errorrr

Send MailThis extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-81This response to the article entitled Bhatia InternationalRightly Overruled: The Consequences of Three Errors inBalco [ V. Niranjan and Shantanu Naravane, Bhatia InternationalRightly Overruled: The Consequences of Three Errors inBalco (2012) 9 SCC J-26.] , argues that the errors identified by the authors inBalco[Bharat Aluminium Co.v.Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810.] are not errors at all. Although we agree that the Court should not have overruledBhatia International[Bhatia Internationalv.Bulk Trading S.A., (2002) 4 SCC 105.] prospectively in the manner it did, it is not an error in the judgment but an error in theapplicationof the judgment.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-81The authors in their article (hereinafter referred to as the authors) accept that the decision inBalco[(2012) 9 SCC 552.] is ultimately correct, inasmuch as the Court overruledBhatia[(2002) 4 SCC 105.] as followed inVenture Global[Venture Global Engg.v.Satyam Computer Services Ltd., (2008) 4 SCC 190.] to establish the territoriality principle or seat theory, and held that Part 1 of the Arbitration and Conciliation Act, 1996 (the Act or the 1996 Act) would have no application to foreign-seated arbitrations. We agree.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-81However, we do not agree with the authors that the Court inBalco[(2012) 9 SCC 552.] reached certain erroneous conclusions.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-81A brief discussion on whatBhatia[(2002) 4 SCC 105.] held is pertinent. The effect of the ruling inBhatia[(2002) 4 SCC 105.] was that Part 1 would apply to all arbitrations, regardless of whether they are held within or outside India. The Court recognised only one exception: that Part 1 would not apply to arbitrations held outside India if the parties either expressly or impliedly excluded its application.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-81The context in which the Court so held inBhatia[(2002) 4 SCC 105.] is important: a foreign party to an arbitration seated outside India sought interim measures under Section 9 of the Act, which falls within Part 1, on the basis that Indian courts were empowered to grant such a measure in respect of assets located within India. TheBhatia[(2002) 4 SCC 105.] Court construed Section 2(2) of the Act to allow Section 9 to apply to the foreign-seated arbitration, despite the express wording in Section 2(2) that states that Part 1 would apply when the arbitration is in India. [ Section 2(2) of the Act reads: This Part shall apply where the place of arbitration is in India.]This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-82The detailed reasoning inBhatia[(2002) 4 SCC 105.] was analysed in an article written by one of us. [See, S.K. Dholakia, Bhatia Internationalv.Bulk Trading S.A. A Critical Review, (2003) 5 SCC J-22.] For the purpose of the present article, it suffices to state that theBhatia[(2002) 4 SCC 105.] Court had based its decision on the finding, amongst others, that the omission of the word only in Section 2(2) allowed for the extra-territorial applicability of Part 1 of the Act to foreign-seated arbitrations.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-82The Court inBalco[(2012) 9 SCC 552.] overruled the decisions inBhatia[(2002) 4 SCC 105.] , andVenture Global[(2008) 4 SCC 190.] that followedBhatia[(2002) 4 SCC 105.] , by affirming that the 1996 Act is based on the overarching territoriality principle or the seat theory by which the seat of the arbitration establishes jurisdiction.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-82The judgment inBhatia[(2002) 4 SCC 105.] was widely regarded as problematic and discordant with the internationally recognised principle of territoriality.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-82At the heart of the decision inBalco[(2012) 9 SCC 552.] lies the Court's ruling that the omission of the word only in Section 2(2) did not undermine the clear legislative intent to adopt the territoriality principle. [ The Court's findings inBalco, (2012) 9 SCC 552 on the significance of the omission of the word only in relation to the seat-based test for jurisdiction are at paras 62 to 76. In particular, the Court observed at para 71 that the discussions of theUncitralCommittee at the 330th Meeting held on 19-6-1985 demonstrate that the word only in Article 1(2) of theUncitralModel Law was introduced in view of the exceptions relating to Articles 8, 9, 35 and 36 which could have extra-territorial effect, if so legislated by the State, while the other provisions would be applicable on a strict territorial basis. The findings of the Court with respect to a complete segregation of Part 1 and Part 2 are at paras 125 to 129,Balco, (2012) 9 SCC 552.] The Court specifically rejected the contention [See, paras 159 and 160,Balco, (2012) 9 SCC 552.] that Section 9 should be purposively construed as a sui generis or stand alone provision as it concerned interim protection of assets located within India without which parties would be left remediless. It held that upon a schematic interpretation of the 1996 Act, construing Section 9 in this manner would do violence to the policy of territoriality declared in Section 2(2) of the Act. [See, para 163. Also see paras 164 to 170,Balco, (2012) 9 SCC 552.] It further held that adopting such an approach to remove perceived hardship to the parties would not be permissible. [See, para 171,Balco, (2012) 9 SCC 552. The Model Law allowed certain provisions to be excepted from the strict territoriality principle so as to have extra-territorial effect, if the State so legislated. For instance, the law in England, while endorsing territoriality [under Section 2(1) of the English Arbitration Act, 1996] makes an exception under Section 2(2) to allow domestic courts to order interim relief in respect of foreign-seated arbitrations. The Court held that if the Indian Parliament while legislating on the basis of the Model Law, did not in its wisdom include these exceptions, it was not for the court then to judicially create a remedy upon the perceived hardship caused to parties.]

Disclaimer: The text is computer generated. The user must verify the authenticity of the extracted portion with the original .

SCC OnLine Web Edition: http://www.scconline.com

Send MailThis extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-83Balco[(2012) 9 SCC 552.] held:(a) Part 1 applies only when the arbitration is held in India; and, the court in Section 2(1)(e) would be the one in whose jurisdiction the arbitration is held [See, paras 95 to 100 ofBalco, (2012) 9 SCC 552.] ;(b) The Indian courts cannot apply Part 1 to arbitrations held outside India [See, paras 176 to 178 and 194-96 ofBalco, (2012) 9 SCC 552.] ;(c) The ruling would apply only to arbitration agreements entered into from the date of the judgment, that is, 6-9-2012. [See, para 197 ofBalco, (2012) 9 SCC 552.]This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-83According to the authors,the three errorsin the Court's reasoning inBalco[(2012) 9 SCC 552.] are:(1) The Court's interpretation of Section 2(1)(e) changes the law on jurisdiction of the relevant court in purely domestic arbitrations [ The term purely domestic arbitration is to distinguish arbitrations that involve only Indian parties and Indian law. A domestic arbitration could mean even an international arbitration held in India. In both cases, the arbitral award would lead to a domestic award, as stated in Section 2(7) of the Act. The distinction is important because in respect of an international arbitration held in India, the argument of the authors will not arise, as discussed further.] ;(2) The Court, while drawing on English jurisprudence, misinterpreted the decisions inSiskina[Siskina (Owners of Cargo Lately Laden on Board)v.Distos Compania Naviera S.A., 1979 AC 210 : (1977) 3 WLR 818 : (1977) 3 All ER 803 (HL).] andChannel Tunnel[Channel Tunnel Group Ltd.v.Balfour Beatty Construction Ltd., 1993 AC 334 : (1993) 2 WLR 262 : (1993) 1 All ER 664 (HL).] and thereby, introduced a common rule as to the nature of interim relief that may not exist. [ V. Niranjan and Shantanu Naravane, Bhatia InternationalRightly Overruled: The Consequences of Three Errors inBalco (2012) 9 SCC J-26.] The authors argue that the Court omitted to extend the scope of Section 151 of the Code of Civil Procedure, 1908 to foreign-seated arbitrations due to a mistaken analysis of the common law position on the grant of interim relief; and,(3) The Court incorrectly invoked the doctrine of prospective overruling to confine its ruling to arbitration agreements entered into from the date of the decision inBalco[(2012) 9 SCC 552.] i.e. 6-9-2012.



