Tuesday 22 November 2016

Whether foreign arbitration award is enforceable against non signatories to arbitration agreement?

Having dealt with the questions of law, I turn to the facts of
the present case. The Representation Agreements in force are signed
by   the   Director­Terry   L.   Peteete   for   and   on   behalf   of   the
applicant­Integrated   Sales   Services   Limited,   and   by   Rattan   Ram
Pathak, the   non­applicant No.3(i), in his capacity as the Managing
Director   of   the   non­applicant   No.1­DMC   Management   Consultants
Ltd., containing the clause of arbitration, making it subject to the laws
of State of Missouri, U.S.A.  Neither the non­applicant No.2­Arun Dev
s/o   Govindvishnu   Upadhyaya,   nor   the   applicant   No.3­Gemini   Bay
Transcription Pvt. Ltd., through its Directors­(i) Rattan Ram Pathak,
and   (ii)   Naresh   Kumar   Kopisetti,   have   signed   the   Representation

Agreements   in   force   in   their   individual   capacity.   Except   the
non­applicant No.2­Arun Dev s/o Govindvishnu Upadhyaya, none of
the other individual non­applicants in this application were joined as
the   party­respondents   in   the   dispute   before   the   International
Arbitration Tribunal.  The respondents before the said Tribunal were
DMC   Management   Consultants   Ltd.,   Arun   Dev   s/o   Govindvishnu
Upadhyaya,   Gemini   Bay   Consultants   Ltd.,   and   Gemini   Bay
Transcription Pvt. Ltd.  
35. The   non­applicant   Nos.2   and   3   have   neither   submitted
themselves   to   the   arbitration   nor   to   the   composition   of   the
International Arbitration Tribunal.  There did not exist or subsist any
arbitration agreement between the applicant and the non­applicant
Nos.2 and 3.   There is nothing in the Representation Agreements in
force, which permit the said Tribunal to exercise jurisdiction over the
non­signatories to it.   The invocation of the principle of lifting of
corporate   veil   and   holding   the   non­applicant   Nos.2   and   3   as
“alter ego” of the non­applicant No.1­Company and on the basis of it,
to hold them jointly and severally liable to pay the amount under the
award, is totally without jurisdiction and cannot be sustained.  Merely

because   the   non­applicant   Nos.2   and   3   have   participated   in   the
proceedings before the International Arbitration Tribunal, they cannot
be   estopped   from   raising   the   question   of   jurisdiction   of   the   said
Tribunal in response to the application under Section 49 of the said
Act.  The question of operating estoppel, acquiescence, surrender, etc.,
to the jurisdiction of the said Tribunal, does not at all arise.   The
award passed by the International Arbitration Tribunal, in the present
case, is, therefore, hit by the conditions in clauses (c), (d) and (e) of
sub­section (1) of Section 48 of the said Act.  The said award cannot,
therefore, be enforced in India against the non­applicant Nos.2 and 3
by making a decree of the Court.
36. Though   the   International   Arbitration   Tribunal   had   no
jurisdiction to invoke the principle of lifting of corporate veil and
holding   the   non­applicant   Nos.2   and   3   as   “alter   ego”   of   the
non­applicant   No.1­Company,   this   Court   is   competent   under
Section 49 of the said Act to go into all these aspects of the matter and
hold that the non­applicant Nos.1, 2 and 3 are jointly liable to pay the
amount covered by the award passed by the said Tribunal.  However,
the applicant has to make out such a case in the proceedings under

Section 49 of the said Act.   After going through the contents of the
application, I  do not  find that any such  case is made out  by the
applicant.   In  spite  of repeated queries, Shri Deven  Chauhan, the
learned Advocate for the applicant, makes a statement that this is not
the case with which the applicant has come forward before this Court
while invoking the jurisdiction under Section 49 of the said Act.  Had
such   a   case   been   made   out,   then   the   extent   of   liability   of   the
non­applicant   No.2,   being   the   Director   of   the   non­applicant
No.1­Company,   was   required   to   be   judged   on   the   basis   of   the
provisions   of   the   Companies   Act,   1956.     In   view   of   this,   the
non­applicant Nos.2 and 3 cannot be held in this proceeding jointly
liable to pay the amount covered by the arbitration award, along with
the non­applicant No.1­Company.
37. Shri   Deven   Chauhan   for   the   applicant   submits   that   the
non­applicant   Nos.2   and   3   were   made   parties   in   the   proceedings
before   the   International   Arbitration   Tribunal   in   their   individual
capacity and they are also made parties in the same capacity before
this Court.  The award passed against them is required to be executed
against them individually by attaching their properties if such occasion

arises.   In order to make the non­applicant Nos.2 and 3(i) and (ii)
individually or severally liable to pay the sum covered by the arbitral
award   in   question,   it   must   be   shown   that   they   have   signed   the
arbitration agreement as guarantors or sureties for the debts due or
recoverable   arising   out   of   or   in   connection   with   the   contract   in
question   against   the   non­applicant   No.1,   of   which   they   are   the
Directors.  In such an event, the liability of the guarantor or surety will
be co­extensive with that of the principal debtor, and consequently
their personal assets may be attached in execution of the decree.  This
is not the case with which the applicant has approached this Court
under Section 49 of the said Act.  Hence, the award passed in question
cannot be enforced against them by passing a decree.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH, NAGPUR
Misc. Civil Application No.1319 of 2015
Integrated Sales Services Limited,

V
 DMC Management Consultants Ltd.,

Coram : R.K. Deshpande, J.

