PASL WIND SOLUTIONS PRIVATE LIMITED v. GE POWER CONVERSION INDIA PRIVATE LIMITED

The Judgment of the Court was delivered by R. F. NARIMAN, J.

1. Leave granted.

2. The present appeal raises an interesting question – as to whether two companies incorporated in India can choose a forum for arbitration E outside India – and whether an award made at such forum outside India, to which the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 [“New York Convention”] applies, can be said to be a “foreign award” under Part II of the Arbitration and Conciliation Act, 1996 [“ArbitrationAct”] and be enforceable as such. F Factual Background 3.1. The appellant is a company incorporated under the Companies Act, 1956 with its registered office at Ahmedabad, Gujarat. The respondent is a company incorporated under the Companies Act, 1956 with its registered office at Chennai, Tamil Nadu, and is a 99% subsidiary G of General Electric Conversion International SAS, France, which in turn is a subsidiary of the General Electric Company, United States. 3.2. In 2010, the appellant issued three purchase orders to the respondent for supply of certain converters. Pursuant to these purchase orders, the respondent supplied six converters to the appellant. Disputes H

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A arose between the parties in relation to the expiry of the warranty of the said converters. In order to resolve these disputes, the parties entered into a settlement agreement dated 23.12.2014. Under clauses 5.1 and 5.2 of the settlement agreement, the respondent agreed to provide certain delta modules along with warranties on these modules for the working of the converter panel. Clause 6 of the settlement agreement contained B the dispute resolution clause which reads as follows: “6. Governing Law and Settlement of Dispute 6.1 Any dispute or difference arising out of or relating to this agreement shall be resolved by the Parties in an amicable way. C (A minimum of 60 days shall be used for resolving the dispute in amicable way before same can be referred toarbitration). 6.2 In case no settlement can be reached through negotiations, all disputes, controversies or differences shall be referred to and finally resolved by Arbitration in Zurich in the English language, in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce, which Rules are deemed to be incorporated by reference into this clause. The Arbitration Award shall be final and binding on both the parties. 6.3 The Agreement (together with any documents referred to herein) constitutes the whole agreement between the Parties and it is hereby expressly declared that no variation and / or amendments hereof be effective unless mutually agreed upon and made in writing.” 3.3. Disputes arose between the parties pursuant to the settlement agreement whereby the appellant claimed that warranties that were supposed to be given for converters were not so given, whereas the respondent argued that the warranties covered only the delta modules and not the converters. Thus, on 03.07.2017, the appellant issued a request for arbitration to the International Chamber of Commerce [“ICC”]. On 18.08.2017, the parties agreed to resolution of disputes by the sole arbitrator appointed by the ICC. It was agreed between the parties, as was reflected in the request for arbitration and in the terms of reference to arbitration, that the substantive law applicable to the dispute would be Indian law. 3.4. The respondent filed a preliminary application challenging the jurisdiction of the arbitrator on the ground that two Indian parties

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could not have chosen a foreign seat of arbitration. Importantly, the A appellant opposed the said application and asserted that there was no bar in law from this being done. By Procedural Order No.3 dated 20.02.2018, the learned sole arbitrator, Mr. Ian Leonard Meakin, dismissed the respondent’s preliminary application, holding as follows: “The Tribunal finds that two Indian parties can arbitrate outside B India. The Tribunal is persuaded that the Supreme Court of India’s decision in Reliance Industries Ltd v. Union of India (2014)7 SCC 603 (Exhibit CLM-3) is a leading authority. This has been confirmed by the Supreme Court of India in Sasan Power Limited v. North American Coal Corporation India Private Limited (2016) 10 SCC 813 (RL-6), which at an earlier instance before the High Court of Madhya Pradesh 2016 (2) ARBLR 179 (MP), rendered on 11.09.2015, held that two Indiancompanies can arbitrate outside of India. Furthermore, the earlier case of Atlas Export Industries v. Kotak & Company (1999) 7 SCC 61,which was applied in Sasan, found that a contract which is unlawful under section 23 of theIndian Contract Act 1872, because it breaches Indian public policy, would be void but that” merely because the arbitrators are situated in a foreign country cannot by itself be enough to nullify the arbitration agreement when the parties have with their eyes open willingly entered into the agreement” (p.65, para f of judgment). Such is the case here where the parties freely agreed on Zurich as the seat of the arbitration. This position has been followed in a recent decision of the Delhi High Court in GMR Energy Ltd. v. Doosan Power Systems India F Pvt. Ltd. on 14 November 2017 CS (Comm) 447/2017 (RL-7) applying Atlas in allowing two Indian parties to arbitrate outside India. The Tribunal notes the Respondent’s contention that this case is “expected to be appealed” (Respondent’s Preliminary Application dated 9 December 2017, para 23) but the Tribunal must deal with the law as it finds it at present and no doubt the G Final Award in the present case will precede any exhaustive appeal in India in GMR. Respondent’s pleadings in reliance, inter alia, on TDM Infrastructure Private Limited v. UED evelopment India H

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A Private Limited (2008) 14 SCC 271 are, in the Tribunal’s finding, misplaced because although it is accepted that two Indian nationals should, as a matter of Indian law, not be permitted to derogate from Indian substantive law, this being part of the public policy of the country, this fails to distinguish between the lex arbitri and the lex causae. In the present case,the parties have not chosen a B foreign substantive law, only a foreign seat. The Respondent also relied on M/s Addhar Mercantile Private Limited v. Shree Jagadamba Agrico Exports Pvt. Ltd. (2015) SCC Online Bom 7752, which the Respondent submitted followed TDM (RL-4). However, although the Tribunal is aware that this C decision has been criticised because although the court did not expressly find that two parties could not opt for arbitration outside India, the court’s finding that Indian parties cannot derogate from Indian lawbecause that would violate Indian public policy has led to the judgment being interpreted wrongly to imply that Indian D parties cannot choose a foreign seat. That said, Addhar is in any event a first instance decision and the higher authorities of the Indian Supreme Court prevail. Finally, the cases of Enercon (India) Limited v. Enercon GMBH (2014) 5SCC 1 and Bharat Aluminium Co. v. Kaiser Aluminium E Inc. (2012) 9 SCC 552 relied on by the Respondent in relation to its submissions that the closest and most real connection test under Indian law do not assist the Respondent because that test is only relevant where the seat is unclear. Moreover, Bharat clearly held that the applicability of section 28 of the Indian Act is restricted to the substantive law of the contract and does not apply to the seat of the arbitration. Conclusion For the reasons set out above, the Tribunal therefore finds that the arbitration clause in the Settlement Agreement is valid and will proceed to apply the Swiss Act because the seat of the arbitration is Zurich, Switzerland.” 3.5. This procedural order was not challenged by either of the parties. Vide the said procedural order, the seat of the arbitration was stated to be Zurich, Switzerland. The respondent suggested Mumbai, India as a convenient venue in which to hold arbitration proceedings as H