Send MailThis extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-84In our analysis, we will deal with the arguments made by the authors in Points (1) and (2) to establish that the Court's reasoning inBalco[(2012) 9 SCC 552.] on both these aspects is not erroneous as the authors suggest, but logically sound and consonant with prevailing law and international arbitration practice.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-84We agree with the authors' conclusion in Point (3) that the Court inBalco[(2012) 9 SCC 552.] should not have restricted the effect of its ruling only to arbitration agreements entered into after the date of the judgment. We differ from the authors in that we think this is an erroneousapplicationof the prospective overruling whereas this was clearly a fit case to apply prospective effect to pending cases as well.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-84Point (1): Interpretation of Section 2(1)(e)Section 2(1)(e) defines court with reference to subject-matter. [ Section 2(1)(e) reads:2.Definitions.(1) In this Part, unless the context otherwise requires***(e) Court means 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;] But, Section 2 itself prefaces the definition of court with the caveat unless the context otherwise requires. If the context so requires, the court must construe the provision accordingly. [Also generally, the importance of context in interpretation has been previously affirmed by the Supreme Court inIndira Nehru Gandhiv.Raj Narain, 1975 Supp SCC 1, 97:The connotation of the above words [unless the context otherwise requires] is that normally it is the definition given in the section which should be applied and given effect to. This normal rule may, however, be departed from, if there be something in the context to show that the definition should not be applied.]This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-84(i) The context: seat theory or territorialityInBalco[(2012) 9 SCC 552.] , the interpretation of Section 2(1)(e) arose in the context of territoriality. [See, para 89,Balco, (2012) 9 SCC 552.] The appellant had argued for extra-territorial applicability of Part 1 submitting that Section 2(1)(e) (among other provisions) indicated that the court seized of the subject-matter of the arbitration should be accorded precedence over the court at the seat of arbitration. [See, para 95,Balco, (2012) 9 SCC 552, 605, wherein party autonomy is discussed:95.The learned counsel for the appellants have submitted that Section 2(1)(e), Section 20 and Section 28 read with Section 45 and Section 48(1)(e) make it clear that Part 1 is not limited only to arbitrations which take place in India. These provisions indicate that the Arbitration Act, 1996 issubject-matter centricand not exclusivelyseat-centric. Therefore, seat is not the centre of gravity so far as the Arbitration Act, 1996 is concerned.(emphasis in original)]This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-84The Court rejected this argument. It categorically affirmed territoriality by holding that the expression in Section 2(2), this Part shall apply where the place of arbitration is in Indiaexcludedthe application of Part 1 to arbitrations seated outside India. [See, para 95,Balco, (2012) 9 SCC 552. In view of the expression used in Section 2(2), the maximexpressum facit cessare tacitum, would not permit by interpretation to hold that Part 1 would also apply to arbitrations held outside the territory of India.]This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-85On this basis, Section 2(1)(e) which is contained in Part 1 would necessarily apply only to arbitrations held in India.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-85The Court further held that the purpose of Section 2(1)(e) is to identify the courts having supervisory control over the arbitration proceedings thus: it refers to a court which would essentially be a court of the seat of the arbitration process. [See, para 96,Balco, (2012) 9 SCC 552.]This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-85As we shall demonstrate, the Court's interpretation of Section 2(1)(e) is consistent with its internal logic inBalco[(2012) 9 SCC 552.] premised on territoriality.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-85(ii) Section 2(1)(e) to apply to all arbitrations held in IndiaPart 1 of the 1996 Act, to borrow from Walt Whitman, contains multitudes. [ Do I contradict myself?Very well then I contradict myself,(I am large, I contain multitudes.) Walt Whitman,Song of Myself(1855).] The arbitrations it governs could take on an international or purely domestic one, ranging from foreign parties having nothing to do with India except for selecting India as a seat of arbitration, to two Indian parties having Indian arbitrators based on Indian law. [ The 1996 Act was enacted as a consolidating legislation that comprehensively lays down the law for arbitration, enforcement of foreign arbitral awards, and conciliation. The Statement of Objects and Reasons of the 1996 Act states at Para 3:Though the saidUncitralModel Law and Rules are intended to deal with international commercial arbitration and conciliation, they could, with appropriate modifications, serve as a model for legislation on domestic arbitration and conciliation.] For Part 1 to apply, theonlyrelevant consideration is that the arbitration is located in India.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-85It is, therefore, incorrect to confine analysis of the interpretation of Section 2(1)(e) to purely domestic arbitrations, as the authors have done. This is clear from the Court's observations which run as follows [See, paras 86, 87, 88 and 89,Balco, (2012) 9 SCC 552.] :88. In our opinion [Section 2(7)] 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 1 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 scheme of the Arbitration Act, 1996 provides that Part 1 shall apply to both international arbitrations which take place in India as well as domestic arbitrations which would normally take place in India. [See, para 88,Balco, (2012) 9 SCC 552, 603.]



Send MailThis extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-86(iii) Supervisory court at the seat of arbitration vested with exclusive jurisdictionThe effect of interpretation of Section 2(1)(e) inBalco[(2012) 9 SCC 552.] is twofold: first, it specifically confers jurisdiction on the court where the arbitration is held, even if that court did not otherwise have jurisdiction to entertain a suit on the same subject-matter. Second, the court so vested also assumesexclusivejurisdiction.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-86Para 96 of the judgment furnishes an illustration that is apposite: if the seat of arbitration is designated as Delhi, would jurisdiction vest in the Delhi Court such that the Bombay and Calcutta Courts aredeprivedof their jurisdiction?This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-86We submit that the answer is in the affirmative.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-86The authors, however, have read the interpretation of Section 2(1)(e) inBalco[(2012) 9 SCC 552.] to mean that more than one court might potentially exercise jurisdiction.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-86But, the Court further explains clearly that it is the court where the arbitration isheldthat would be required to exercise supervisory control over the arbitral process. [See, para 96,Balco, (2012) 9 SCC 552, 606:96. In our opinion, the provision in Section 2(1)(e) has to be construed keeping in view the provisions in Section 20 which give recognition to party autonomy. In our view, the legislature has intentionally given jurisdiction to two courts i.e. the court which would have jurisdiction where the cause of action is located and the courts where the arbitration takes place. This was necessary as on many occasions the agreement may provide for a seat of arbitration at a place which would be neutral to both the parties.Therefore, the courts where the arbitration takes place would be required to exercise supervisory control over the arbitral process.(emphasis supplied)]This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-86At first flush, the authors' understanding may appear to be justified because the Court also states: both courts would have jurisdiction.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-86(iv) Logical interpretation of Section 2(1)(e) based on seat theoryAs we saw, the Court's interpretation of the 1996 Act is founded on the principle of territoriality according to which the seat of arbitration determines jurisdiction. The logical corollary is that the court at the seat of arbitration would assumeexclusive jurisdictionto supervise the arbitration. Such a construction, as the Court inBalco[(2012) 9 SCC 552.] explained, would give effect to the principle of party autonomy under Section 20 of the 1996 Act. [ Section 20 reads:20.Place of arbitration.(1) The parties are free to agree on the place of arbitration.(2) Failing any agreement referred to in sub-section (1), the place of arbitration shall be determined by the Arbitral Tribunal having regard to the circumstances of the case, including the convenience of the parties.(3) Notwithstanding sub-section (1) or sub-section (2), the Arbitral Tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of documents, goods or other property.]



Send MailThis extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-87Party autonomy does not stop short at merely enabling the choice of a convenient seat. The overarching seat theory specifically empowers the courts at the chosen seat to exercise supervisory control of the arbitrations. Such supervisory control, by its very nature, would not allow concurrent jurisdiction by different courts over the same arbitration. It is only because exclusive jurisdiction vests in and remains with the supervisory court at the chosen seat, that parties can freely conduct their arbitration hearings in multiple places as they find convenient.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-87As the Court observed, parties are enabled under Section 20(3) to hold hearings in places other than the designated seat of their arbitration. [ Specifically, para 96.Also see, further paras 97, 98, 99 and 100 ofBalco, (2012) 9 SCC 552.] The Court reasoned that:100. in an international commercial arbitration, having a seat in India, hearings may be necessitated outside India. In such circumstances, the hearing of the arbitration will be conducted at the venue fixed by the parties, but it would not have the effect of changing the seat of arbitration which would remain in India. [See, para 100,Balco, (2012) 9 SCC 552, 607. The Court referred to Redfern & Hunter,The Law and Practice of International Commercial Arbitration(1986) at p. 69100. it is by no means unusual for an Arbitral Tribunal to hold meetingsor even hearingsin a place other than the designated place of arbitration, either for its own convenience or for the convenience of the parties or their witnesses. In such circumstances, each move of the Arbitral Tribunal does not of itself mean that the seat of arbitration changes. The seat of arbitration remains the place initially agreed by or on behalf of the parties.]Such an interpretation also gives full effect to Section 42 [ Section 42 of the Act reads:42.Jurisdiction.Notwithstanding anything contained elsewhere in this Part or in any other law for the time being in force, where with respect to an arbitration agreement any application under this Part has been made in a court, that court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that court and in no other court.] of the Act, which confirms that the supervising court retains exclusive jurisdiction.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-87The argument that the authors proffer is that the concept ofsupervisory controlby the court at the seat of arbitration is alien to purely domestic arbitrations. To support this, the authors point to various judgments on fixing of jurisdiction of the relevant court. [Food Corpn. of Indiav.Evdomen Corpn., (1999) 2 SCC 446;Jindal Vijayanagar Steel (JSW Steel Ltd.)v.Jindal Praxair Oxygen Co. Ltd., (2006) 11 SCC 521;GE Countrywide Consumer Financial Services Ltd.v.Surjit Singh Bhatia, (2006) 129 DLT 393;Jyothi Turbo Power Services (P) Ltd.v.Shenzhen Shandong Nuclear Power Construction Co. Ltd., AIR 2011 AP 111. InGE Countrywide, (2006) 129 DLT 393 for instance, the Court at Delhi had declined jurisdiction, although parties had agreed that Delhi be the seat, on the basis that Section 2(1)(e) is not concerned with the seat but with the court which would have had jurisdiction had a suit been instituted.] However, it has to be noted that these judgments were delivered at a time when the seat theory was not fully developed or accepted. The position inBalco[(2012) 9 SCC 552.] as held by the five-Judge Bench of the Supreme Court now settles the law.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-88If the authors' argument that Section 2(1)(e) pegs jurisdiction to cause of action, not consent is accepted, the logic of the seat theory so emphatically endorsed inBalco[(2012) 9 SCC 552.] (and indeed by the authors) would break down and be rendered nugatory. This becomes evident if one examines a case wherein both the parties are foreigners (a common case in the UK and hopefully, in due course in India), with the agreed venue to be say, Chennai. It is the Chennai court that would have the jurisdiction over the arbitral process, although no part of the cause of action of the dispute being referred to arbitration arose in Chennai, nor would the defendant be a resident of Chennai. As it often happens in international arbitrations, these were probably the reasons why a neutral venue was chosen in the first place.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-88However, by the authors' reasoning, notwithstanding that the arbitration is seated in India to which Part 1 would wholly apply, there would be no Indian court to refer the matter to because the subject-matter of the dispute under arbitration would not fall within the jurisdiction of any Indian court as construed on ordinary legal principles concerning suits.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-88Contrary to the authors' argument, the seat theory as adopted inBalco[(2012) 9 SCC 552.] ensures that there are no natural fora of jurisdiction. In international commercial arbitration, it is perfectly acceptable and common for parties to choose a neutral venue whose court would then control their arbitral process, even though that court may be unrelated to the cause of action, the parties, or their choice of law. More so, the international arbitration law and practice has increasingly evolved to support and encourage parties' choice of neutral venues for conducting arbitrations.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-88There is no basis, in principle as made out by the authors, for why the same standards set by party autonomy and territoriality as adopted by the Court in respect of international arbitrations, should not equally apply in the domestic context.