Dated:  18th April, 2016
Citation: 2016(6) MHLJ195

2. The International Arbitration Tribunal has passed an award
on 28­3­2010 in favour of the applicant­Integrated Sales Services Ltd.,
a Company based in Hong Kong, holding the non­applicant No.1­DMC
Management   Consultants   Ltd.,   the   applicant   No.2­Arun   Dev   s/o
Govindvishnu Uppadhyaya, and the non­applicant No.3­Gemini Bay
Transcription   Private   Ltd.   jointly   and   severally   liable   to   pay   the
applicant­Company the sum of 6,948,100 dollars within a period of
thirty   days   from   the   date   of   the   award,   failing   which   the
applicant­Company   would   become   entitled   to   recovery   of   interest
computed   from   the   date   of   termination   of   the   Representation
Agreement (22­7­2008) on the total sum of the award at the highest
legal rate allowable under the Delaware law.  The non­applicants are
also held jointly and severally liable to reimburse the administrative
fees   and   expenses   of   the   Tribunal   totaling   14,000   dollars,   the
compensation and expenses of the Arbitrator totaling 49,903 dollars,

and   the   fees   and   expenses   incurred   in   the   matter   totaling
63,903 dollars.
3. This application is filed under Section 49 of the Arbitration
and Conciliation Act, 1996 read with Order XXI, Rule 1 of the Code of
Civil Procedure for execution of the arbitral award dated 28­3­2010.
Initially, such application was filed before the Principal District Judge
at   Nagpur,   who   heard   the   matter   and   closed   it   for   judgment   on
5­10­2015.     By   virtue   of   subsequent   amendment   introduced   to
Section 47 of the Arbitration and Conciliation Act, 1996 with effect
from 23­10­2015, the jurisdiction to entertain, try and decide such
application is conferred upon the High Court and the learned Principal
District Judge ceased to have any jurisdiction.  However, the learned
Principal District Judge, by his final judgment dated 5­11­2015, has
rejected all the objections raised to the executability of the award and
made the said award as a decree of the Court to be executed.  
4. The learned Advocates appearing for the parties agree that
the judgment delivered by the learned Principal District Judge in this
matter   on   5­11­2015   is   without   jurisdiction   and,   therefore,   this

application is moved before this Court for making the arbitral award
as a decree of the Court.   The non­applicants have raised several
objections, including those under Section 48 of the said Act, claiming
refusal to enforce the award passed by the International Arbitration
Tribunal, which are required to be decided now afresh.  The parties
have agreed that the question of leading oral evidence in support of
their rival contentions does not at all arise and the pure questions of
law are raised, which can be decided on the basis of the documents
which are admitted and placed on record.
5. The facts in detail are as under :
On 28­9­2000, the first Representation Agreement between
the   Hong   Kong   based   applicant­Integrated   Sales   Services   Ltd.
(described   therein   as   “the   representative”)   signed   by   the
Director­Terry   L.   Peteete,   and   the   non­applicant   No.1­India   based
DMC Management Consultants Ltd. at Nagpur, registered under the
Companies Act, 1956 (described therein as “the Company”) by one
Rattan   Pathak   as   the   Managing   Director,   was   entered   into   for
providing assistance to the non­applicant No.1­Company to sell its
goods and services to prospective customers and to identify potential

services of investment and investors, upon the terms and conditions
agreed therein.  The said agreement was brought into force with effect
from 3­10­2000.
6. The first amendment to the said Representation Agreement
was signed on behalf of the applicant­Company by Terry L. Peteete;
and   on   behalf   of   the   non­applicant   No.1­Company,   by   Arun   Dev
Upadhyaya, the non­applicant No.2. By the second amendment signed
by Terry L. Peteete on behalf of the applicant­Company, and by one
Rattan Pathak on behalf of the non­applicant No.1­Company, the first
amendment was declared as null and void.   Thus, the relationship
between the parties to the Representation Agreement was governed by
the agreement which came into force on 3­10­2000 and the second
amendment to it.
7. Clause 8(d) of the Representation Agreement brought into
force on 3­10­2000 deals with the interpretation, amendment, law,
arbitration and assignments.   It makes the agreement subject to the
laws of State of Missouri, U.S.A., and provides that in the event that a
dispute arises in connection with this agreement, such dispute shall be

referred to a single arbitrator in Kansas City, Missouri, U.S.A.   The
applicant­Company invoked the aforesaid clause of the arbitration and
lodged   its   monetary   claim   before   the   International   Arbitration
Tribunal, which was registered as ICDR Case No.50­181­T­00327­09,
making DMC Management Consultants Ltd, DMC Global Inc., Arun
Dev   Upadhyaya,   Gemini   Bay   Consultants   Ltd.,   and   Gemini   Bay
Transcription   Pvt.   Ltd.   as   the   respondents.     The   parties   appeared
before the International Arbitration Tribunal and filed their replies and
objections.   Although, the Arbitral Tribunal looked at the objections
raised to its jurisdiction to entertain, try and decide the dispute raised
before it, the Tribunal deferred the decision on it, stating that it shall
be decided along with the dispute on merits.  
8. The Arbitral Tribunal framed the following issues :
“1. Does   the   “alter   ego”   doctrine   warrant   piercing   the
corporate veil?
2. Was there a breach of the Representation Agreement and
by whom?
3. Should damages be awarded, and if the answer is yes,
how much?  

On the first issue, the Tribunal has held that DMC Global Inc.
is a wholly owned subsidiary of DMC Management Consultants Ltd.,
and both are jointly referred to as “DMC”.  Shri Arun Dev Upadhyaya
is   an   individual   entrepreneur,   shareholder   and   former   Director   of
DMC.  Gemini Bay Consultants Ltd. and its wholly owned subsidiary
Gemini  Bay Transcription  Pvt.  Ltd. (jointly  referred  to  as  “Gemini
Bay”)   are   unrelated   Corporations.     The   Tribunal   holds   that   Shri
Upadhyaya and Gemini Bay have challenged the jurisdiction of the
Tribunal   on   the   ground   that,   as   non   signatory   parties   to   the
Representation   Agreement,   they   are   not   subject   to   the   arbitration
clause it contains, but neither did participate directly in the arbitration
process.  The Tribunal finds that the law applicable was Delaware law
and hence the precedents of the Delaware Court of Chancery must be
followed.  It holds that the control of DMC by Shri Upadhyaya and the
collusion with Shri Pathak and the use of the corporate forms of DMC
and Gemini Bay were simply a “facade” used to shield or cover­up the
unjust   result  of eliminating  ISS.   It  further  holds  that  “alter ego”
doctrine   is,   therefore,   an   appropriate   justification   for   lifting   the
corporate veil.   On the second issue, the Tribunal has observed that