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costs would be reduced thereby. The appellant objected to this suggestion. A At the Case Management Conference dated 28.06.2018, the learned arbitrator decided that though the seat is in Zurich, all hearings will be held in Mumbai, acceding to the application made by the respondent. Since the mountain did not come to Muhammad, Muhammad, in the form of the learned arbitrator, went to the mountain and held all sittings B at the convenient venue in Mumbai. 3.6 A final award dated 18.04.2019 was passed by the learned arbitrator in which the appellant’s claim was rejected. The learned arbitrator held: “Operative Part C

227. Based on the foregoing, the Arbitral Tribunal hereby finds, holds and orders: Preliminary Issues A. The seat of the arbitration is Zurich, Switzerland. D On the Merits B. The Claimant’s claims for breach of contract, damages and interest thereon are rejected. C. The Claimant shall pay to the Respondent INR 25,976,330.00 and US$ 40,000.00 in legal costs and E expenses with accumulated interest, if any, inaccordance with the Indian Interest Act, 1978. D. All other claims of either party, to the extent thatthey exist, are dismissed. F Made in Zurich, this 18th day of April 2019" 3.7. After the passing of the final award, the respondent called upon the appellant to pay the amounts granted vide the said award. As the appellant failed to oblige, the respondent initiated enforcement proceedings under sections 47 and 49 of the Arbitration Act before the G High Court of Gujarat, within whose jurisdiction the assets of the appellant were located. At this stage, the appellant did a complete volte-face and asserted that the seat of arbitration was really Mumbai, where all the hearings of the arbitral proceedings took place. So asserting, the appellant filed proceedings challenging the said final award under section 34 of H

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A the Arbitration Act, being CMA No.18 of 2019 before the Small Causes Court, Ahmedabad which was then transferred to the Commercial Court, Ahmedabad and renumbered as CMA No.76 of 2020. An application filed under Order 7 Rule 11 of the Code of Civil Procedure, 1908 [“CPC”] by the respondent was rejected by the Commercial Court, Ahmedabad. At present, the proceedings under section 34 of the Arbitration Act and the respondent’s application under Order 21 of the CPC for execution of the final award are at a standstill in view of the appeal before us. The Appellant’s Case: 4.1. Mr. Tushar Himani, learned Senior Advocate appearing on behalf of the appellant, argued that two Indian parties cannot designate a seat of arbitration outside India as doing so would be contrary to section 23 of the Indian Contract Act, 1872 [“ContractAct”] read with section 28(1)(a) and section 34(2A) of the Arbitration Act. To buttress this submission, Mr. Himani pointed out the provisions of the Prohibition of Benami Property Transactions Act, 1988 [“Benami Transactions Act”] D which cannot be bypassed if two Indians are to apply only the substantive law of India. However, by designating a seat outside India, it is open to two Indian parties to opt out of the substantive law of India which itself would be contrary to the public policy of India. 4.2. He then argued that foreign awards contemplated under Part E II of the Arbitration Act arise only from international commercial arbitrations. “International commercial arbitration”, as has been defined in section 2(1)(f) of the Arbitration Act, would make it clear that there has to be a foreign element when parties arbitrate outside India, the foreign element being that at least one of the parties is, inter alia, a F national of a country other than India, or habitually resident in a country other than India, or a body corporate incorporated outside India. For this reason, the award passed in the present case cannot be designated as a foreign award under Part II of the Arbitration Act. To buttress this submission, he relied heavily upon the judgment of a learned Single Judge of this Court in TDM Infrastructure (P) Ltd. v. UE Development G India (P) Ltd., (2008) 14 SCC 271 [“TDM”] and two judgments of the Bombay High Court. 4.3. He then sought to distinguish this Court’s judgment in Atlas Export Industries v. Kotak & Co., (1999) 7 SCC 61 [“Atlas Export”], arguing that the specific argument made under section 23 of H

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the Contract Act was not dealt with by the Court and that, in any case, A ultimately, the Court did not allow the appellant in that case to take up this plea as it had not been taken up in the courts below. 4.4. Mr. Himani also argued that the judgment of the Madhya Pradesh High Court in Sasan Power Limited v. North American Coal Corporation (India) Pvt. Ltd., 2015 SCC OnLine MP 7417 B [“Sasan I”], which decided that two Indian parties can choose a foreign seat outside India for the purpose of resolving their disputes, was based on an incorrect appreciation of facts, as observed in the appeal to the Supreme Court in Sasan Power Ltd. v. North American Coal Corporation (India) Pvt. Ltd., (2016) 10 SCC 813 [“Sasan II”]. C 4.5. Going to the language of section 44 of the Arbitration Act, Mr. Himani stressed upon the expression “unless the context otherwise requires” and cited several judgments to show that the context of section 44 is that of an international commercial arbitration and cannot, therefore, apply to a foreign award between two Indian parties without the involvement of a foreign element. He also relied heavily upon the 246th D Report of the Law Commission of India of August 2014 which recommended amendments to the Arbitration Act, and particularly, the substitution of section 2(1)(e) and the explanation to section 47. He stressed the fact that both these amendments were necessary to ensure that it is the High Court that exercises jurisdiction in all cases of international commercial arbitration. For this purpose, he relied upon the domestic arbitration law of the United States [“U.S.”] to show that even under the said law, it is only when an agreement or award between two U.S. citizens involves some foreign element that such arbitration can take place abroad. He buttressed these submissions by referring to the proviso to section 2(2) of the Arbitration Act which, according to him, furnished a bridge that joined Part II to Part I, as a result of which it became clear that section 44 refers only to international commercial arbitrations, as is stated in the proviso to section 2(2). 4.6. He then went on to argue that the Arbitration Act is a self- contained code, as has been held by several judgments of this Court, and that when there is no foreign element involved in an award made in Zurich between two Indian companies, such award cannot be the subject matter of challenge or enforcement either under Part I or Part II of the Arbitration Act. H