Send MailThis extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-89(v) Seat theory should apply equally to arbitrations held in IndiaApart from the fact that the decision inBalco[(2012) 9 SCC 552.] now falls in line with internationally recognised arbitration jurisprudence and practice, there are good, practical reasons to support the Court's reasoning: It is not inconceivable that parties may choose a seat such as Delhi (as inGE Countrywide[(2006) 129 DLT 393.] ), precisely to attract the supervisory control of the courts at Delhi over other places. The 1996 Act allows the High Courts to make their own rules. [ Section 82, the 1996 Act.] Even otherwise, as lawyers will attest, court cultures vary significantly between different High Courts in terms of speedy disposal of certain types of cases, propensity to grant certain interlocutory measures, and familiarity and expertise of the Bench and counsel in arbitration or commercial law, to state only a few. The courts at the seat of arbitration are in the best position to control the arbitration. In practice, this aspect is often played out for instance, in the appointment of arbitrators/Arbitral Tribunal under Section 11 of the Act. Appointment can and often does turn on the court's familiarity with the subject-matter of the dispute and the particular arbitrator(s). If the position inGE Countrywide[(2006) 129 DLT 393.] were correct as the authors urge, the Chennai court would appoint the Arbitral Tribunal for proceedings that would be held in New Delhi, which would likely entail practical difficulties and also defeat party autonomy. Supervisory control exercised by Indian courts in respect of arbitration proceedings within their jurisdiction, far from being an alien concept, would foster and forge a culture of arbitration in India. Parties would be able to freely hold hearings in multiple places without being concerned about invoking the jurisdiction of courts other than the supervisory court at the seat of arbitration.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-89On a final note, the prior conflicting jurisprudence on fixing of jurisdiction serves as a reminder for the need to clearly circumscribe the court's supervisory role.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-89Lord Hacking in an essay noted that the earlier Arbitration Act of 1975 by which the New York Convention was adopted into English law was amended by the Act of 1979 and [t]he principal reason for doing so was just to make London a more attractive seat for arbitration. [See, Lord Hacking, The Story of the Arbitration Act, 1979 (2010) 76 Arbitration 125 (Sweet & Maxwell).The English Parliament found that the 1975 Act had the case stated procedure and also procedures for setting aside the award for errors of fact or law on the face of the award. The debate for the 1979 Act was held on 15-5-1978. Lord Hacking noted that Lord Cullen of Ashborn of the Conservative Party led the debate for the Opposition in May 1978 when Labour Party was in power. This is how Lord Hacking put the discussion:Thankfully, however, the Conservative peers remained loyal to Lord Cullen. I so state because Lord Cullen proved a good choice. He was a conscientious and well-researched speaker who did his homework. He therefore, set out to make the commercial case for arbitration law reform. He calculated that 5000 large arbitrations were being annually deterred from coming to London at the loss of earning power to England of 100,000 pounds for each arbitration. From this, the figure of 500 million pounds emerged as the large annual loss as Lord Cullen (as they were then called) power-invisible exports.]This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-89As a comparison to illustrate the importance of applying the territoriality standard consistently, the 1979 English Act was specifically enacted to ensure that the supervisory jurisdiction of the English courts over arbitrations remained limited.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-90Today, as we are aware, London (along with Singapore, Paris and New York) is an established arbitration hub only because the English courts have evolved to supervise and support arbitrations held there.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-90India could well follow England's lead in this respect. The Indian Supreme Court's seminal decision inBalco[(2012) 9 SCC 552.] (aside from its restricted prospective applicability as discussed below) certainly paves the way forward, and should be properly recognised as such.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-90Point (2): Analysis of the law in respect of interim relief for foreign-seated arbitrationsThe Court held inBalco[(2012) 9 SCC 552.] that Indian civil courts have no jurisdiction and therefore, no power to grant interim relief in respect of foreign-seated arbitrations.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-90The Court reasoned that the right to obtain interim relief is ancillary to and contingent upon a pre-existing cause of action; and, no such cause of action is there where the substantive proceedings would be finally determined outside India. Consequently, an inter partes suit instituted seeking interim relief for arbitration held outside India would be dismissed at the threshold as not maintainable under the present law. [See, paras 177, 178 and 179 ofBalco, (2012) 9 SCC 552.In particular, the Court held at 642, para 175:175.In our opinion, pendency of arbitration proceedings outside India would not provide acause of actionfor a suit where the main prayer is for injunction. If such a suit [were] filed, it would in all probabilities be stayed in view of Sections 8 and 45 of the Arbitration Act, 1996. such a suit would not be maintainable, because an interlocutory injunction can only be granted during the pendency of a civil suit claiming a relief which is likely to result in a final decision upon thesubject in dispute. The suit would be maintainable only on the existence of acause of action, which would entitle the plaintiff for the substantive relief claimed in the suit. The cause of action would clearly be contingent/speculative. There would be no existing cause of action. In any event no interim relief could be granted unless it is in aid of and ancillary to the main relief that may be available to a party on final determination of rights in a suit.(emphasis in original)]



Send MailThis extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-90The authors think that the Court made its second error when it so held. They argue, first, that the Court by proceeding on a mistaken analysis of the common law position in respect of grant of interim relief, missed the opportunity to grant such relief in aid of foreign-seated arbitrations. Secondly, that the Court misplaced its reliance on the English decisions inSiskina[1979 AC 210 (HL).] andChannel Tunnel[1993 AC 334 (HL).] by incorrectly attributing the development of the law in this respect to specific statutory intervention.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-91This is not correct.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-91(i) Section 151 CPC is exceptional in nature and unavailable where express provisions applyThe authors' construction of the scope of Section 151 CPC is misconceived.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-91Section 151 CPC reads as follows:151.Saving of inherent powers of court.Nothing in this Code shall be deemed to limit or otherwise affect the inherent power of the court to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the court.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-91The law is settled that Section 151 would not be available where a specific statute governs the case. [ The authors admit this in Bhatia InternationalRightly Overruled: The Consequences of Three Errors inBalco (2012) 9 SCC J-26, 35.] Orders 38, 39 and 40 CPC and similar other provisions would apply ordinarily (and to that extent, exhaustively) to the grant of interim relief. Section 151 would be available to the courts as an inherent exceptional power to be invoked only in extraordinary circumstances.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-91Balco[(2012) 9 SCC 552.] correctly reflects this position. [ See, para 192 ofBalco, (2012) 9 SCC 552.]This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-91The two precedents inManohar Lal Chopra[Manohar Lal Choprav.Seth Hiralal, AIR 1962 SC 527.] andVareed Jacob[Vareed Jacobv.Sosamma Geevarghese, (2004) 6 SCC 378.] that the authors seek to rely upon, evince the position stated above.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-91InManohar Lal Chopra[AIR 1962 SC 527.] , the Supreme Court observed that thus:The inherent powers are to be exercised by the Court in very exceptional circumstances, for which the Code lays down no procedure. [See, para 27,Manohar Lal Chopra case, AIR 1962 SC 527.]This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-91Similarly, the decision by a three-Judge Bench of the Supreme Court inVareed Jacob[(2004) 6 SCC 378.] reiterate the law as follows:11. Therefore, when a matter comes before the court, the court has to examine the facts of each case and ascertain whether the ingredients of Section 94 read with the rules in an order are satisfied and accordingly grant an appropriate relief. It is only in cases where circumstances do not fall under any of the rules prescribed that the court can invoke its inherent power under Section 151 CPC. [Vareed Jacob, (2004) 6 SCC 378, 389, para 11.]