there was a breach of Representation Agreement by Shri Upadhyaya,
DMC, and Gemini Bay colluded together and, therefore, held them
jointly and severally liable to breaching the Representation Agreement
by terminating it abruptly in violation of the indefinite term of that
contract and by refusing to pay commissions as obligated under the
Representation Agreement. 
9. The   operative   portion   of   the   final   award   passed   by   the
Arbitral Tribunal on 28­3­2010 is reproduced below :
“1. Within thirty (30) days from the date of transmittal of
this Award to the Parties, DMC Management Consultants, Ltd,
DMC   Global,   Inc.,   Arun   Dev   Upadhyaya,   Gemini   Bay
Consulting   Limited   and   Gemini   Bay   Transcription   Private
limited, hereinfter referred to as Respondents, shall jointly and
severally   pay   to   Integrated   Sales   Services   Ltd,   hereinafter
referred to as Claimant, the sum of six Million, nine hundred
and   forty­eight   thousand,   one   hundred   dollars
($6,948,100.00).
2. In the event that the award is not fully paid within thirty
days from the date of this Award, Claimant shall be entitled to
also   seek   recovery   of   interest   computed   from   the   date   of
termination of the Representation Agreement (July 22, 2008)
on   the   total   sum   of   the   Award   at   the   highest   legal   rate
allowable under Delaware law.
3. The administrative fees and expenses of the International
Centre   for   Dispute   Resolution   (“ICDR”)   totaling   fourteen
thousand   dollars   ($14,000.00),   and   the   compensation   and
expenses of the arbitrator totaling forty­nine thousand, nine

hundred   and   three   dollars   ($49,903.00),   shall   be   borne
entirely,   jointly   and   severally   by   Respondents.     Therefore,
Respondents shall jointly and severally reimburse Claimant the 
sum of sixty­three thousand, nine hundred and three dollars
($63,903.00),   representing   that   portion   of   said   fees   and
expenses   (including   the   Arbitrator's   fees   and   expenses)
previously incurred by Claimant.
4. Since the arbitration clause did not provide for the award
of   the   attorneys'   fees,   Claimant   and   Respondents   shall   be
responsible for their own attorneys' fees, costs and expenses.
5. As ordered by this tribunal, all the costs and expenses of
the video conference call held on Friday, March 5, 2010 shall
be   borne   exclusively   by   Respondents   but   Claimant   shall   be
responsible for the costs and expenses of its attorneys present
during that call.
6. This   award   is   in   full   settlement   of   all   claims   and
counterclaims  submitted   to   this   Arbitration.     Any   claim   or
counterclaim not specifically awarded is hereby denied.”     
10. Heard  Shri Deven Chauhan, the learned Advocate for the
applicant­Company;  Shri Willson Mathew, the learned Advocate for
Non­Applicant No.1­Company; Shri Sunil Manohar, the learned Senior
Advocate, assisted by Advocates Shri A.G. Gharote and Ms Rohini
Jaiswal,   for   the   non­applicant   No.2;   and  Shri   Anand   Jaiswal,   the
learned Senior Advocate, assisted by Advocate Shri Shyam Dewani,
for the non­applicant No.3.

11. Shri   Sunil   Manohar   and   Shri   Anand   Jaiswal,   the   learned
Senior Advocates, have urged that the Arbitral Tribunal has no power
to lift the corporate veil and it is only a Court which can lift the
corporate veil, and hence the finding by the Arbitral Tribunal on this
aspect   was   without   jurisdiction.   The   reliance   is   placed   upon   the
judgment   rendered   by   the   Division   Bench   of   this   Court
on 5­9­2006 in Appeal No.658 of 2006 in Arbitration Petition No.295
of 2006 (Hemant D. Shah and others  v.  Chittaranjan D. Shah and
others) and the common judgment delivered by the learned Single
Judge   of   this   Court   (Shri   R.D.   Dhanuka,   J.)   on   28­4­2015   in
Arbitration Petition No.587 of 2014 and other connected matters in
Oil   and   Natural   Gas   Corporation   Ltd.  v.  M/s.   Jindal   Drilling   and
Industries   Limited.    Inviting   my   attention   to   Section   44   of   the
Arbitration and Conciliation Act, 1996, it is urged that so far as the
non­applicant Nos.2 and 3 are concerned, the arbitral award cannot be
treated as “foreign award” for the two reasons, viz. (i) that the nonapplicant
  Nos.2   and   3   are   not   signatories   to   the   Representation
Agreement for arbitration to which the Convention set­forth in the
First Schedule under the said Act applies; and (ii) that there exists no

legal relationship between them and the applicant, out of which, the
differences or the disputes before the Arbitral Tribunal arose.  Further
inviting my attention to Sections 46 and 48 of the said Act, it is urged
that even if the arbitral award is described as “foreign award” covered
by Section 44 of the said Act, the enforcement of such award needs to
be refused on the grounds mentioned in clauses (b), (c) and (d) of
sub­section (1) of Section 48 of the said Act, and, therefore, the award
does not bind the parties and cannot be made a decree of this Court.
Shri   Mathew,   the   learned   Advocate   for   the   non­applicant
No.1/Company, has invited my attention to clause (b) of sub­section
(2) of Section 48 of the said Act to urge that the enforcement of the
award against the non­applicant No.1 would be contrary to the public
policy of India.
12. Shri   Deven   Chauhan,   the   learned   Advocate   for   the
applicant­Company, has invited my attention to paras 99, 102, 103,
103.1, 103.2, 104 and 105 of the decision of the Apex Court in the
case of  Chloro Controls India Private Limited  v.  Severn Trent Water
Purification Inc. and another, reported in  (2013) 1 SCC 614, to urge
that joinder of a non­signatory party to arbitration is not unknown to

