Arbitration and Conciliation Act, 1996 – ss. 2(1)(f)(ii), 2(1)(f)(iii) and 11 – International Commercial Arbitration – Contract for development of a Monorail system, between Mumbai Metropolitan Regional Development Authority (MMRDA)respondent and a Consortium-petitioner (comprising an Indian company and a Malaysian company) – Dispute arose between the parties – Consortium made various interim claims and filed petition u/s.11 of the Act – According to Consortium, since one of the parties to the Arbitration Agreement, was a body corporate, incorporated in a country other than India so it would attract s.2(1)(f)(ii) of the Act and relied upon their status (i.e. an Indian company and a Malaysian company) as independent entities – Propriety of – Held: In another proceeding between the same parties arising out of the self-same agreement, the High Court by order dated 20.10.2016 had upheld the order of the Arbitrator that the particular claim that was made in that case could be made only as a Consortium and not as two entities separately and the said judgment was final interparties as no appeal was preferred – Thus, it is not open for the petitioner to rely upon their status as independent entities – This being the case, the un-incorporated “association” referred to in s.2(1)(f)(iii) is attracted on facts of the case and not s.2(1)(f)(ii) as the Malaysian body could not be referred to as an independent entity following the judgment of the High Court – Further, the Indian company was the lead partner and the Supervisory Board constituted under the Consortium agreement made it clear that the lead partner had the determining voice in that, as it appointed the Chairman of the said Board and the fact that the Consortium’s office was in Wadala, Mumbai and also that the lead member led the arbitration METROPOLITAN REGION DEV. AUTH.
proceedings – This all pointed to the fact that the central management and control of the Consortium appeared to be exercised in India and not in any foreign nation – There is no “international commercial arbitration” as defined u/s.2(1)(f) of the Act – Thus, petition filed u/s.11 of the Act dismissed.
Arbitration and Conciliation Act, 1996 – s.2(1)(f)(iii) – discussed.
Dismissing the Arbitration Petition, the Court HELD: 1. Mumbai Metropolitan Region Development Authority (MMRDA), the respondent, has relied upon an order was passed by the High Court of Bombay, dated 20.10.2016 between the same parties, in which an interim Award dated 18.08.2016 was challenged, which was between the same parties arising out of the self-same agreement. This order upheld the interim Award of the Arbitrators in stating that the particular claim that was made in that case could be made only as a Consortium and not as two entities separately. That order has become final as it has not been challenged by the petitioner before this Court. [Para 3][33-C-D]
2. It is clear, as has been held by the judgment of the High Court of Bombay, and which is binding inter-parties, that it is not open for the petitioner to rely upon their status as independent entities while dealing with the respondent and they will have to deal with the respondent as a Consortium only. [Para 9][35-G]
3. This being the case, it is clear that the un-incorporated “association” referred to in Section 2(1)(f)(iii) would be attracted on the facts of this case and not Section 2(1)(f)(ii) as the Malaysian body cannot be referred to as an independent entity following the judgment of the High Court of Bombay. [Para 10][35-H; 36-A]
4. Section 2(1)(f)(iii) of the Act refers to two different sets of persons: an “association” as distinct and separate from a “body of individuals”. For example, under Section 2(31) of the Income Tax Act, 1961, “person” is defined as including, under sub-clause (v), an association of persons, or body of individuals, whether incorporated or not. It is in this sense, that an association is referred to in Section 2(1)(f)(iii) which would therefore include a consortium consisting of two or more bodies corporate, at least one of whom is a body corporate incorporated in a country other than India. [Para 11][36-B-C]
5. It would become clear that prior to the deletion of the expression “a company or”, there were three sets of persons referred to in Section 2(1)(f)(iii) as separate and distinct persons who would fall within the said sub-clause. This does not change due to the deletion of the phrase “a company or” for the reason given by the Law Commission. This is another reason as to why “an association” cannot be read with “body of individuals” which follows it but is a separate and distinct category by itself, as is understood from the definition of “person” as defined in the Income Tax Act referred to above. [Para 12][37-D-E]
6. This being the case, coupled with the fact that the Indian company is the lead partner, and that the Supervisory Board constituted under the Consortium Agreement makes it clear that the lead partner really has the determining voice in that it appoints the Chairman of the said Board (undoubtedly, with the consent of other members); and the fact that the Consortium’s office is in Wadala, Mumbai as also that the lead member shall lead the arbitration proceedings, would all point to the fact that the central management and control of this Consortium appears to be exercised in India and not in any foreign nation. [Para 13][37-E-G]
7. This being the case, the petition filed under Section 11 of the Act is dismissed, as there is no “international commercial arbitration” as defined under Section 2(1)(f) of the Act for the petitioner to come to this Court. [Para 14][37-G-H] TDM Infrastructure Private Ltd. v. UE Development India Private Ltd., (2008) 14 SCC 271 : [2008]
8 SCR 775 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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