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A 4.7. Mr. Himani then relied heavily upon section 10 of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 [“Commercial Courts Act”] which also recognises only two categories of arbitrations – international commercial arbitration and other than international commercial arbitration. He argued that there is a head-on conflict between section B 10(3) of the Commercial Courts Act and section 47 of the Arbitration Act, as a result of which the former must prevail. For this purpose, he relied upon the non-obstante clause in section 21 of the Commercial Courts Act. This being the case, in any case, the impugned judgment made by the Gujarat High Court has to be set aside as it was made C without jurisdiction because even as per the impugned judgment, the present is not a case of an international commercial arbitration but instead falls under the second category of “other than international commercial arbitration”, as a result of which only the district court would have jurisdiction. D 4.8. He finally argued that going by the closest connection test, the seat of arbitration can only be held to be Mumbai, and for this purpose, he relied upon Enercon (India) Ltd. v. Enercon GmbH, (2014) 5 SCC 1 [“Enercon”]. According to him, since every factor connected the arbitration in the present case to India, with no foreign element involved, applying this test, the seat would necessarily be Mumbai. E Consequently, he argued that Zurich, at best, could be stated to be a “salutary seat”. This being so, obviously Part II of the Arbitration Act would not apply and the judgment has to be set aside on this score also. Despite the fact that in the written submissions before us, Mr. Himani argued, without prejudice, that the award would not be enforceable under F section 48 of the Arbitration Act, he very fairly did not press this issue. The Respondent’s Case: 5.1. Mr. Nakul Dewan, learned Senior Advocate appearing on behalf of the respondent, first pointed out that the appellant argued the exact opposite of what it itself sought under Procedural Order No.3 G dated 20.02.2018 before the arbitrator. Having argued that two Indian companies can agree to have a seat of arbitration outside India, and that in the present case, that seat was Zurich, and having opposed any hearings being held in Mumbai, it would now not be open to the appellant to argue the exact opposite before this Court only because the final award was H made against it.

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5.2. Mr. Dewan then argued that Part I and Part II of the A Arbitration Act have been held to be mutually exclusive and pointed out the fundamental fallacy contained in the argument of Mr. Himani to try and import the definition of international commercial arbitration from Part I of the Arbitration Act into section 44 via the expression “unless the context otherwise requires” contained in section 44, and the so- B called bridge between Parts I and II contained in the proviso to section 2(2). According to him, section 44 is modelled on the New York Convention which only requires “persons”, both of whom can be Indian, having disputes arising out of commercial legal relationships, which are to be decided in the territory of a State outside India, which State is a signatory to the New York Convention. He then argued that any attempt to breach the wall created between Part I and Part II, which have been held to be mutually exclusive in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 [“BALCO”], cannot be countenanced by this Court. 5.3. He further argued that unlike the definition of “international commercial arbitration” contained in section 2(1)(f) in Part I, nationality, domicile or residence of parties is irrelevant for the purpose of applicability of section 44 of the Arbitration Act. As a matter of fact, according to the learned Senior Advocate, this is no longer res integra as it has been expressly decided under the pari materia provisions of the Foreign Awards (Recognition and Enforcement) Act, 1961 [“Foreign Awards E Act”] in Atlas (supra) that two Indian parties can enter into an arbitration agreement with a seat outside India, which would result in an award that would then have to be enforced as a foreign award. 5.4. He also relied upon the judgment of the Madhya Pradesh High Court in Sasan I (supra) and argued that, in appeal, the Supreme F Court did not dislodge any of the findings of the High Court but instead proceeded on the basis that the arbitration was not between only two Indian companies. He then argued, relying upon a commentary on International Commercial Arbitration, authored by Prof. Eric E. Bergsten and published by the United Nations Conference on Trade and G Development in 2005 [“UNCTAD Commentary on International Commercial Arbitration”], that parties being from the same State can agree to have their disputes resolved in a State other than the State to which they belong, as a result of which the New York Convention will then apply to enforce the aforesaid foreign award. H

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A 5.5. He then went on to argue that neither section 23 nor section 28 of the Contract Act proscribe the choice of a foreign seat in arbitration. As a matter of fact, the exception to section 28 of the Contract Act expressly excepts arbitration from the clutches of section 28, which is an express approval to party autonomy which is the very basis of the Arbitration Act. He also argued that section 23 of the Contract Act, B when it speaks of “public policy”, must be confined to clear and incontestable cases of harm to the public and cited several cases to buttress this proposition. 5.6. In any case, he combated Mr. Himani’s argument by referring to paragraph 118 of BALCO (supra) to argue that section 28(1) of the C Arbitration Act would apply only when the arbitration takes place in India and not when the seat is outside India. Equally, grounds available for challenge, which would no longer be available as a result of two parties going abroad to resolve their differences, are waivable, and both parties have, in this case, substituted the challenge to be made to an D award under section 34 of the Arbitration Act with two bites at the cherry – first, by a challenge under Swiss law to the award in Zurich, and second, by resisting enforcement under the grounds contained in section 48 of the Arbitration Act. 5.7. He then refuted Mr. Himani’s contention that the expression E “unless the context otherwise requires” can be used to defeat the very basis of section 44, arguing that section 44 only requires that the seat of arbitration be in a territory which is outside India and cited case law for this proposition. 5.8. He also refuted Mr. Himani’s argument that Mumbai should F be the seat, as the closest connection test applies only absent the determination of seat. In the present case, the arbitration clause in the settlement agreement, together with the procedural orders passed by the arbitrator, designated Zurich as the seat and Mumbai only as a convenient venue, which has been accepted by both parties, and must govern the arbitral proceedings in this case. G 5.9. He then proceeded to distinguish the three judgments relied upon by Mr. Himani to demonstrate that two Indian parties can choose a foreign seat. He then went on to argue that both in the proviso to section 2(2) and section 10 of the Commercial Courts Act, the phrase “international commercial arbitration” is not governed by the definition H

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contained in section 2(1)(f) but would only refer to arbitrations in which A the seat is outside India. The Arbitration and Conciliation Act, 1996

6Copy pinpoint6. Having heard learned counsel for both parties, it is first necessary to set out the relevant provisions of Part I and Part II of the Arbitration Act. B