the arbitration jurisprudence and various legal bases may be applied to
bind a non­signatory to an arbitration agreement.   The doctrines of
agent­principal   relations,   apparent   authority,   piercing   of   veil   (also
called “alter ego”), joint venture relations, succession and estoppel are
the issues, which can be dealt with by the Arbitral Tribunal.  Relying
upon   the   decision   of   the   learned   Single   Judge   of   this   Court
(Shri R.D. Dhanuka, J.) delivered on 8­4­2015 in Arbitration Petition
No.75 of 2012 (POL India Projects Limited  v.  Aurelia Reederei Eugn
Friederich GmbH Schiffahrtsgesellschaft & Company KG), it is urged that
once the issues are raised by the non­applicants in the objections filed
before the Arbitral Tribunal, which have been negatived, resulting in
passing an arbitral award, it could only be challenged by adopting
remedy provided under the law applicable.  He has relied upon paras
81, 82, 87, 88, 91, 97, 101, 102, 104, 105, 106, 111, 119 and 120 of
the   aforesaid  decision   of   this  Court.     It  is  further   urged   that   the
non­applicants   were  parties  to  the  proceedings  before   the  Arbitral
Tribunal and the only remedy was to challenge the arbitral award
before the Court of competent jurisdiction in terms of the law agreed
to be applicable under clause 8(d) of the Representation Agreement,
which   was   in   the   present   case,   the   United   States   District   Court,

Missouri.  He has invited my attention to the certificate produced from
the United States District Court at Missouri, stating that no appeal has
been filed against the arbitral award in question, which is on page 114
of this application.  
13. From   the   rival   submissions,   the   questions,   which   fall   for
determination by this Court, are as under :
Sr.No. Questions Answers
1. Whether   the   arbitral   award   dated   28­3­2010
passed by the International Arbitration Tribunal
can be considered as the “foreign award” within
the meaning of Section 44 of the Arbitration and
Conciliation Act, 1996?
Yes
2. Whether   the   International   Arbitration   Tribunal
has   jurisdiction   to   pass   an   award   against   the
non­applicant   Nos.2   and   3,   who   are   nonsignatories
  to   the   arbitration   agreement,
recording a finding that they are the “alter ego”
of the non­applicant No.1­Company?
No

3. Once   the   International   Arbitration   Tribunal
decides   the   question   of   its   own   jurisdiction,
which can be challenged in the forum provided
in the law applicable (in the present case, the law
of   the   State   of   Missouri,   U.S.A.)   whether   this
Court, acting under Section 49 of the said Act,
can go behind such award to record the findings
contrary   to   the   contents   of   such   award   and
thereby refuse to make it a decree of a Court?
Yes
           
Chapter   I   in   Part   II   of   the   said   Act   containing
Sections 44 to 52 is a complete code in respect of the enforcement of
certain foreign awards.  In order to answer the aforesaid questions, the
scheme   for   enforcement   of   award   and   the   extent   and   manner   of
judicial interference in setting aside the award permissible under the
said Act, need to be seen.
As to Question No.1 :
14. Section   44   under   the   said   Act   contains   the   definition   of
“foreign award”, and it runs as under :
“44. Definition.­­In this Chapter, unless the context otherwise

requires,   “foreign   award”   means   an   arbitral   award   on
differences between persons arising out of legal relationships,
whether contractual or not, considered as commercial under
the law in force in India, made on or after the 11th day of
October, 1960­­
(a) in   pursuance   of   an   agreement   in   writing   for
arbitration to which the Convention set forth in the First
Schedule applies, and
(b) in one of such territories as the Central Government,
being satisfied that reciprocal provisions have been made
may, by notification in the Official Gazette, declare to be
territories to which the said Convention applies.”
The   aforesaid   provision   states   that   unless   the   context
otherwise   requires,   “foreign   award”   means   an   arbitral   award   on
differences between persons arising out of legal relationships, whether
contractual or not, considered as commercial under the law in force in
India, made on or after the 11th day of October, 1960, in pursuance of
an agreement in writing for arbitration to which the Convention set
forth in the First Schedule applies.   The foreign award, therefore,
contains an adjudication over the differences between  the persons
arising out of the legal relationships, considered as commercial under

the law in force in India.  The “legal relationships” contemplated must
contain in the agreement in writing for arbitration in accordance with
the Convention set forth in the First Schedule.
15. Clause 1 under Article II of the First Schedule states that each
Contracting State shall recognise an agreement in writing under which
the parties undertake to submit to arbitration all or any differences
which have arisen or which may arise between them in respect of
defined legal relationship, whether contractual or not, concerning a
subject­matter capable of settlement by arbitration.  Clause 2 therein
states that the term “agreement in writing” shall include an arbitral
clause in a contract or an arbitration agreement, signed by the parties
or   contained   in   an   exchange   of   letters   or   telegrams.     Thus,   the
existence of the defined legal relationship in writing, undertaking to
submit to arbitration all or any differences concerning a subject­matter
capable of settlement by arbitration, is the sine qua non to constitute a
“foreign award”, as defined under Section 44 of the said Act, as has
been   rightly   urged   by   the   learned   Senior   Advocate
Shri Sunil Manohar.