Send MailThis extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-92The authors admit that Section 151 may not be relied upon to circumvent the provisions, but argue nevertheless that Section 151 supplements these provisions. [See, their argument in Bhatia InternationalRightly Overruled: The Consequences of Three Errors inBalco (2012) 9 SCC J-26, 36:In sum, although CPC does not expressly provide the Indian civil courts the power to grant interim relief in aid of foreign-seated arbitrations, there is no express prohibition either. To the contrary, there is a case to be made for accommodating this power within Section 151, provided such a power is consistent with the inherent nature of interim relief.]This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-92We find this proposition vague, and contrary to the settled legal position.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-92The authors cite [ Bhatia InternationalRightly Overruled: The Consequences of Three Errors inBalco (2012) 9 SCC J-26, 35.]National Institute of Mental Health[National Institute of Mental Health and Neuro Sciencev.C. Parameshwara, (2005) 2 SCC 256.] to bolster their argument, even though the Court clearly held in para 12 of that judgment that:12.InManohar Lal Choprav.Seth Hiralal[AIR 1962 SC 527.] it has been held that inherent jurisdiction of the court to make orders ex debito justitiae is undoubtedly affirmed by Section 151 CPC, but that jurisdiction cannot be exercised so as to nullify the provisions of the Code. Where the Code deals expressly with a particular matter, the provision should normally be regarded asexhaustive. [Ibid., 260.](emphasis supplied)This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-92In view of this position, in an ordinary civil matter that did not concern an arbitration, a party seeking interim relief from the courts would have to apply under the provisions of Order 38 or 39 CPC, which impose certain limitations. If the party did not satisfy these limitations, it could not separately rely upon Section 151 CPC. Once its suit is not maintainable under the ordinary provisions, Section 151 cannot be relied upon as an alternative source of jurisdiction.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-92Applying this logic to suits instituted seeking interim measures for foreign-seated arbitrations, the difference is not in thenatureof relief sought; it is in the fact that the substantive dispute is to be resolved througharbitrationand not through a suit. The mechanism to resolve a dispute cannot form the basis of jurisdiction when the nature of relief asked for is essentially the same. [See, the Court's finding at para 179,Balco, (2012) 9 SCC 552, 643:179.In matters pertaining to arbitration, the suit would also be barred under Section 14(2) of the Specific Relief Act. Although the provision exists in Section 37 of the Specific Relief Act, 1963, for grant of temporary/perpetual injunction, but the existence of cause of action would be essential under this provision also. Similar would be the position under Section 38 of the Specific Relief Act.]



Send MailThis extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-92On the authors' reasoning, however, Section 151 would be invoked to confer jurisdiction to grant interim relief,as a matter of law, ineverycase in which the arbitration is seated out of India. In other words, an exceptional power is sought to be made exercisable in a routine manner. This is discordant with the prevalent law.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-93(ii) Interim relief founded on existence of cause of actionThe Court inBalco[(2012) 9 SCC 552.] confirmed that in India, interim reliefper secannot be granted without a cause of action. Such a cause of action is furnished by the enforcement of a substantive right. A claim for interim relief, being ancillary to the substantive relief, cannot exist if the main proceedings lie outside the court's jurisdiction. [See, paras 177, 178 and 179,Balco, (2012) 9 SCC 552.]This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-93The principle of cause of action is, therefore, fundamental to the grant of interim relief. [ See,State of Orissav.Madan Gopal Rungta, AIR 1952 SC 12;Cotton Corpn. of India Ltd.v.United Industrial Bank Ltd., (1983) 4 SCC 625;Ashok Kumar Lingalav.State of Karnataka, (2012) 1 SCC 321; all relied upon by the Court inBalco, (2012) 9 SCC 552 seeparas 180-182.Also see, Section 9 CPC read with Order 7 Rule 11 CPC, which stipulates assertion of a right to maintain a suit.]This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-93The authors dispute this position. They contend that in English law there is no such inherent requirement for the grant of interim relief. To support this, the authors refer to the judgments inSouth Carolina[South Carolina Insurance Co.v.Assurantie Maatschappij De Zeven Provincien N.V., 1987 AC 24 : (1986) 3 WLR 398 : (1986) 3 All ER 487 (HL).] ,Castanho[Brown & Root (U.K.) Ltd.v.Castanho, 1981 AC 557 : (1980) 3 WLR 991 : (1981) 1 All ER 143 (HL).] andLaker Airways[Laker Airways Ltd.v.British Airways Board, 1985 AC 58 : (1984) 3 WLR 413 : (1984) 3 All ER 39 (HL).] . Their argument is: although these decisions accepted that an English court does require jurisdiction over the defendant or the subject-matter of the dispute, they doubted the validity of the principle laid down inSiskina. [ Bhatia InternationalRightly Overruled: The Consequences of Three Errors inBalco (2012) 9 SCC J-26, 39.]This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-93The principle inSiskina[1979 AC 210 (HL).] was laid down by Lord Diplock (and relied upon by the Court inBalco[(2012) 9 SCC 552.] ):[The relevant statutory provision], speaking as it does of interlocutory orders, presupposes the existence of an action, actual or potential, claiming substantive relief which the High Court has jurisdiction to grant and to which the interlocutory orders referred to are but ancillary. This factor has been present in all previous cases in which Mareva injunctions have been granted. A right to obtain an interlocutory injunction is not a cause of action. It cannot stand on its own. It is dependent upon there being a pre-existing cause of action against the defendant arising out of an invasion, actual or threatened by him, of a legal or equitable right of the plaintiff for the enforcement of which the defendant is amenable to the jurisdiction of the court. To come within [sub-rule (i)] the injunction sought in the action must be part of the substantive relief to which the plaintiff's cause of action entitles him; and the thing that it is sought to restrain the foreign defendant from doing in England must amount to an invasion of some legal or equitable right belonging to the plaintiff in this country and enforceable here by a final judgment for an injunction. [Siskina, 1979 AC 210, 254E & 256 D&H.]This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-94Lord Brandon's observations in the subsequentSouth Carolina case[1987 AC 24.] , relied upon by the authors (and which they quote) as laying down a revised principle differing from the strict position inSiskina[1979 AC 210.] , are pertinent: the power of the High Court to grant injunctions is, subject to two exceptions to which I shall refer shortly, limited to two situations.Situation (1) is when one party to an action can show that the other party has either invaded, or threatens to invade, a legal or equitable right of the former for which the enforcement of the latter is amenable to the jurisdiction of the court. [South Carolina, 1987 AC 24, 40-D : (1986) 3 All ER 487 (HL), 495gand 496a.](emphasis supplied)This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-94In the case of foreign-seated arbitrations, neither of the two conditions specified in Situation 1 [ Situation 2 referred to by Lord Brandon does not arise, nor is it the contention of the authors that it arises from the present analysis.] is met. There is no legal or equitable right, which the party seeks to enforce that arises at the time of seeking interim measures, as the substantive right would crystallise only when the final award is rendered.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-94The English position clearly holds that there must exist a legal or equitable right without which the court has no power to grant the injunction sought for. [South Carolina, 1987 AC 24, 41A-B.Lord Brandon speaking for the majority stated as follows:[Have the plaintiffs shown that the defendants], by beginning and intending to prosecute their application to the United States District Court, have invaded, or threatened to invade,a legal or equitable rightof South Carolina for the enforcement of which the [defendants] are amenable to the jurisdiction of the court? It was contended by [the counsel for the plaintiffs that the plaintiffs] did indeed have such a legal or equitable right, but it appeared to me that he had great difficulty in formulating the legal or equitable right on which he relied.Neither of the courts below decided as they did on the basis that the [defendants] had by their conduct invaded a legal or equitable right of [the plaintiffs], and I cannot see how such a case can be made out. I would therefore hold that [the plaintiffs] have not shown that Situation (1) exists.(emphasis supplied)]