“2. Definitions.—(1) In this Part, unless the context otherwise requires,— *** (e) “Court” means— C (i) in the case of an arbitration other than international commercial arbitration, the principal civil court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject matter of the arbitration if the same had been the subject matter of a suit, but does not include any civil court of a grade inferior to such principal civil court, or any Court of Small Causes; (ii) in the case of international commercial arbitration, the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject matter of the arbitration if the same had been the subject matter of a suit, and in other cases, a High Court having jurisdiction to hear appeals from decrees of courts subordinate to that High Court; (f) “international commercial arbitration” means an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India and where at least one of the parties is— G

(i) an individual who is a national of, or habitually resident in, any country other than India; or (ii) a body corporate which is incorporated in any country other than India; or H

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A (iii) an association or a body of individuals whose central management and control is exercised in any country other than India; or (iv) the Government of a foreign country; *** B Scope (2) This Part shall apply where the place of arbitration is in India. Provided that subject to an agreement to the contrary, the provisions of Sections 9, 27 and clause (b) of sub-section (1) and sub-section C (3) of Section 37 shall also apply to international commercial arbitration, even if the place of arbitration is outside India, and an arbitral award made or to be made in such place is enforceable and recognised under the provisions of Part II of this Act. *** D Construction of references (6) Where this Part, except Section 28, leaves the parties free to determine a certain issue, that freedom shall include the right of the parties to authorise any person including an institution, to determine that issue. E (7) An arbitral award made under this Part shall be considered as a domestic award.” A party may choose to waive its right to object under section 4 of the Arbitration Act, which reads as follows: F “4. Waiver of right to object.—A party who knows that— (a) any provision of this Part from which the parties may derogate, or (b) any requirement under the arbitration agreement, has not been complied with and yet proceeds with the G arbitration without stating his objection to such non- compliance without undue delay or, if a time-limit is provided for stating that objection, within that period of time, shall be deemed to have waived his right to so object.” H

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The rules applicable to the substance of dispute are set out in section 28 as follows: “28. Rules applicable to substance of dispute.—(1) Where the place of arbitration is situated in India,— (a) in an arbitration other than an international commercial arbitration, the arbitral tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India; (b) in international commercial arbitration,— (i) the arbitral tribunal shall decide the dispute in accordance with the rules of law designated by the parties as applicable to the substance of the dispute; (ii) any designation by the parties of the law or legal system of a given country shall be construed, unless otherwise expressed, as directly referring to the substantive law of that country and not to its conflict of laws rules; (iii) failing any designation of the law under sub-clause (ii) by the parties, the arbitral tribunal shall apply the rules of law it considers to be appropriate given all the circumstances surrounding the dispute. (2) The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur only if the parties have expressly authorised it to do so. (3) While deciding and making an award, the arbitral tribunal shall, in all cases, take into account the terms of the contract and trade usages applicable to the transaction.” Recourse to a court against an arbitral award may be made by an application for setting aside such award, inter alia, under section 34(2A) of the Arbitration Act, which is set out as follows: G “34. Application for setting aside arbitral award.— *** (2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by H

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A the court, if the court finds that the award is vitiated by patent illegality appearing on the face of the award: Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.” B Part II of the Arbitration Act deals with enforcement of foreign awards in India, and contains two chapters, Chapter I of which deals with the enforcements of awards to which the New York Convention applies. Sections 44, 46, 47, and 49, contained in Chapter I of Part II of the Arbitration Act, are extracted as follows: C “44. Definition.—In this Chapter, unless the context otherwise requires, “foreign award” means an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India, made on or after the 11th day of October, 1960— D (a) in pursuance of an agreement in writing for arbitration to which the Convention set forth in the First Schedule applies, and (b) in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made may, by notification in the Official Gazette, declare to be territories to which the said Convention applies.” “46. When foreign award binding.—Any foreign award which would be enforceable under this Chapter shall be treated as binding for all purposes on the persons as between whom it was made, and may accordingly be relied on by any of those persons by way of defence, set-off or otherwise in any legal proceedings in India and any references in this Chapter to enforcing a foreign award shall be construed as including references to relying on an award.” “47. Evidence.—(1) The party applying for the enforcement of G a foreign award shall, at the time of the application, produce before the Court— (a) the original award or a copy thereof, duly authenticated in the manner required by the law of the country in which it was made; H

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(b) the original agreement for arbitration or a duly certified copy thereof; and (c) such evidence as may be necessary to prove that the award is a foreign award. (2) If the award or agreement to be produced under sub-section (1) is in a foreign language, the party seeking to enforce the award shall produce a translation into English certified as correct by a diplomatic or consular agent of the country to which that party belongs or certified as correct in such other manner as may be sufficient according to the law in force in India. Explanation.—In this section and in the sections following in this C Chapter, “Court” means the High Court having original jurisdiction to decide the questions forming the subject matter of the arbitral award if the same had been the subject matter of a suit on its original civil jurisdiction and in other cases, in the High Court having jurisdiction to hear appeals from decrees of courts subordinate to D such High Court.” “49. Enforcement of foreign awards.—Where the Court is satisfied that the foreign award is enforceable under this Chapter, the award shall be deemed to be a decree of that Court.” Seat of the arbitral proceedings in the present case E

7Copy pinpoint7. Clause 6 of the settlement agreement extracted above would show that arbitration is to be resolved “in Zurich” in accordance with the Rules of Conciliation and Arbitration of the ICC. In similar circumstances, in Mankastu Impex (P) Ltd. v. Airvisual Ltd., (2020) 5 SCC 399, where disputes were to be resolved by arbitration F “administered in Hong Kong”, the Court concluded: “21. In the present case, the arbitration agreement entered into between the parties provides Hong Kong as the place of arbitration. The agreement between the parties choosing “Hong Kong” as the place of arbitration by itself will not lead to the conclusion that G the parties have chosen Hong Kong as the seat of arbitration. The words, “the place of arbitration” shall be “Hong Kong”, have to be read along with Clause 17.2. Clause 17.2 provides that “… any dispute, controversy, difference arising out of or relating to MoU shall be referred to and finally resolved by H

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A arbitration administered in Hong Kong….”. On a plain reading of the arbitration agreement, it is clear that the reference to Hong Kong as “place of arbitration” is not a simple reference as the “venue” for the arbitral proceedings; but a reference to Hong Kong is for final resolution by arbitration administered in Hong Kong. The agreement between the parties that the dispute “shall B be referred to and finally resolved by arbitration administered in Hong Kong” clearly suggests that the parties have agreed that the arbitration be seated at Hong Kong and that laws of Hong Kong shall govern the arbitration proceedings as well as have power of judicial review over the arbitration award.” C (emphasis in original) As per this clause, Zurich was therefore determined to be the juridical seat of arbitration between the parties.