16. It is not in dispute that the Representation Agreements in
force containing clause 8(d) of arbitration brought into force from
3­10­2000 undertaking to submit to arbitration all or any differences
concerning the subject­matter capable of settlement by arbitration, are
signed by the Director Terry  L. Peteete of the applicant­Company, and
by the non­applicant No.3(i)­Rattan Ram Pathak in his capacity as the
Managing Director of the non­applicant No.1­Company.  There exists a
defined legal relationship in writing in the form of the Representation
Agreements.   The   arbitral   award   passed   on   28­3­2010   by   the
International Arbitration Tribunal is on the differences between the
parties   to   the   arbitration   agreement.     The   said   award,   therefore,
satisfies the test of “foreign award”, as defined under Section 44 of the
said Act.  The question No.(1) is answered accordingly.
As to Question No.2 :
17. Section 45 of the said Act confers a power upon a judicial
authority   to   refer   the   parties   to   arbitration,   and   it   is   reproduced
below :
“45. Power   of   judicial   authority   to   refer   parties   to
arbitration.­­ Notwithstanding anything contained in Part I or

in the Code of Civil Procedure, 1908 (V of 1908), a judicial
authority, when seized of an action in a matter  in respect of
which   the   parties   have   made   an   agreement   referred   to   in
Section 44, shall, at the request of one of the parties or any
person claiming through or under him, refer the parties to
arbitration, unless it finds that the said agreement is null and
void, inoperative or incapable of being performed.”
Perusal of the aforesaid provision shows that the jurisdiction
of   a   judicial   authority   under   the   aforesaid   provision   is   two­fold   ­
(i) to refer the parties to arbitration, if it finds that the matter pending
before   it   is   such   that   in   respect   of   it   the   parties   have   made   an
agreement referred to in Section 44 of the said Act, and (ii) to decide
the question as to whether the arbitration agreement produced before
it is null and void, inoperative or incapable of being performed.  
18. In   the   decision   of   the   Apex   Court   in   the   case   of  Chloro
Controls   India   Private   Limited,   cited   supra,   relied   upon   by
Shri Deven Chauhan, the learned Advocate for the applicant, the Apex
Court was considering the question of invocation of jurisdiction of the
Court under Section 45 of the said Act, and in para 59, it holds that

the applicant should satisfy the prerequisites stated in Section 44 of
the   said   Act.     In   para   63,   the   Apex   Court   holds   that   for   proper
interpretation and application of Chapter I of Part II, it is necessary
that those provisions are read in conjunction with Schedule I of the
Act.   To examine the provisions of Section 45 without the aid of
Schedule I would not be appropriate as that is the very foundation of
Section 45 of the said Act.  Para 83 of the said decision being relevant,
is reproduced below :
“83. Where the court which, on its judicial side, is seized of
an action in a matter in respect of which the parties have made
an arbitration agreement, once the required ingredients are
satisfied, it would refer the parties to arbitration but for the
situation where it comes to the conclusion that the agreement is
null and void, inoperative or incapable of being performed.
These expressions have to be construed somewhat strictly so as
to ensure that the court returns a finding with certainty and on
the   correct   premise   of   law   and   fact   as  it   has   the   effect  of
depriving the party of its right of reference to arbitration.  But
once the court finds that the agreement is valid then it must
make the reference, without any further exercise of discretion
(refer General Electric Co. v. Renusagar Power Co. ­ (1987) 4
SCC 137).   These are the issues which go to the root of the

matter and their determination at the threshold would prevent
multiplicity of litigation and would even prevent futile exercise
of proceedings before the Arbitral Tribunal.”
It is thus a mandate of Section 45 of the said Act to refer the
parties to arbitration if the judicial authority finds that the matter
pending before it is in respect of the subject covered by an agreement
referred  to  in  Section  44  of the said  Act.   However, the  right  to
reference cannot be construed strictly as an indefeasible right.   One
can claim the reference only upon satisfaction of the prerequisites
stated under Sections 44 and 45 read with Schedule I of the said Act.
Thus, it is a legal right, which has its own contours and is not an
absolute right, free of any obligations/limitations, as has been held in
para 69 of the said decision.  If the judicial authority decides that the
arbitration   agreement   produced   before   it   is   null   and   void,   or
inoperative, or incapable of being performed, it has to refuse to refer
the parties to arbitration.  This provision covers or deals with the stage
before the parties are referred to arbitration.
19. In   a   situation   where   the   parties   go   before   the   Arbitral
Tribunal   without   involvement   of   the   judicial   authority,   as

contemplated by Section 45 of the said Act, a dispute may be raised
before the Arbitral Tribunal that the arbitration agreement in question
is non­existent, or is null and void, inoperative, or incapable of being
performed.  A dispute may also be raised about the jurisdiction of the
Arbitral Tribunal to pass an award against the persons or parties, who
are not signatories to the arbitration agreement.  The Arbitral Tribunal
may record its finding either one way or the other.  If the objections
raised are rejected, then the Arbitral Tribunal may proceed further to
arbitrate the disputes or the differences referred to it on merits and
pass an award against the parties, or non­parties, or signatories, or
non­signatories to the arbitration agreement.   In case of the foreign
award passed by the International Arbitration Tribunal, unless it is
made a decree of Court in India, as contemplated by Section 49 of the
said Act, it does not become enforceable.  Section 49 of the said Act
deals with the enforcement of the foreign awards, and it states that
where the Court  is satisfied that the foreign award is enforceable
under Chapter I of Part II under the said Act, the foreign award shall
be made as a decree of the Court, which becomes binding upon the
parties and enforceable.