Send MailThis extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-94A decision by the English High Court (Chancery Division) inRoyal Westminster Investments[Royal Westminster Investments S.A.v.Varma, 2012 EWHC 3439 (Ch) (30-11-2012).] delivered as recently as in November 2012 confirms this. The English court there specifically dealt with the doubts [See, para 40 ofRoyal Westminster, 2012 EWHC 3439 (Ch).40.InSouth Carolina, 1987 AC 24, Lord Goff of Chieveley (with whom Lord Mackay of Clashfern agreed) said (at 44-45) that he was reluctant to accept the proposition that the power of the court to grant injunctions is restricted to certain exclusive categories. Lord Browne-Wilkinson (with whom Lord Keith of the Kinkel and Lord Goff of Chieveley agreed) shared the same doubts inChannel Tunnel Group Ltd.v.Balfour Beatty Construction Ltd., 1993 AC 334 (see343).] expressed inChannel Tunnel[1993 AC 334.] andSouth Carolina[1987 AC 24.] (as relied upon by the authors), only to uphold the principle inSiskina[1979 AC 210.] on the basis that the weight of authority is to the effect that an interim injunction should normally be granted only in aid of an enforceable right. [ The relevant findings of the Court inRoyal Westminster, 2012 EWHC 3439 are at paras 42 to 44. The reasoning of the Court is at paras 38 to 42 of which the relevant portions are extracted hereunder:38.Section 37(1) of the Senior Courts Act, 1981 confers a power to grant injunctions in wide terms. It states:The High Court may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the court to be just and convenient to do so.However, the power is not unfettered. Collins, L.J. explained the position as follows inMasriv.Consolidated Contractors International (UK) Ltd. (No. 2), 2008 EWCA Civ 303 : 2009 QB 450, 496-97 (at para 175):175. As Lord Brandon of Oakbrook said inSouth Carolina Insurance Co., 1987 AC 24, 40: although the terms of Section 37(1) of the Act of 1981 and its predecessors are very wide, the power conferred by them has been circumscribed by judicial authority dating back many years.This point has often been reaffirmed by the House of Lords (and by the Privy Council) in relation to injunctions [seeGourietv.Union of Post Office Workers, 1978 AC 435, 500-01, 516;Siskina (Owners of Cargo Lately Laden on Board)v.Distos Compania Naviera S.A., 1979 AC 210, 256;Bremer Vulkanv.South India Shipping Corpn. Ltd., 1981 AC 909, 979;British Airways Boardv.Laker Airways Ltd., 1985 AC 58, 80-81;P.v.Liverpool Daily Post and Echo Newspapers plc, (1991) 2 AC 370, 420-21;Channel Tunnel Group Ltd.v.Balfour Beatty Construction Ltd., 1993 AC 334, 341, 360-61 andMercedes Benz A.G.v.Leiduck, 1996 AC 284, 298 (PC).The point was recently repeated by the Privy Council inTasarruf Mevduati Sigorta Fonuv.Merrill Lynch Bank and Trust Co. (Cayman) Ltd., (2012) 1 WLR 1721 (at para 57).39.InSouth Carolina Insurance Co., 1987 AC 24. Lord Brandon of Oakbrook, delivering the leading speech in the House of Lords, said (at 40) that the authorities showed that the power of the High Court to grant injunction is: subject to two exceptions.40.[seefootnote 103 above].41. Nonetheless, the weight of authority is to the effect that an interim injunction should normally be granted only in aid of an enforceable right.]This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-95In so holding, the Court relied on the majority decision by the House of Lords inFouriev.Le Roux[2007 UKHL 1 : (2007) 1 WLR 320.Seepara 32 of the judgment as held by Lord Scott of Foscote (with whom the other Members of the House of Lords expressed agreement).] , which held:32. without the issue of substantive proceedings or an undertaking to do so, the propriety of the grant of an interlocutory injunction would be difficult to defend. An interlocutory injunction, like any other interim order, is intended to be of temporary duration, dependent on the institution and progress of some proceedings for substantive relief. [Ibid., 333.]This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-96The principle inSiskina[1979 AC 210.] thus continues to be good law, doubts notwithstanding.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-96It also appears to us that there is no substantial difference between the Indian and English law in this respect.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-96(iii)Balcocorrectly relied upon Channel Tunnel and SiskinaWe think thatBalco[(2012) 9 SCC 552.] rightly construed the English decisions inSiskina[1979 AC 210.] andChannel Tunnel[1993 AC 334.] . [See, paras 184-86 and 190 ofBalco, (2012) 9 SCC 552.]This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-96The authors are not right in suggesting that the common law position in England would likely support the existence of a power to grant interim relief in the sort of cases being considered by the Supreme Court inBalco[(2012) 9 SCC 552.] . [Bhatia InternationalRightly Overruled: The Consequences of Three Errors inBalco (2012) 9 SCC J-26, 36.]This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-96Channel Tunnel[1993 AC 334.] and subsequent decisions (as cited above) establish that English law does not appear to have departed from the requirement of a legal or equitable right to found the power to grant any relief.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-96The Court inBalco[(2012) 9 SCC 552.] also correctly identified the legislative intervention in England that enabled those courts to grant free-standing interlocutory relief in instances where the only factor was the presence of assets within the jurisdiction of the country. [See, para 189,Balco, (2012) 9 SCC 552.The important statutory amendments in England in this respect are listed below:(1) Section 25 of the Civil Jurisdiction and Judgments Act, 1982(2) Section 44 of the Arbitration Act, 1996(3) Civil Jurisdiction and Judgments Act, 1982 (Interim Relief), Order 1997 read with (1) above.]



Send MailThis extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-96The limited scope of Section 151 as a residual, exceptional power cannot be qualified or extended by Indian courts to cases where the substantive proceedings lie outside India. Any change to allow the courts here to exercise such long-arm jurisdiction would necessitate statutory support.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-97(iv) Courts cannot grant interim relief if no legal or equitable right arisesThe issue of what constitutes a legal or equitable right has long been contentious [ Generally, for a theoretical analysissee, for instance, Hohfield's analysis of rights inFundamental Legal Conception As Applied in Judicial Reasoning(1919); M.A. Stewart,Law, Morality and Rights(1983); A.R. White,Rights(1984). More specifically, this issue is pertinent for it is implicit in Lord Browne-Wilkinson's observations inChannel Tunnel, 1993 AC 334 expressing doubt on the rule inSiskina, 1979 AC 210. In doing so, he himself postulated (at 342): the relevant question is whether the [] court has power to grant the substantive relief, not whether it will in fact do so.] and merits a brief discussion.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-97InMareva[Mareva Compania Naviera S.A.v.International Bulkcarriers S.A., (1980) 1 All ER 213 : (1975) 2 Lloyd's Rep 509 (CA).] , Lord Denning allowed interim relief to be granted, stating that whatever the powers of the court, the court will not grant relief to protect a person who has no legal or equitable right whatever. [ See,Mareva, (1980) 1 All ER 213, 214h(CA).]This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-97The significance of this observations would be apparent when one reads Roskill, L.J.'s separate concurring judgment inMareva[(1980) 1 All ER 213.] . He wrote:There is or may be a legal or perhaps equitable right which the shipowners may be entitled to have protected by the court.The full extent and [the] nature of that right has long been a controversial matter which may have to be resolved hereafter and I therefore say no more about it. [ See,Mareva, (1980) 1 All ER 213, 216c.](emphasis supplied)The third learned Judge, Omrod, L.J. did not acknowledge the issue at all.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-97Assuming arguendo that a legal or equitable right does exist, it must be in relation to the property in dispute in the foreign-seated arbitration. The other requirement under the law is that the defendant should be amenable to the jurisdiction of the court. This can be made clear by considering a case of two foreign parties having arbitration outside India, one of whom has property situated in India. The defendant would not be amenable to the jurisdiction of the Indian court by applying either the principles of cause of action or of residence. Further, no jurisdiction would be established by the mere fortuitous presence of property within India. This view is expressed by the Supreme Court inWorld Tanker[World Tanker Carrier Corpn.v.SNP Shipping Services (P) Ltd., (1998) 5 SCC 310.] wherein it observed.41. The fortuitous presence of the ship in the Bombay harbour will not entitle the owner to file a limitation action in the Bombay High Courtin the absence of any claim being made or apprehended against him or the vessel in that court. [Ibid., 326.](emphasis supplied)This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-98Having regard to the scope of Section 151 explained above, there is no inherent power in an Indian court to grant interim relief when arbitration is seated outside India.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-98Point (3): Incorrect application of the doctrine of prospective overrulingWe agree with the authors that the Court inBalco[(2012) 9 SCC 552.] erroneously applied the doctrine of prospective overruling. However, we disagree that this was not a fit case to invoke the doctrine of prospective overruling. [ Bhatia InternationalRightly Overruled: The Consequences of Three Errors inBalco (2012) 9 SCC J-26, 41.]This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-98The Court applied the prospective overruling principle by restricting its ruling only to arbitration agreementsentered intoafter the date of the decision i.e. 6-9-2012 [Balco, (2012) 9 SCC 552.] .This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-98It is apposite to add here that the doctrine of prospective overruling was applied inSBP & Co.v.Patel Engg. Ltd.[(2005) 8 SCC 618. The seven-Judge Bench was construing the provisions of the 1996 Act and not any constitutional matters. The constitutionality restriction stated inGolak Nathv.State of Punjab, AIR 1967 SC 1643 has been derogated from in subsequent decisions, albeit impliedly.The Court inGolak Nath, AIR 1967 SC 1643, had first applied the doctrine of prospective overruling attributing its origin to American jurisprudence wherein it is also referred to as the Sunburst doctrine after the decision of Cardozo, J., in 1932 inGreat Northern Railway Co.v.Sunburst Oil and Refining Co., 77 L Ed 360 : 287 US 358 (1932):51.As this Court for the first time has been called upon to apply the doctrine evolved in a different country under different circumstances, we would like to move warily in the beginning. We would lay down the following propositions:(1) The doctrine of prospective overruling can be invoked only in matters arising under our Constitution.(2) It can be applied only by the highest court of the country i.e. the Supreme Court as it has the constitutional jurisdiction to declare law binding on all the courts in India;(3) The scope of the retroactive operation of the law declared by the Supreme Court superseding its earlier decision is left to its discretion to be moulded in accordance with the justice of the cause or matter before it.] , where a Bench of seven Judges (by a 6:1 majority) overruled an earlier five-Judge Bench decision inKonkan Railway Corpn. Ltd.v.Rani Construction (P) Ltd.[(2002) 2 SCC 388 wherein the Court had affirmed the three-Judge Bench decision inKonkan Railway Corpn. Ltd.v.Mehul Construction Co., (2000) 7 SCC 201.]This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-98The Court explained its position thus:47. (x) Since all were guided by the decision of this Court inKonkan Railway Corpn. Ltd.v.Rani Construction (P) Ltd.[(2002) 2 SCC 388.] and orders under Section 11(6) of the Act have been made based on the position adopted in that decision, we clarify that appointments of arbitrators or Arbitral Tribunals thus far made, are to be treated as valid, all objections being left to be decided under Section 16 of the Act.As and from this date, the position as adopted in this judgment will govern even pending applications under Section 11(6) of the Act. [SBP & Co.v.Patel Engg. Ltd., (2005) 8 SCC 618, 664.](emphasis supplied)