8Copy pinpoint8. At the Case Management Conference held on 28.06.2018, the D learned arbitrator specifically decided: “3. The venue of the hearing shall be Mumbai, India. The seat of the arbitration of course remains Zurich, Switzerland. I am grateful to the Respondent for offering to assist with the organisation of the hearing in India. The consequence of holding the hearing in E Mumbai will of course be dealt with in the Award on costs, depending on the outcome. The Tribunal is of the view that it is cost efficient to hold the hearing in India where the parties are based, the Respondent’s five witnesses are based, where Respondent’s legal team are based and Claimant’s co-counsel is based. This means that the Claimant’s lead counsel, the Claimant’s F sole witness and the sole arbitrator must travel to India. …” This arrangement has been accepted by both parties. Even in the final award dated 18.04.2019, the learned arbitrator held: “82. For the reasons set out above, the Tribunal therefore has held in Procedural Order No.3 and hereby finds that the arbitration G clause in the Settlement Agreement is valid and proceeds to apply the Swiss Act because the seat of theArbitration is Zurich, Switzerland.”

9Copy pinpoint9. The closest connection test strongly relied upon by Mr. Himani would only apply if it is unclear that a seat has been designated either by H

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the parties or by the tribunal. In this case, the seat has clearly been designated both by the parties and by the tribunal, and has been accepted by both the parties. The judgment in Enercon (supra), relied upon by Mr. Himani, applied the aforesaid test only because the arbitration clause therein provided that London was the “venue” and not the seat. It was, therefore, pointed out by this Court that given the various factors connecting the dispute to India and the absence of any factors connecting it to England, on the facts of that case, there was no necessity to regard London as the seat when it was, in fact, only the venue (see paragraphs 98-103, 114-116, and 128).

10Copy pinpoint10. For this reason, it is not possible to accept Mr. Himani’s contention that the seat of arbitration ought to be held to be Mumbai in the facts of the present case. Part I and Part II of the Arbitration Act are mutually exclusive

11Copy pinpoint11. The Arbitration Act is in four parts. Part I deals with arbitrations where the seat is in India and has no application to a foreign-seated arbitration. It is, therefore, a complete code in dealing with appointment of arbitrators, commencement of arbitration, making of an award and challenges to the aforesaid award as well as execution of such awards. On the other hand, Part II is not concerned with the arbitral proceedings at all. It is concerned only with the enforcement of a foreign award, as defined, in India. Section 45 alone deals with referring the parties to arbitration in the circumstances mentioned therein. Barring this exception, in any case, Part II does not apply to arbitral proceedings once commenced in a country outside India.

12Copy pinpoint12. Even before the Arbitration Act of 1996, India, being one of the earliest signatories to the New York Convention, legislated in accordance therewith and enacted the Foreign Awards Act in 1961. Under this Act, section 2, which is pari materia to section 44 of the Arbitration Act, laid down: “2. Definition.—In this Act, unless the context otherwise requires, G “foreign award” means an award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India, made on or after the 11th day of October, 1960— H

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A (a) in pursuance of an agreement in writing for arbitration to which the Convention set forth in the Schedule applies; and (b) in one of such territories as the Central Government being satisfied that reciprocal provisions have been made, may, by notification in the official Gazette, declare to be territories B to which the said Convention applies.” Under section 6 of the Foreign Awards Act, where the court is satisfied that the foreign award is enforceable, the court shall order the award to be filed and shall proceed to pronounce judgment according to the award. This provision has since been done away with by the C Arbitration Act, 1996 as section 49 of the Arbitration Act expressly provides that the award shall be deemed to be a decree of the court. Thereafter, section 7 of the Foreign Awards Act enumerates grounds on which such foreign award may be refused to be enforced. Obviously, under the earlier regime, there was no overlap between the Arbitration Act, 1940, which dealt only with domestic awards, and the Foreign D Awards Act. This situation continues in the current Arbitration Act, Part I and Part II of which have been held to be mutually exclusive. Thus, in BALCO (supra), this Court held: “37. In 1953 the International Chamber of Commerce promoted a new treaty to govern international commercial arbitration. The E proposals of ICC were taken up by the United Nations Economic and Social Council. This in turn led to the adoption of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards at New York in 1958 (popularly known as “the New York Convention”). The New York Convention is an F improvement on the Geneva Convention of 1927. It provides for a much more simple and effective method of recognition and enforcement of foreign arbitral awards. It gives much wider effect to the validity of arbitration agreement. This Convention came into force on 7-6-1959. India became a State signatory to this Convention on 13-7-1960. The Foreign Awards (Recognition and G Enforcement) Act, 1961 was enacted to give effect to the New York Convention.” *** “44. In the 1961 Act, there is no provision for challenging the foreign award on merits similar or identical to the provisions H

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contained in Sections 16 and 30 of the 1940 Act, which gave power to remit the award to the arbitrators or umpire for reconsideration under Section 30 which provided the grounds for setting aside an award. In other words, the 1961 Act dealt only with the enforcement of foreign awards. The Indian Law has remained as such from 1961 onwards. There was no intermingling of matters covered under the 1940 Act, with the matters covered by the 1961 Act.” *** “88. … Section 2(7) of the Arbitration Act, 1996 reads thus: “2. (7) An arbitral award made under this Part shall be considered as a domestic award.” In our opinion, the aforesaid provision does not, in any manner, relax the territorial principle adopted by the Arbitration Act, 1996. It certainly does not introduce the concept of a delocalised arbitration into the Arbitration Act, 1996. It must be remembered that Part I of the Arbitration Act, 1996 applies not only to purely domestic arbitrations i.e. where none of the parties are in any way “foreign” but also to “international commercial arbitrations” covered within Section 2(1)(f) held in India. The term “domestic award” can be used in two senses: one to distinguish it from E “international award”, and the other to distinguish it from a “foreign award”. It must also be remembered that “foreign award” may well be a domestic award in the country in which it is rendered. As the whole of the Arbitration Act, 1996 is designed to give different treatments to the awards made in India and those made outside India, the distinction is necessarily to be made between F the terms “domestic awards” and “foreign awards”. The scheme of the Arbitration Act, 1996 provides that Part I shall apply to both “international arbitrations” which take place in India as well as “domestic arbitrations” which would normally take place in India. This is clear from a number of provisions contained in the G Arbitration Act, 1996 viz. the Preamble of the said Act, proviso and the explanation to Section 1(2), Sections 2(1)(f), 11(9), 11(12), 28(1)(a) and 28(1)(b). All the aforesaid provisions, which incorporate the term “international”, deal with pre-award situation. The term “international award” does not occur in Part I at all. Therefore, it would appear that the term “domestic award” means H

