951 & ANR. [SURINDER SINGH NIJJAR, J.]

BHC ...... " A

141Copy pinpoint141. It must be noticed that Respondent No. 1 was initially having 51 per cent shareholding of the Appellant No.1 company, which was subsequently.increased to 56 per cent. This would be an indicator that the .Respondent No: 1·is actively carrying 8 on business at Daman. This Court considered the expression "carries on. business" as·it occurs in Section 20•of the Civil Procedure Code in :the case o(Dhodha Hqtise Vs. S. K. Maingi?g and observed as. follows:-

"46. The expression "carries on business" and the C expression "personally works for gain" connote two different meanings. For the purpose of carrying on business only presence of a man at a place is not necessary. Such business may be carried on at a place through an agent or a manager or through a servant. The D owner may not even visit that place. The phrase "carries on business" at a certain place would, therefore, mean having an interest in a business at that place, a voice in what is done, a share in the gain or loss and some control thereover. The expression is much wid~r than what the . E expression in normal parlance connotes, because of the ambit of a civil action within the meaning of Section 9 of the Code ..... "

142Copy pinpoint142. The fact that Daman trial court has jurisdiction over the matter is supported by the judgment of this Court in Harshad Chiman Lal Modi {supra), which was relied upon by Mr. Nariman. The following excerpt makes it very clear:-

"16 ........... The proviso to Section 16, no doubt, states that though the court cannot, in case of immovable property situate beyond jurisdiction, grant a relief in rem still it can entertain a suit where relief ·sought can be obtained through the personal obedience of the defendant. ..... The principle on which the maxim was based was that the

39. (2006) e sec 41. H

952 SUPREME COURT REPORTS [2014} 2 S.C.R.

A courts could grant relief in suits respecting immovabl~ property situate abroad by enforcing their judgm~nts ·by process in personam i.e. by arrest of the defendant or by attachment of his property."

143Copy pinpoint143. This apart, we have earlier noticed that the main contract, the IPLA is to be performed in India. The governing law of the contract is the law of India. Neither party is English. One party is Indian, the other is German. The enforcement of the award will be in India. Any interim measures which are to C be sought against the assets of Appellant No. 1 ought to be in India as the assets are situated in India. We have also earlier noticed that Respondent No.1 has not only participated in the proceedings in the Daman courts and the Bombay High Court, but also filed independent proceedings under the Companies D ~t at Madras and Delhi. All these factors would indicate that Respondent No.1 does not even consider the Indian Courts as forum-non-conveniens. In view of the above, we are of the considered opinion that the objection raised by the Appellants to the continuance of the parallel proceedings in England is not wholly without justification. The only single factor which prompted E Responddnt No.1 to pursue the action in England was that the venue of the arbitration has been fixed in London: The considerations for designating a convenient venue for arbitration can not be understood as conferring concurrent jurisdiction on the English Courts over the arbitration proceedings or disputes F in general. Keeping in view the aforesaid, we are incHned to restore the anti-suit injunction granted by the Daman Trial Court.

144Copy pinpoint144. For the reasons recorded above, Civil Appeal No.2087 of 2014@ SLP (C) No.10906 of 2013 is dismissed. G The fin~ings recorded by the Appellate Court that the parties can proceed to arbitration are affirmed. The findings recorded . by the Trial Court dismissing the Applica~ion under Section 45 _are set aside. In other words, the Application filed by the Respondents for reference of the dispute to arbitration under H Section 45 has been correctly allowed by the Appellate Court

ENERCON (INDIA) LTD. & ORS. v. ENERCON GMBH 953 & ANR. [SURINDER SINGH NIJJAR, J.]

as well as by the High Court. The findings of the High c·ourt A · are affirmed to that extent. All the disputes arising between the parties in relation to the following agreements viz. SHA, TKHA, SSHAs and STKHA, Agreed Principles and IPLA, including the controversy as to whether IPLA is a concluded contract are referred to the Arbitral Tribunal for adjudication. B

145Copy pinpoint145. In the normal circumstances, we would have directed the parties to approach the two learned arbitrators, namely Mr. V.V. Veeder, QC and Mr. Justice 8.P. Jeevan Reddy to appoint the third arbitrator who shall also act as the presiding arbitrator. C However, keeping in view the peculiar facts and circumstances of this case and the inordinate delay which has been caused due to the extremely convoluted and complicated proceedings indulged in by the parties, we deem it appropriate to take it upon ourselves to name the third arbitrator. A perusal of the judgment of Eder, J. gives an indication that a list of three names was D provided from which the third arbitrator could possibly be appointed. The three names are Lord Hoffmann, Sir Simon Tuckey and Sir Gordon Langley. We hereby appoint Lord · Hoffmann as the third arbitrator who shall act as the Chairman of the Arbitral Tribunal. E

146Copy pinpoint146. In view of the above, Regular Civil Suit No. 9 of 2008, pending before the Court of Civil Judge, Senior Dhtision, Daman; and the Application under Section 45 of the Arbitration Act, 1996 flied in the Civil Suit No.2667 of 2007 and Contempt F Petition in relation to Civil Suit No.2667 of 2007 pending before the Bombay High Court at the instance of the Appellants are stayed. Parties are at liberty to approach the Court for the appropriate orders, upon the final award being rendered by the Arbitral Tribunal. This will not preclude the parties from seeking G interim measures under Section 9 of the Indian Arbitration Act, 1996.

147Copy pinpoint147. Civil Appeal No.2086 of 2014@ SLP (C) No.10924 ·of 2013 is partly allowed as follows: H

954 SUPREME COURT REPORTS (2014] 2 S.C.R.

. A a. The conclusion of the Bombay High Court that the seat of the arbitration is in India is upheld; b. The conclusion that the English Courts would have concurrent jurisdiction is overruled and consequently set aside; B c. The conclusion of the Bombay High Court that the anti-suit injunction granted by the Daman Trial Court has been correctly vacated by Daman Appellate Court is overruled and hence set aside. c d. Consequently, the Respondents are restrained from proceeding with any of the actions the details of which have been given in the judgment of Eder, J. dated 23rd March, 2012 and the order dated 27th March, 2012 as well as the judgment of Justice D Cooke dated 30th November, 2012. These matters include: All or any of the. proceedings/ applications/ reliefs claimed by the Respondents in the Arbitration E Claim 2011 Folio 1399, including but not limited to: (1) Application under Section 18 of the English Arbitration Act, 1996; (2) Injunctions pursuant to Se.ction 44 of the English Arbitration Act, 1996 and /or Section 37 of the Senior F Courts Act, 1981 . The Respondents are also restrained from approaching the English Courts for seeking any declaration/relief/clarification and/or to institute any proceedings that may result in delaying G or otherwise affect the constitution of the arbitral tribunal and its proceedings thereafter.

148Copy pinpoint148. In view of the above, the parties are directed to proceed to arbitration in accordance with law. H R.P. Appeals disposed of.