Send MailThis extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-99Thus, inPatel Engg.[(2005) 8 SCC 618.] , the Court was conscious that appointments of arbitrators that would have been made relying on the previous legal position would entail significant practical difficulties. It accordingly held that even pending applications would be governed by the new ruling.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-99Patel Engg. case[(2005) 8 SCC 618.] provided a clear precedent for applying prospective overruling to pending arbitration petitions or applications.This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-99However, by restricting prospective effect to arbitration agreements executed after 6-9-2012, the Court inBalco[(2012) 9 SCC 552.] has set up an anomalous situation. This is because, as the authors validly point out, those claimants who concluded their arbitration agreements prior to the decision inBhatia[(2002) 4 SCC 105.] by relying on the correct position as now affirmed inBalco[(2012) 9 SCC 552.] , are unjustifiably in a worse position than those who relied on the wrong position stated inBhatia[(2002) 4 SCC 105.] .This extract is taken fromNot Three but Half an Error in BALCO : Bhatia International Rightly Overruled, (2013) 1 SCC J-81at page J-99Therefore, in this limited respect alone, the ruling inBalco[(2012) 9 SCC 552.] should be reviewed.


SCC OnLine Web Edition: http://www.scconline.comherefore, in this limited respect alone, the ruling inBalco140should be reviewed.Senior Advocate, Supreme Court.Advocate, Supreme Court.1V. Niranjan and Shantanu Naravane, Bhatia InternationalRightly Overruled: The Consequences of ThreeErrorsinBalco(2012) 9 SCC J-26.2Bharat Aluminium Co.v.Kaiser Aluminium Technical Services Inc.,(2012) 9 SCC 552: (2012) 4 SCC (Civ) 810.3Bhatia Internationalv.Bulk Trading S.A,(2002) 4 SCC 105.4(2012) 9 SCC 552.5(2002) 4 SCC 105.6Venture Global Engg.v.Satyam Computer Services Ltd.,(2008) 4 SCC 190.7(2012) 9 SCC 552.8(2002) 4 SCC 105.9(2002) 4 SCC 105.10(2002) 4 SCC 105.11(2002) 4 SCC 105.12Section 2(2) of the Act reads: This Part shall apply where the place of arbitration is in India.13(2002) 4 SCC 105.14See, S.K Dholakia, Bhatia Internationalv.Bulk Trading S.A A Critical Review, (2003) 5 SCC J-22.15(2002) 4 SCC 105.16(2002) 4 SCC 105.17(2012) 9 SCC 552.18(2002) 4 SCC 105.19(2008) 4 SCC 190.20(2002) 4 SCC 105.21(2012) 9 SCC 552.22The Court's findings inBalco,(2012) 9 SCC 552on the significance of the omission of the word only in relation to the seat-based test for jurisdiction are at paras 62 to 76. In particular, the Court observed at para 71 that the discussions of theUncitralCommittee at the 330th Meeting held on 19-6-1985 demonstrate that the word only in Article 1(2) of theUncitralModel Law was introduced in view of the exceptions relating to Articles 8, 9, 35 and 36 which could have extra-territorial effect, if so legislated by the State, while the other provisions would be applicable on a strict territorial basis. The findings of the Court with respect to a complete segregation of Part 1 and Part 2 are at paras 125 to 129,Balco,(2012) 9 SCC 552.23See, paras 159 and 160,Balco,(2012) 9 SCC 552.24See, para 163. Also see paras 164 to 170,Balco,(2012) 9 SCC 552.25See, para 171,Balco,(2012) 9 SCC 552. The Model Law allowed certain provisions to be excepted from the strict territoriality principle so as to have extra-territorial effect, if the State so legislated. For instance, the law in England, while endorsing territoriality [under Section 2(1) of the English Arbitration Act, 1996] makes an exception under Section 2(2) to allow domestic courts to order interim relief in respect of foreign-seated arbitrations. The Court held that if the Indian Parliament while legislating on the basis of the Model Law, did not in its wisdom include these exceptions, it was not for the court then to judicially create a remedy upon the perceived hardship caused to parties.26(2012) 9 SCC 552.27See, paras 95 to 100 ofBalco,(2012) 9 SCC 552.28See, paras 176 to 178 and 194-96 ofBalco,(2012) 9 SCC 552.29See, para 197 ofBalco,(2012) 9 SCC 552.30(2012) 9 SCC 552.31The term purely domestic arbitration is to distinguish arbitrations that involve only Indian parties and Indian law. A domestic arbitration could mean even an international arbitration held in India. In both cases, the arbitral award would lead to a domestic award, as stated in Section 2(7) of the Act. The distinction is important because in respect of an international arbitration held in India, the argument of the authors will not arise, as discussed further.32Siskina (Owners of Cargo Lately Laden on Board)v.Distos Compania Naviera S.A,1979 AC 210:(1977) 3 WLR 818: (1977) 3 All ER 803 (HL).33Channel Tunnel Group Ltd.v.Balfour Beatty Construction Ltd.,1993 AC 334:(1993) 2 WLR 262: (1993) 1 All ER 664 (HL).34V. Niranjan and Shantanu Naravane, Bhatia InternationalRightly Overruled: The Consequences of ThreeErrorsinBalco(2012) 9 SCC J-26.35(2012) 9 SCC 552.36(2012) 9 SCC 552.37(2012) 9 SCC 552.38Section 2(1)(e) reads:2.Definitions.(1) In this Part, unless the context otherwise requires***(e) Court means 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;39Also generally, the importance of context in interpretation has been previously affirmed by the Supreme Court inIndira Nehru Gandhiv.Raj Narain,1975 Supp SCC 1, 97:The connotation of the above words [unless the context otherwise requires] is that normally it is the definition given in the section which should be applied and given effect to. This normal rule may, however, be departed from, if there be something in the context to show that the definition should not be applied.40(2012) 9 SCC 552.41See, para 89,Balco,(2012) 9 SCC 552.42See, para 95,Balco,(2012) 9 SCC 552, 605, wherein party autonomy is discussed:95.The learned counsel for the appellants have submitted that Section 2(1)(e), Section 20 and Section 28 read with Section 45 and Section 48(1)(e) make it clear that Part 1 is not limited only to arbitrations which take place in India. These provisions indicate that the Arbitration Act, 1996 issubject-matter centricand not exclusivelyseat-centric. Therefore, seat is not the centre of gravity so far as the Arbitration Act, 1996 is concerned.(emphasis in original)43See, para 95,Balco,(2012) 9 SCC 552. In view of the expression used in Section 2(2), the maximexpressum facit cessare tacitum, would not permit by interpretation to hold that Part 1 would also apply to arbitrations held outside the territory of India.44See, para 96,Balco,(2012) 9 SCC 552.45(2012) 9 SCC 552.46Do I contradict myself?Very well then I contradict myself,(I am large, I contain multitudes.) Walt Whitman,Song of Myself(1855).47The 1996 Act was enacted as a consolidating legislation that comprehensively lays down the law for arbitration, enforcement of foreign arbitral awards, and conciliation. The Statement of Objects and Reasons of the 1996 Act states at Para 3:Though the saidUncitralModel Law and Rules are intended to deal with international commercial arbitration and conciliation, they could, with appropriate modifications, serve as a model for legislation on domestic arbitration and conciliation.48See, paras 86, 87, 88 and 89,Balco,(2012) 9 SCC 552.49See, para 88,Balco,(2012) 9 SCC 552, 603.50(2012) 9 SCC 552.51(2012) 9 SCC 552.52See, para 96,Balco,(2012) 9 SCC 552, 606:96. In our opinion, the provision in Section 2(1)(e) has to be construed keeping in view the provisions in Section 20 which give recognition to party autonomy. In our view, the legislature has intentionally given jurisdiction to two courts i.e the court which would have jurisdiction where the cause of action is located and the courts where the arbitration takes place. This was necessary as on many occasions the agreement may provide for a seat of arbitration at a place which would be neutral to both the parties.Therefore, the courts where the arbitration takes place would be required to exercise supervisory control over the arbitral process.