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A an award made in India whether in a purely domestic context i.e. domestically rendered award in a domestic arbitration or in the international context i.e. domestically rendered award in an international arbitration. Both the types of awards are liable to be challenged under Section 34 and are enforceable under Section 36 of the Arbitration Act, 1996. Therefore, it seems clear that the B object of Section 2(7) is to distinguish the domestic award covered under Part I of the Arbitration Act, 1996 from the “foreign award” covered under Part II of the aforesaid Act; and not to distinguish the “domestic award” from an “international award” rendered in India. In other words, the provision highlights, if anything, a C clear distinction between Part I and Part II as being applicable in completely different fields and with no overlapping provisions.

89. That Part I and Part II are exclusive of each other is evident also from the definitions section in Part I and Part II. The definitions contained in Sections 2(1)(a) to (h) are limited to Part I. The D opening line which provides “In this Part, unless the context otherwise requires….”, makes this perfectly clear. Similarly, Section 44 gives the definition of a foreign award for the purposes of Part II (Enforcement of Certain Foreign Awards); Chapter I (New York Convention Awards). Further, Section 53 gives the interpretation of a foreign award for the purposes of Part II E (Enforcement of Certain Foreign Awards); Chapter II (Geneva Convention Awards). From the aforesaid, the intention of Parliament is clear that there shall be no overlapping between Part I and Part II of the Arbitration Act, 1996. The two parts are mutually exclusive of each other. To accept the submissions made F by the learned counsel for the appellants would be to convert the “foreign award” which falls within Section 44, into a domestic award by virtue of the provisions contained under Section 2(7) even if the arbitration takes place outside India or is a foreign seated arbitration, if the law governing the arbitration agreement is by choice of the parties stated to be the Arbitration Act, 1996. G This, in our opinion, was not the intention of Parliament. The territoriality principle of the Arbitration Act, 1996, precludes Part I from being applicable to a foreign seated arbitration, even if the agreement purports to provide that the arbitration proceedings will be governed by the Arbitration Act, 1996.” H ***

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“120. We are unable to agree with the submission of the learned A Senior Counsel that there is any overlapping of the provisions in Part I and Part II; nor are the provisions in Part II supplementary to Part I. Rather there is complete segregation between the two parts.

121. Generally speaking, regulation of arbitration consists of four B steps: (a) the commencement of arbitration; (b) the conduct of arbitration; (c) the challenge to the award; and C (d) the recognition or enforcement of the award. In our opinion, the aforesaid delineation is self-evident in Part I and Part II of the Arbitration Act, 1996. Part I of the Arbitration Act, 1996 regulates arbitrations at all the four stages. Part II, however, regulates arbitration only in respect of commencement and recognition or enforcement of the award.” *** “124. Having accepted the principle of territoriality, it is evident that the intention of Parliament was to segregate Part I and Part II. Therefore, any of the provisions contained in Part I cannot be made applicable to foreign awards, as defined under Sections 44 and 53 i.e. the New York Convention and the Geneva awards. This would be a distortion of the scheme of the Act. It is, therefore, not possible to accept the submission of Mr Subramanium that provisions contained in Part II are supplementary to the provision contained in Part I. Parliament has clearly segregated the two parts.”

13Copy pinpoint13. This being the case, it is a little difficult to accede to any argument that would breach the wall between Parts I and II. Mr. Himani’s argument that the proviso to section 2(2) of the Arbitration Act is a G bridge which connects the two parts must, thus, be rejected. As a matter of fact, section 2(2) specifically states that Part I applies only where the place of arbitration is in India. It is settled law that a proviso cannot travel beyond the main enacting provision – see Union of India v. Dileep Kumar Singh, (2015) 4 SCC 421 (at paragraph 20), DMRC v. Tarun H

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A Pal Singh, (2018) 14 SCC 161 (at paragraph 21), Kandla Export Corpn. v. OCI Corpn., (2018) 14 SCC 715 (at paragraph 13), and Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax, Calicut, 2021 SCC OnLine SC 16 (at paragraph 41).

14Copy pinpoint14. As a matter of fact, the reason for the insertion of the proviso B to section 2(2) by the Arbitration and Conciliation (Amendment) Act, 2015 was because the judgment in Bhatia International v. Bulk Trading S.A., (2002) 4 SCC 105 [“Bhatia”] had muddied the waters by holding that section 9 would apply to arbitrations which take place outside India without any express provision to that effect. The judgment in Bhatia (supra) has been expressly overruled a five-Judge Bench in C BALCO (supra). Pursuant thereto, a proviso has now been inserted to section 2(2) which only makes it clear that where, in an arbitration which takes place outside India, assets of one of the parties are situated in India and interim orders are required qua such assets, including preservation thereof, the courts in India may pass such orders. It is important to note that the expression “international commercial arbitration” is specifically spoken of in the context of a place of arbitration being outside India, the consequence of which is an arbitral award to be made in such place, but which is enforced and recognised under the provisions of Part II of the Arbitration Act. The context of this expression is, therefore, different from the context of the definition of “international commercial arbitration” contained in Section 2(1)(f), which is in the context of such arbitration taking place in India, which only applies “unless the context otherwise requires”. The four sub-clauses contained in section 2(1)(f) would make it clear that the definition of the expression “international commercial arbitration” contained therein is party-centric in the sense that at least one of the parties to the arbitration agreement should, inter alia, be a person who is a national of or habitually resident in any country other than India. On the other hand, when “international commercial arbitration” is spoken of in the context of taking place outside India, it is place-centric as is provided by section 44 of the Arbitration Act. This expression, therefore, only means that it is an arbitration which takes place between two parties in a territory outside India, the New York Convention applying to such territory, thus making it an “international” commercial arbitration. Ingredients of a Foreign Award sought to be enforced under Part II H

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15Copy pinpoint15. Section 44 of the Arbitration Act is modelled on Articles I and A II of the New York Convention. The relevant provisions of the New York Convention read as under: “Article I

1. This Convention shall apply to the recognition and enforcement of arbitral awards made in the territory of a State other than the B State where the recognition and enforcement of such awards are sought, and arising out of differences between persons, whether physical or legal. It shall also apply to arbitral awards not considered as domestic awards in the State where their recognition and enforcement are sought.” C *** “Article II

1. Each Contracting State shall recognise an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of defined legal relationship, whether contractual or not, concerning a subject-matter capable of settlement by arbitration.