20. In the application filed under Section 49 of the said Act to
make the foreign award as a decree of the Court in India, Section 48
of the said Act provides an opportunity to the party against whom
such an award is made to raise objections touching the jurisdiction of
the International Arbitration Tribunal to pass such an award and upon
production of the proof, to claim the order of refusal to enforce the
award.   Section 48 of the said Act deals with the conditions for the
enforcement of the foreign awards, and it reads as under :
“48. Conditions   for   enforcement   of   foreign   awards.­­
(1) Enforcement of a foreign award may be refused, at the
request of the party against whom it is invoked, only if that
party furnishes to the Court proof that­­
(a) the parties to the agreement referred to in section 44
were, under the law applicable to them, under some incapacity,
or the said agreement is not valid under the law to which the
parties have subjected it or, failing any indication thereon,
under the law of the country where the award was made, or
(b) the party against whom the award is invoked was not
given proper notice of the appointment of the arbitrator or of
the arbitral proceedings or was otherwise unable to present his

case; or
(c) the award deals with a difference not contemplated by or
not falling within the terms of the submission to arbitration, or
it   contains   decisions   on   matters   beyond   the   scope   of   the
submission to arbitration:
Provided that, if the decisions on merits submitted to
arbitration can be separated from those not so submitted, that
part   of   the   award   which   contains   decisions   on   matters
submitted to arbitration may be enforced; or
(d) the composition of the arbitral authority or the arbitral
procedure was not in accordance with the agreement of the
parties, or, failing such agreement, was not in accordance with
the law of the country where the arbitration took place; or
(e) the award has not yet become binding on the parties, or
has been set aside or suspended by a competent authority of
the country in which, or under the law of which, that award
was made.
(2) Enforcement of an arbitral award may also be refused if
the Court finds that­­
(a) the   subject­matter   of   the   difference   is   not   capable   of
settlement by arbitration under the law of India; or

(b) the enforcement of the award would be contrary to the
public policy of India.
[Explanation   1.­­For   the   avoidance   of   any   doubt,   it   is
clarified that an award is in conflict with the public policy of
India, only if,­­
(i) the making of the award was induced or affected by
fraud   or   corruption   or   was   in   violation   of   section   75   or
section 81; or
(ii) it is in contravention with the fundamental policy of
Indian law; or
(iii) it is in conflict with the most basic notions of morality or
justice.
Explanation 2.­­For the avoidance of doubt, the test as to
whether there is a contravention with the fundamental policy
of Indian law shall not entail a review on the merits of the
dispute.
(3) If an application for the setting aside or suspension of
the award has been made to a competent authority referred to
in clause (e) of sub­section (1) the Court may, if it considers it
proper, adjourn the decision on the enforcement of the award

and   may   also,   on   the   application   of   the   party   claiming
enforcement   of   the   award,   order   the   other   party   to   give
suitable security.”
If the objections, as contemplated by the aforesaid provisions,
are   raised   before   the   Court   in   India,   those   are   required   to   be
adjudicated on their own merits.  If the Court is satisfied about the
proof in support of such objections, then it may hold that the foreign
award is not binding upon such objectors and refuse to make such
award enforceable by making it a decree of the Court.   It is thus
apparent that before enforcing the foreign award, the Court has to
record its satisfaction under Section 49 of the said Act that  such
foreign award is binding upon the parties before it and is, therefore,
enforceable in India.
21.   In the decision of the Apex Court in the case of  Renusagar
Power   Co.   Ltd.  v.  General   Electric   Company,   reported   in
1984(4) SCC 679, the question considered was whether on merits, the
claims   referred   to   the   Court   of   arbitration   were   beyond   the
scope/purview of the arbitration clause contained in the commercial
contract.   The Court holds that amongst other factors, the answer

would depend upon the question as to whether it embraces even
questions   of   the   existence,   validity   and   effect   of   the   arbitration
agreement, as stated in para 15 of the said decision.  After considering
various judgments, four propositions are laid down by the Apex Court
in para 25 of the said decision, which is reproduced below :
“1. Whether a given dispute inclusive of the arbitrators
jurisdiction comes within the scope of purview of an arbitration
clause or not primarily depends upon the terms of the clause
itself; it is a question of what the parties intend to provide and
what language they employ.
2. Expressions such as “arising out of” or “in respect of”
or “in connection with” or “in relation to” or “in consequence
of” or “concerning” or “relating to” the contract are of the
widest amplitude and content and include even questions as to
the   existence,   validity   and   effect   (scope)   of   the   arbitration
agreement.
3. Ordinarily   as   a   rule   an   arbitrator   cannot   clothe
himself   with   power   to   decide   the   questions   of   his   own
jurisdiction   (and   it   will   be   for   the   Court   to   decide   those
questions) but there is nothing to prevent the parties from
investing  him  with  power  to  decide  those  questions,  as for

instance, by a collateral or separate agreement which will be
effective and operative.
4. If, however, the arbitration clause, so widely worded as
to include within its scope questions of its existence, validity
and effect (scope), is contained in the underlying commercial
contract then decided cases have made a distinction between
questions as to the existence and/or validity of the agreement
on the one hand and its effect (scope) on the other and have
held   that   in   the   case   of   former   those   questions   cannot   be
decided by the arbitrator, as by sheer logic the arbitration
clause must fall along with underlying, commercial contract
which is either nonexistent or illegal while in the case of the
latter it will ordinarily be for the arbitrator to decide the effect
or scope of the arbitration agreement, i.e. to decide the issue of
arbitrability of the claims preferred before him.”   
The   Apex   Court   holds   as   a   general   principle   of   law   that
ordinarily as a rule, an arbitrator cannot clothe himself with power to
decide the questions of his own jurisdiction (and it will be for the
Court to decide those questions), but there is nothing to prevent the
parties from investing him with power to decide those questions, as
for  instance,  by a   collateral  or  separate  agreement  which  will  be
effective and operative.  It is further held that a distinction has to be

made in respect of commercial contract between the questions as to
the existence and/or validity of the agreement on the one hand and
its effect (scope) on the other and have held that in the case of
former, those questions cannot be decided by the arbitrator, as the
arbitration clause must fall along with the underlying commercial
contract, which is either non­existent or illegal, while in the latter
case, it will ordinarily be for the arbitrator to decide the effect of
scope   of   the   arbitration   agreement,   i.e.   to   decide   the   issue   of
arbitrability of the claim preferred before him.
22. Thus, the scheme of the Act clearly postulates the filtration
of   the   disputes   or   the   differences     on   the   touchstone   of   various
expressions used under the arbitration agreements, like “arising out
of” or “in respect of” or “in connection with” or “in relation to” or
“in   consequence   of”   or   “concerning”   or   “relating   to   the   contract
between the parties” containing the clause of arbitration at two stages,
viz. ­ (i) at the initial stage under Section 45 of the said Act before the
matter is referred to the International Arbitration Tribunal, and (ii) at
the stage of enforceability of the foreign award under Section 49 of
the said Act by the Court in India.   The questions of existence and