(emphasis supplied)53(2012) 9 SCC 552.54Section 20 reads:20.Place of arbitration.(1) The parties are free to agree on the place of arbitration.(2) Failing any agreement referred to in sub-section (1), the place of arbitration shall be determined by the Arbitral Tribunal having regard to the circumstances of the case, including the convenience of the parties.(3) Notwithstanding sub-section (1) or sub-section (2), the Arbitral Tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of documents, goods or other property.55Specifically, para 96.Also see, further paras 97, 98, 99 and 100 ofBalco,(2012) 9 SCC 552.56See, para 100,Balco,(2012) 9 SCC 552, 607. The Court referred to Redfern & Hunter,The Law and Practice of International Commercial Arbitration(1986) at p. 69100. it is by no means unusual for an Arbitral Tribunal to hold meetingsor even hearingsin a place other than the designated place of arbitration, either for its own convenience or for the convenience of the parties or their witnesses. In such circumstances, each move of the Arbitral Tribunal does not of itself mean that the seat of arbitration changes. The seat of arbitration remains the place initially agreed by or on behalf of the parties.57Section 42 of the Act reads:42.Jurisdiction.Notwithstanding anything contained elsewhere in this Part or in any other law for the time being in force, where with respect to an arbitration agreement any application under this Part has been made in a court, that court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that court and in no other court.58Food Corpn. of Indiav.Evdomen Corpn.,(1999) 2 SCC 446;Jindal Vijayanagar Steel (JSW Steel Ltd.)v.Jindal Praxair Oxygen Co. Ltd.,(2006) 11 SCC 521;GE Countrywide Consumer Financial Services Ltd.v.Surjit Singh Bhatia, (2006) 129 DLT 393;Jyothi Turbo Power Services (P) Ltd.v.Shenzhen Shandong Nuclear Power Construction Co. Ltd.,AIR 2011 AP 111. InGE Countrywide, (2006) 129 DLT 393 for instance, the Court at Delhi had declined jurisdiction, although parties had agreed that Delhi be the seat, on the basis that Section 2(1)(e) is not concerned with the seat but with the court which would have had jurisdiction had a suit been instituted.59(2012) 9 SCC 552.60(2012) 9 SCC 552.61(2012) 9 SCC 552.62(2012) 9 SCC 552.63(2006) 129 DLT 393.64Section 82, the 1996 Act.65(2006) 129 DLT 393.66See, Lord Hacking, The Story of the Arbitration Act, 1979 (2010) 76 Arbitration 125 (Sweet & Maxwell).The English Parliament found that the 1975 Act had the case stated procedure and also procedures for setting aside the award forerrorsof fact or law on the face of the award. The debate for the 1979 Act was held on 15-5-1978. Lord Hacking noted that Lord Cullen of Ashborn of the Conservative Party led the debate for the Opposition in May 1978 when Labour Party was in power. This is how Lord Hacking put the discussion:Thankfully, however, the Conservative peers remained loyal to Lord Cullen. I so state because Lord Cullen proved a good choice. He was a conscientious and well-researched speaker who did his homework. He therefore, set out to make the commercial case for arbitration law reform. He calculated that 5000 large arbitrations were being annually deterred from coming to London at the loss of earning power to England of 100,000 pounds for each arbitration. From this, the figure of 500 million pounds emerged as the large annual loss as Lord Cullen (as they were then called) power-invisible exports.67(2012) 9 SCC 552.68(2012) 9 SCC 552.69See, paras 177, 178 and 179 ofBalco,(2012) 9 SCC 552.In particular, the Court held at 642, para 175:175.In our opinion, pendency of arbitration proceedings outside India would not provide acause of actionfor a suit where the main prayer is for injunction. If such a suit [were] filed, it would in all probabilities be stayed in view of Sections 8 and 45 of the Arbitration Act, 1996. such a suit would not be maintainable, because an interlocutory injunction can only be granted during the pendency of a civil suit claiming a relief which is likely to result in a final decision upon thesubject in dispute. The suit would be maintainable only on the existence of acause of action, which would entitle the plaintiff for the substantive relief claimed in the suit. The cause of action would clearly be contingent/speculative. There would be no existing cause of action. In any event no interim relief could be granted unless it is in aid of and ancillary to the main relief that may be available to a party on final determination of rights in a suit.(emphasis in original)701979 AC 210 (HL).711993 AC 334 (HL).72The authors admit this in Bhatia InternationalRightly Overruled: The Consequences of ThreeErrorsinBalco(2012) 9 SCC J-26, 35.73(2012) 9 SCC 552.74See, para 192 ofBalco,(2012) 9 SCC 552.75Manohar Lal Choprav.Seth Hiralal,AIR 1962 SC 527.76Vareed Jacobv.Sosamma Geevarghese,(2004) 6 SCC 378.77AIR 1962 SC 527.78See, para 27,Manohar Lal Chopra case,AIR 1962 SC 527.79(2004) 6 SCC 378.80Vareed Jacob,(2004) 6 SCC 378, 389, para 11.81See, their argument in Bhatia InternationalRightly Overruled: The Consequences of ThreeErrorsinBalco(2012) 9 SCC J-26, 36:In sum, although CPC does not expressly provide the Indian civil courts the power to grant interim relief in aid of foreign-seated arbitrations, there is no express prohibition either. To the contrary, there is a case to be made for accommodating this power within Section 151, provided such a power is consistent with the inherent nature of interim relief.82Bhatia InternationalRightly Overruled: The Consequences of ThreeErrorsinBalco(2012) 9 SCC J-26, 35.83National Institute of Mental Health and Neuro Sciencev.C. Parameshwara,(2005) 2 SCC 256.84AIR 1962 SC 527.85Ibid., 260.86See, the Court's finding at para 179,Balco,(2012) 9 SCC 552, 643:179.In matters pertaining to arbitration, the suit would also be barred under Section 14(2) of the Specific Relief Act. Although the provision exists in Section 37 of the Specific Relief Act, 1963, for grant of temporary/perpetual injunction, but the existence of cause of action would be essential under this provision also. Similar would be the position under Section 38 of the Specific Relief Act.87(2012) 9 SCC 552.88See, paras 177, 178 and 179,Balco,(2012) 9 SCC 552.89See,State of Orissav.Madan Gopal Rungta,AIR 1952 SC 12;Cotton Corpn. of India Ltd.v.United Industrial Bank Ltd.,(1983) 4 SCC 625;Ashok Kumar Lingalav.State of Karnataka,(2012) 1 SCC 321; all relied upon by the Court inBalco,(2012) 9 SCC 552seeparas 180-182.Also see, Section 9 CPC read with Order 7 Rule 11 CPC, which stipulates assertion of a right to maintain a suit.90South Carolina Insurance Co.v.Assurantie Maatschappij De Zeven Provincien N.V,1987 AC 24:(1986) 3 WLR 398: (1986) 3 All ER 487 (HL).91Brown & Root (U.K) Ltd.v.Castanho,1981 AC 557:(1980) 3 WLR 991: (1981) 1 All ER 143 (HL).92Laker Airways Ltd.v.British Airways Board,1985 AC 58:(1984) 3 WLR 413: (1984) 3 All ER 39 (HL).93Bhatia InternationalRightly Overruled: The Consequences of ThreeErrorsinBalco(2012) 9 SCC J-26, 39.941979 AC 210 (HL).95(2012) 9 SCC 552.96Siskina,1979 AC 210, 254E & 256 D&H.971987 AC 24.981979 AC 210.99South Carolina,1987 AC 24, 40-D : (1986) 3 All ER 487 (HL), 495gand 496a.100Situation 2 referred to by Lord Brandon does not arise, nor is it the contention of the authors that it arises from the present analysis.101South Carolina,1987 AC 24, 41A-B.Lord Brandon speaking for the majority stated as follows:[Have the plaintiffs shown that the defendants], by beginning and intending to prosecute their application to the United States District Court, have invaded, or threatened to invade,a legal or equitable rightof South Carolina for the enforcement of which the [defendants] are amenable to the jurisdiction of the court? It was contended by [the counsel for the plaintiffs that the plaintiffs] did indeed have such a legal or equitable right, but it appeared to me that he had great difficulty in formulating the legal or equitable right on which he relied.Neither of the courts below decided as they did on the basis that the [defendants] had by their conduct invaded a legal or equitable right of [the plaintiffs], and I cannot see how such a case can be made out. I would therefore hold that [the plaintiffs] have not shown that Situation (1) exists.