2. The term “agreement in writing” shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams.”

16Copy pinpoint16. By way of contrast, section 53 of the Arbitration Act, which deals with awards under the Geneva Convention on the Execution of Foreign Arbitral Awards, 1927 [“Geneva Convention”], states: F “53. Interpretation.—In this Chapter “foreign award” means an arbitral award on differences relating to matters considered as commercial under the law in force in India made after the 28th day of July, 1924,— (a) in pursuance of an agreement for arbitration to which the G Protocol set forth in the Second Schedule applies, and (b) between persons of whom one is subject to the jurisdiction of some one of such powers as the Central Government, being satisfied that reciprocal provisions have been made, may, by notification in the Official Gazette, declare to be H

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A parties to the Convention set forth in the Third Schedule, and of whom the other is subject to the jurisdiction of some other of the powers aforesaid, and (c) in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made, may, by like notification, declare to be territories to which the said Convention applies, and for the purposes of this Chapter an award shall not be deemed to be final if any proceedings for the purpose of contesting the validity of the award are pending in the country in which it was made.” It will be seen that the requirement of section 53(b) is conspicuous by its absence in section 44 when it comes to an award to which the New York Convention applies.

17Copy pinpoint17. As a matter of fact, before the New York Convention was made final, several countries wanted to insert the provisions of section 53(b), which reflected Article I of the Geneva Convention, in the New York Convention as well. Thus, China objected to the phrasing of Article I of the New York Convention, stating: “China E The first part of article I, paragraph 2, provides: ‘Any Contracting State may, upon signing, ratifying or acceding to this Convention, declare that it will apply the Convention only to the recognition and enforcement of arbitral awards made in the territory of another Contracting State.’ It follows from this provision that any person F receiving an arbitral award in a Contracting State may request recognition and enforcement, and this right is not limited to the nationals of a Contracting State. The Chinese Government considers this provision as too liberal, and is of the opinion that, on the basis of the principle of international reciprocity, such a right should be restricted in accordance with the spirit of article I of the G 1927 Convention on the Execution of Foreign Arbitral Awards, which provides: ‘An arbitral award … shall be recognised as binding and shall be enforced … provided that the said award has been made in a territory of one of the High Contracting Parties to which the present Convention applies, and between persons who H

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are subject to the jurisdiction of one of the High Contracting A Parties.’” Likewise, Mexico also objected, stating: “The Mexican Government further considers that it would be advisable to include in the draft Convention the stipulation contained in the Geneva Convention that the arbitral award must have been made in a dispute between persons who are subject to the jurisdiction of one of the Contracting States. The Mexican Government takes this view because Mexican law regards arbitral awards as acts which in themselves are private, since they are made pursuant to compromise concluded between private persons, and which become enforceable only when the logic of the award is, in addition supported by the authority of a judicial decision.” Hungary followed suit, also stating: “For this reason, and contrary to the statement contained in point 23 of the Committee’s report, the point should be reconsidered whether, in compliance with the provisions of the Geneva Convention of 1927, the validity of the Convention should be restricted to arbitral awards on differences between persons coming under the jurisdiction of one or the other of the Contracting States, or whether at least the Contracting States should be accorded the right under the Convention to apply the provisions of the same only to arbitral awards of such a nature. If the present meaning of the word ‘jurisdiction’ – as stated in the Committee’s report - is rather vague and ambiguous, there is no reason why it should not be defined more precisely.” F As did Norway: “As far as the definition of the scope of the convention is concerned, the Norwegian Government agrees with the Special Committee (see paragraph 23 of the Report) that the requirement of the Geneva Convention of 1927 (article I, first paragraph), to G the effect that the arbitral award must have been made “between persons who are subject to the jurisdiction of one of the High Contracting Parties”, is too vague and ambiguous. The scope of the present draft seems on the other hand to be unreasonably comprehensive. As now formulated, the convention would apply even if both the parties to the arbitral award are nationals of the H

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A State where enforcement is sought as well as in cases where none of them is a national of a Contracting State.”

18Copy pinpoint18. Professor Pieter Sanders, in an article “New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards” (Netherlands International Law Review, Volume 6, Issue 1, March 1959), B outlined what he referred to as the strides made by the New York Convention when compared with the Geneva Convention, thus: “The international business world, for whom these conventions are made, strongly hopes that Government will soon ratify the New York Convention or accede to it, as in their opinion the C Convention constitutes an important step forward compared with the Geneva Convention. Before briefly commenting upon the separate articles of the Convention, I may try to give a broad outline of the most important differences between the Geneva Convention 1927 and the New York Convention 1958.”

D *** “4. Article 1 has been the result of lengthy discussions in a special working group as well as in the plenary sessions of the New York arbitration conference. The first paragraph is the result of a compromise reached within the working group. The first sentence of this paragraph is based upon a territorial criterion: The Convention shall apply to the recognition and enforcement of arbitral awards made in the territory of a state other than the state where the recognition and enforcement of such awards are sought, and arising out of differences between persons, whether physical or legal. The second sentence introduces the national principle: It shall also apply to arbitral awards not considered as domestic awards in the state where their recognition and enforcement is sought. G Let me illustrate this by an example. Germany regards an arbitral award rendered in France under German procedural law as a German arbitral award and an arbitral award rendered in Germany under French procedural law as a non-domestic, French award. Germany applies the criterion of the applicable procedural law H and therefore will also apply the Convention when enforcement

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is sought in Germany of an award rendered in Germany under A French procedural law. The scope of the new Convention is wider than that of the Geneva Convention which applies to awards that have been “made in a territory of one of the High Contracting Parties to which the Convention applies and between persons who are subject to the B jurisdiction of one of the High Contracting Parties”. Here we only find the territorial principle and in addition to this the restriction that the award must be made between persons, subject to the jurisdiction of the High Contracting Parties.”