validity of commercial contract cannot be decided by the Arbitration
Tribunal, as the arbitration clause must fall along with the underlying
commercial   contract,   which   becomes   non­existent   and   invalid.
However, it will be the exclusive jurisdiction of the Arbitral Tribunal
to decide the effect and scope of the arbitration agreement, including
that of arbitrability of the dispute.  This case is not concerned with the
filtration of the arbitration agreement under Section 45 of the said
Act,   but   it   is   essentially   concerned   with   the   enforceability   of   the
foreign award under Section 49 of the said Act.
23. In the decision of the Apex Court in the case of  Khardah
Company Ltd. v. Raymon & Co. (India) Private Ltd., delivered by the
Constitution   Bench   of   the   Apex   Court,   and   reported   in
AIR 1962 SC 1810, it is held in para 4 as under : 
“(4) It cannot be disputed that the expression “arising out
of” or “concerning” or “in connection with” or “in consequence
of” or “relating to this contract” occurring in Cl. 14 are of
sufficient amplitude to take in a dispute as to the validity of
the agreement dated September 7, 1955.  Vide Ruby General
Insurance Co. Ltd. v. Pearey Lal Kumar, 1952­3 SCR 501 :

(AIR 1952 SC 119).  But the question is not whether Cl. 14 is
all comprehensive but whether it could be enforced when the
agreement of which it forms an integral part is held to be
illegal.  Logically speaking, it is difficult to conceive how when
an agreement is found to be bad, any portion of it can be held
to be good.   When the whole perishes, its parts also must
perish. 'Ex nihilo nil fit'.  On principle therefore it must be held
that when an agreement is invalid every part of it including
the clause as to arbitration contained therein must also be
invalid.”  
The Apex Court considered all sorts of expressions normally
used under the agreement containing the clause of arbitration.  The
Court   has   held   that   the   question   is   not   whether   such   clause   is
comprehensive, but whether it could be enforced when the agreement
of which it forms an integral part is held to be illegal.   The Court
holds that logically speaking, it is difficult to conceive how when an
agreement is found to be bad, any portion of it can be held to be
good.     When   the   whole   perishes,   it   parts   also   must   perish.     It,
therefore, holds that when an agreement is invalid, every part of it,
including the clause of arbitration therein must also be invalid. 

24. In respect of domestic arbitration, Section 16 contained in
Chapter IV of the said Act deals with the competence of the Arbitral
Tribunal to rule on its jurisdiction, and sub­sections (1), (2) and (3)
of Section 16 of the said Act being relevant, are reproduced below :
“16. Competence   of   arbitral   tribunal   to   rule   on   its
jurisdiction.­­(1) the arbitral tribunal may rule on its own
jurisdiction, including ruling on any objections with respect to
the existence or validity of the arbitration agreement, and for
that purpose,­­
(a) an arbitration clause which forms part of a contract
shall be treated as an agreement independent of the other
terms of the contract; and
(b) a decision by the arbitral tribunal that the contract
is null and void shall not entail ipso jure the invalidity of
the arbitration clause.
(2) A   plea   that   the   arbitral   tribunal   does   not   have
jurisdiction shall be raised not later than the submission of the
statement of defence; however, a party shall not be precluded
from raising such a plea merely because that he has appointed,
or participated in the appointment of, an arbitrator.

(3) A plea that the arbitral tribunal is exceeding the scope of
its authority shall be raised as soon as the matter alleged to be
beyond the scope of its authority is raised during the arbitral
proceedings.”
In view of the aforesaid statutory provisions, the domestic
Arbitral Tribunal is made competent to rule on its own jurisdiction,
including ruling on any objections with respect to the existence or
validity of the arbitration agreement.  Such a plea has to be raised not
later than the submission of the statement of defence.   However, a
party is not precluded from raising such a plea merely because he has
appointed or participated in the appointment of an Arbitrator.  There
is no provision in Chapter I of Part II under the said Act making the
International   Arbitration   Tribunal   competent   to   rule   on   its   own
jurisdiction, as is contained in sub­section (1) of Section 16 in respect
of   the   domestic   arbitration.     The   presumption  would   be   that   the
Legislature   has   consciously   excluded   the   jurisdiction   of   the
International Arbitration Tribunal to decide the question of its own
jurisdiction, including the question of existence and validity of an
arbitration agreement.

25. It   is   now   well­settled   that   the   exclusion   of   the   ordinary
jurisdiction  of  the  Civil Courts in India to adjudicate all the civil
disputes cannot be readily inferred unless it is barred by the express
provision of law or by necessary implication.  The Arbitral Tribunals,
whether   domestic   or   international,   are   the   forums   of   limited
jurisdiction.   It   exercises   the   jurisdiction   only   to   the   extent   it   is
conferred and only over the persons or the parties, who have agreed
to surrender themselves to such jurisdiction. The source of jurisdiction
of the Arbitral Tribunals to adjudicate the disputes or the differences
between   the   parties   to   the   arbitration   agreement   flows   from   the
consent of parties – implied or express, the agreement to that effect in
writing, or waiver or surrender to the jurisdiction of such Tribunal by
conduct of parties.  In the absence of these things, it is not possible for
the Arbitral Tribunals, whether domestic or international, to assume
the   jurisdiction   in   respect   of   the   subject­matter,   which   is   to   be
arbitrated and/or to pass an award against the person/s or party/ies,
who are non­signatories to the arbitration agreement.
26. Even   if   the   Arbitral   Tribunal   decides   the   disputes   or