(emphasis supplied)102Royal Westminster Investments S.Av.Varma, 2012 EWHC 3439 (Ch) (30-11-2012).103See, para 40 ofRoyal Westminster, 2012 EWHC 3439 (Ch).40.InSouth Carolina,1987 AC 24, Lord Goff of Chieveley (with whom Lord Mackay of Clashfern agreed) said (at 44-45) that he was reluctant to accept the proposition that the power of the court to grant injunctions is restricted to certain exclusive categories. Lord Browne-Wilkinson (with whom Lord Keith of the Kinkel and Lord Goff of Chieveley agreed) shared the same doubts inChannel Tunnel Group Ltd.v.Balfour Beatty Construction Ltd.,1993 AC 334(see343).1041993 AC 334.1051987 AC 24.1061979 AC 210.107The relevant findings of the Court inRoyal Westminster, 2012 EWHC 3439 are at paras 42 to 44. The reasoning of the Court is at paras 38 to 42 of which the relevant portions are extracted hereunder:38.Section 37(1) of the Senior Courts Act, 1981 confers a power to grant injunctions in wide terms. It states:The High Court may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the court to be just and convenient to do so.However, the power is not unfettered. Collins, L.J explained the position as follows inMasriv.Consolidated Contractors International (UK) Ltd. (No. 2), 2008 EWCA Civ 303 :2009 QB 450, 496-97(at para 175):175. As Lord Brandon of Oakbrook said inSouth Carolina Insurance Co.,1987 AC 24, 40: although the terms of Section 37(1) of the Act of 1981 and its predecessors are very wide, the power conferred by them has been circumscribed by judicial authority dating back many years.This point has often been reaffirmed by the House of Lords (and by the Privy Council) in relation to injunctions [seeGourietv.Union of Post Office Workers,1978 AC 435, 500-01, 516;Siskina (Owners of Cargo Lately Laden on Board)v.Distos Compania Naviera S.A,1979 AC 210, 256;Bremer Vulkanv.South India Shipping Corpn. Ltd.,1981 AC 909, 979;British Airways Boardv.Laker Airways Ltd.,1985 AC 58, 80-81;P.v.Liverpool Daily Post and Echo Newspapers plc,(1991) 2 AC 370, 420-21;Channel Tunnel Group Ltd.v.Balfour Beatty Construction Ltd.,1993 AC 334, 341, 360-61andMercedes Benz A.Gv.Leiduck,1996 AC 284, 298 (PC).The point was recently repeated by the Privy Council inTasarruf Mevduati Sigorta Fonuv.Merrill Lynch Bank and Trust Co. (Cayman) Ltd.,(2012) 1 WLR 1721(at para 57).39.InSouth Carolina Insurance Co.,1987 AC 24. Lord Brandon of Oakbrook, delivering the leading speech in the House of Lords, said (at 40) that the authorities showed that the power of the High Court to grant injunction is: subject to two exceptions.40.[seefootnote 103 above].41. Nonetheless, the weight of authority is to the effect that an interim injunction should normally be granted only in aid of an enforceable right.1082007 UKHL 1 :(2007) 1 WLR 320.Seepara 32 of the judgment as held by Lord Scott of Foscote (with whom the other Members of the House of Lords expressed agreement).109Ibid., 333.1101979 AC 210.111(2012) 9 SCC 552.1121979 AC 210.1131993 AC 334.114See, paras 184-86 and 190 ofBalco,(2012) 9 SCC 552.115(2012) 9 SCC 552.116Bhatia InternationalRightly Overruled: The Consequences of ThreeErrorsinBalco(2012) 9 SCC J-26, 36.1171993 AC 334.118(2012) 9 SCC 552.119See, para 189,Balco,(2012) 9 SCC 552.The important statutory amendments in England in this respect are listed below:(1) Section 25 of the Civil Jurisdiction and Judgments Act, 1982(2) Section 44 of the Arbitration Act, 1996(3) Civil Jurisdiction and Judgments Act, 1982 (Interim Relief), Order 1997 read with (1) above.120Generally, for a theoretical analysissee, for instance, Hohfield's analysis of rights inFundamental Legal Conception As Applied in Judicial Reasoning(1919); M.A Stewart,Law, Morality and Rights(1983); A.R White,Rights(1984). More specifically, this issue is pertinent for it is implicit in Lord Browne-Wilkinson's observations inChannel Tunnel,1993 AC 334expressing doubt on the rule inSiskina,1979 AC 210. In doing so, he himself postulated (at 342): the relevant question is whether the [] court has power to grant the substantive relief, not whether it will in fact do so.121Mareva Compania Naviera S.Av.International Bulkcarriers S.A, (1980) 1 All ER 213 : (1975) 2 Lloyd's Rep 509 (CA).122See,Mareva, (1980) 1 All ER 213, 214h(CA).123(1980) 1 All ER 213.124See,Mareva, (1980) 1 All ER 213, 216c.125World Tanker Carrier Corpn.v.SNP Shipping Services (P) Ltd.,(1998) 5 SCC 310.126Ibid., 326.127(2012) 9 SCC 552.128Bhatia InternationalRightly Overruled: The Consequences of ThreeErrorsinBalco(2012) 9 SCC J-26, 41.129Balco,(2012) 9 SCC 552.130(2005) 8 SCC 618. The seven-Judge Bench was construing the provisions of the 1996 Act and not any constitutional matters. The constitutionality restriction stated inGolak Nathv.State of Punjab,AIR 1967 SC 1643has been derogated from in subsequent decisions, albeit impliedly.The Court inGolak Nath,AIR 1967 SC 1643, had first applied the doctrine of prospective overruling attributing its origin to American jurisprudence wherein it is also referred to as the Sunburst doctrine after the decision of Cardozo, J., in 1932 inGreat Northern Railway Co.v.Sunburst Oil and Refining Co.,77 L Ed 360:287 US 358 (1932):51.As this Court for the first time has been called upon to apply the doctrine evolved in a different country under different circumstances, we would like to move warily in the beginning. We would lay down the following propositions:(1) The doctrine of prospective overruling can be invoked only in matters arising under our Constitution.(2) It can be applied only by the highest court of the country i.e the Supreme Court as it has the constitutional jurisdiction to declare law binding on all the courts in India;(3) The scope of the retroactive operation of the law declared by the Supreme Court superseding its earlier decision is left to its discretion to be moulded in accordance with the justice of the cause or matter before it.131(2002) 2 SCC 388wherein the Court had affirmed the three-Judge Bench decision inKonkan Railway Corpn. Ltd.v.Mehul Construction Co.,(2000) 7 SCC 201.132(2002) 2 SCC 388.133SBP & Co.v.Patel Engg. Ltd.,(2005) 8 SCC 618, 664.134(2005) 8 SCC 618.135(2005) 8 SCC 618.136(2012) 9 SCC 552.137(2002) 4 SCC 105.138(2012) 9 SCC 552.139(2002) 4 SCC 105.140(2012) 9 SCC 552.5.2 Fringe Benefit TaxTaxation is certain in todays world and it is most important instrument available to governments for taking away resources from the private sector. Salary income, which is also known as income from employment is generally the most important component of income of individuals in many countries. In general, salary income includes wages, salaries, pensions, gratuity, leave salary, perquisites, allowances and fringe benefits. Taxation of salary income is one source where tax compliance is generally maximum as the tax is deducted at the source itself (called withholding tax) in most countries. Still, ways and means have been devised to reduce the amount of taxable salary. The payment of a part of the salary to employees in the form of noncash facilities, allow

errorrr

Documents

Transcript of errorrr