19Copy pinpoint19. Likewise, Gary B. Born, in his book “International Commercial C Arbitration” (Wolters Kluwer, 3rd Edn., 2021), has this to say: “The Geneva Protocol was expressly limited to agreements to arbitrate between parties that were nationals of different Contracting States. This was the sole criterion for “internationality”: other agreements to arbitrate, even if they D involved classic cross-border international trade or investment, were not subject to the Protocol. In contrast, as noted above, the text of Article II of the New York Convention does not expressly address the categories of arbitration agreements which are subject to the Convention. Instead, the E Convention’s text only addresses what arbitral awards are entitled to the treaty’s protections. As a consequence, the definition of those arbitration agreements that are within the scope of the New York Convention must be ascertained by implication, either by reference to the Convention’s treatment of awards or otherwise. In these circumstances, there are unfortunately several possible interpretations that may be adopted. The analysis of these permutations can be frustratingly complex, but, properly understood, ultimately produces a simple, sensible result.”

20Copy pinpoint20. Finally, the New York Convention, in Article I(3), referred to only two conditions that can be made by a State when it signs, ratifies, or accedes to the New York Convention, as follows: “3. When signing, ratifying or acceding to this Convention, or notifying extension under article X hereof, any State may on the basis of reciprocity declare that it will apply the Convention to the recognition and enforcement of awards made only in the territory H

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A of another Contracting State. It may also declare that it will apply the Convention only to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under the national law of the State making such declaration.” It is in pursuance of Article I of the New York Convention that section 44 of the Arbitration Act has been enacted.

21Copy pinpoint21. Under section 44 of the Arbitration Act, a foreign award is defined as meaning an arbitral award on differences between persons arising out of legal relationships considered as commercial under the law in force in India, in pursuance of an agreement in writing for arbitration to which the New York Convention applies, and in one of such territories as the Central Government, by notification, declares to be territories to which the said Convention applies. Thus, what is necessary for an award to be designated as a foreign award under section 44 are four ingredients: (i) the dispute must be considered to be a commercial dispute under the law in force in India, (ii) it must be made in pursuance of an agreement in writing for arbitration, (iii) it must be disputes that arise between “persons” (without regard to their nationality, residence, or domicile), and E (iv) the arbitration must be conducted in a country which is a signatory to the New York Convention. Ingredient (i) is undoubtedly satisfied on the facts of this case. Ingredient (ii) is satisfied given clause 6 of the settlement agreement. Ingredients (iii) and (iv) are also satisfied on the facts of this case as the F disputes are between two persons, i.e. two Indian companies, and the arbitration is conducted at the seat designated by the parties, i.e. Zurich, being in Switzerland, a signatory to the New York Convention.

22Copy pinpoint22. At this juncture, it is important to cite the UNCTAD Commentary on International Commercial Arbitration, which states: G “1.4.1 Foreign arbitration and international arbitration are not the same An arbitration that takes place in State A is a foreign arbitration in State B. It does not matter whether the arbitration is commercial H or non-commercial or whether the parties are from the same

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country, from different countries or that one or all are from State A A. Since even a domestic arbitration in State A is a foreign arbitration in State B, the courts of State B would be called upon to apply the New York Convention to enforcement of a clause calling for arbitration in State A and to the enforcement of any award that would result. B Aiding foreign arbitration In some legal systems the courts will not come to the aid of a “foreign” arbitration by way of aiding in the procurement of evidence, granting interim orders of protection or the like. However, many modern arbitration laws provide that the courts will aid C arbitrations taking place in a foreign State. 1.4.3 Definition of an international arbitration *** Model Law D In the Model Law an arbitration is international if any one of four different situations is present: *** 2) The place of arbitration, if determined in or pursuant to, the arbitration agreement, is situated outside the State in which the E parties have their places of business.”

23Copy pinpoint23. The ICCA’s Guide to the Interpretation of the 1958 New York Convention: A Handbook for Judges, compiled by the International Council for Commercial Arbitration with the assistance of the Permanent Court of Arbitration, in its comment on Article I(1) of the New York Convention, F and particularly, the expression “awards made in the territory of a State other than the State where the recognition and enforcement … are sought”, states as follows: “III.1.1. … Any award made in a State other than the State of the recognition or enforcement court falls within the scope of the G Convention, i.e., is a foreign award. Hence, the nationality, domicile or residence of the parties is without relevance to determine whether an award is foreign. … Where is an award made? The Convention does not answer this question. The vast majority of Contracting States considers that H

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A an award is made at the seat of the arbitration. The seat of the arbitration is chosen by the parties or alternatively, by the arbitral institution or the arbitral tribunal. It is a legal, not a physical, geographical concept. Hearings, deliberations and signature of the award and other parts of the arbitral process may take place elsewhere.” B

24Copy pinpoint24. However, Mr. Himani strongly relied upon the following judgments to buttress his submission that the expression “unless the context otherwise requires” used in section 44 would necessarily import the definition of “international commercial arbitration” contained in Part I when the context requires this to be done, namely, when two Indian C parties are resolving their disputes against each other in a territory outside India: (i) Vanguard Fire and General Insurance Co. Ltd. v. Fraser and Ross, (1960) 3 SCR 857

D “The main basis of this contention is the definition of the word “insurer” in Section 2(9) of the Act. It is pointed out that that definition begins with the words “insurer means” and is therefore exhaustive. It may be accepted that generally the word “insurer” has been defined for the purposes of the Act to mean a person or body corporate etc. which is actually carrying on the business of insurance i.e. the business of effecting contracts of insurance of whatever kind they might be. But Section 2 begins with the words “in this Act, unless there is anything repugnant in the subject or context” and then come the various definition clauses of which (9) is one. It is well settled that all statutory definitions or abbreviations must be read subject to the qualification variously expressed in the definition clauses which created them and it may be that even where the definition is exhaustive inasmuch as the word defined is said to mean a certain thing, it is possible for the word to have a somewhat different meaning in different sections of the Act depending upon the subject or the context. That is why all definitions in statutes generally begin with the qualifying words similar to the words used in the present case, namely, unless there is anything repugnant in the subject or context. Therefore in finding out the meaning of the word “insurer” in various sections of the Act, the meaning to be ordinarily given to it is that given in the definition clause. But this is not inflexible and there may be sections

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