differences under the arbitration agreement which is non­existent or
illegal   or   decides   the   disputes   or   differences   not   covered   by   the
arbitration agreement or exercises jurisdiction over non­signatories to
it and passes an award against them or against the persons or parties
who are not joined in such proceedings, the jurisdiction of the Civil
Courts in India under Section 34 in respect of domestic awards and
under   Section   49   of   the   said   Act   in   respect   of   an   award   by  the
International Arbitration Tribunal, to review such decision is saved.
Not   only   that,   but   such   decision   of   the   Court   in   India   is   made
appealable under Sections 37 and 50 of the said Act, as the case may
be.   Though the second appeal thereafter is barred under the said
provisions,  the  jurisdiction  of the  Supreme  Court  of India is  kept
unaffected with an addition under Sections 37(3) and 50(2) that it
shall not take away right of appeal to the Supreme Court.  In view of
this, the jurisdiction of the Arbitral Tribunal to decide the questions
and   pass   an   award,   as   contemplated   earlier,   stands   excluded   by
necessary implication.
27. There is a decision of the learned Single Judge of this Court
(Shri R.D. Dhanuka, J.) delivered on 28­4­2015 in Arbitration Petition

No.587 of 2015 and other connected matters in Oil and Natural Gas
Corporation Ltd. v. M/s. Jindal Drilling and Industries Limited, holding
in para 37 of the said decision that the Arbitral Tribunal has no power
to lift the corporate veil and such power can be exercised only by a
Court   if  the   strongest   case   is   made   out.     The  Court   rejected   the
argument   advanced   by   the   petitioner   therein   that   the   Arbitral
Tribunal should have lifted the corporate veil to find out that the
other   respondents   in   the   said   petition   were   forming   part   of   the
respondent   No.1   and   were   one   and   the   same   entity   –   bound   to
discharge the liabilities of the respondent No.1.  The Court found that
the decision of the Arbitral Tribunal refusing to lift the corporate veil
cannot, therefore, be interfered with under Section 34 of the said Act.
28. Shri   Deven   Chauhan,   the   learned   Advocate   for   the
applicant­Company, has invited my attention to clause 8(d) contained
in   the   Representation   Agreement   in   force,   which   is   reproduced
below :
“8(d) Interpretation, Amendment, Law, Arbitration and
Assignments.

(i) This Agreement is subject to the laws of the State of
Missouri, U.S.A.
(ii) In the event that a dispute arises in connection with
this Agreement such dispute shall be referred to a single
arbitrator in Kanas City, Missouri, U.S.A. to be appointed
by   agreement   between   the   parties   hereto,   or   failing
agreement to be appointed according to the rules of the
American Arbitration Association, the same rules under
which any dispute shall be decided.
(iii) In the event a dispute is committed to arbitration, the
party deemed at fault shall reimburse the full cost of the
arbitration and legal process to the aggrieved party.
(iv) This Agreement shall not be amended in any way
other   than   by   agreement   in   writing,   signed   by   both
parties.”
It is urged by him, relying upon the observations made in
paras 97, 99, 100, 102, 103, 103.1, 103.2 and 143 of the decision of
the Apex Court in the case of  Chloro Controls India Private Limited,
cited supra, that the expression “a dispute arises in connection with
this Agreement” is of the widest amplitude and confers a jurisdiction
upon the International Arbitration Tribunal not only to decide the

questions of existence, validity and effect (scope) of the arbitration
agreement, but also the rights and liabilities of the persons, who are
non­signatories to the agreement, if it finds that the cause of action is
directly relatable to the contract and that the non­signatories are the
“alter   ego”   of   the   non­applicant   No.1­Company   liable   to   pay   the
compensation/damages for breach of contract or payment of amount
arising out of the contract.
29. The Apex Court in the case of Chloro Controls India Private
Limited, cited supra, was dealing with a case under Section 45 of the
said Act, which concerns the power of the judicial authority to refer
the   parties   to   arbitration,   as   has   been   rightly   pointed   out   by
Shri Sunil Manohar, the learned Senior Advocate for the non­applicant
No.2.   The decision can be used as an authority for the proposition
advanced by Shri Manohar that it is the jurisdiction of the Court in
India to decide the question of existence, validity, binding nature and
enforceability of the agreement against non­signatories by invoking
the doctrine of “lifting of corporate veil” or “alter ego”.  The factual
background in which the principles are laid down and the object and
purpose of laying down such principles will have to be kept in mind.

A decision is an authority for what it actually decides and not for what
logically   follows   from   it,   is   a   well­settled   principle   of   judicial
precedents.   It was not the question raised and decided in the said
decision as to whether the jurisdiction to decide all such issues lies
with   the   Arbitral   Tribunal.   The   decision   in  Chloro   Controls   India
Private Limited is not an authority for the proposition that the Arbitral
Tribunal   is   competent   or   empowered   either   to   rule   on   its   own
jurisdiction or to make non­signatories to the arbitration agreement
bound by the award passed by it.  The decision is, therefore, no avail
to the applicant.
30. In   view   of   above,   the   argument   that   the   International
Arbitration  Tribunal   has   jurisdiction  to  pass  an   award  against   the
non­signatories to the arbitration agreement on the basis of finding
that they are the “alter ego” of the party to the agreement, is rejected
and it is held that such jurisdiction does not vest in the International
Arbitration Tribunal.  The question No.2 is answered accordingly.
As to Question No.3 :
31. Now   coming   to   the   question   as   to   whether   the

non­applicants,   who   had   appeared   in   the   proceedings   before   the
International Arbitration Tribunal and filed their reply raising all such
objections,   are   estopped   from   raising   such   objections   in   the
proceedings under Section 49 of the said Act, asking the Court to go
behind the findings recorded by the International Arbitration Tribunal.
No   doubt,   that   in   terms   of   clause   8(d)(i)   of   the   Representation
Agreement in question, there may be a forum available under the
laws of the State of Missouri, U.S.A., which is the agreed law, to
challenge the award passed in question. In the decision of the Apex
Court, delivered by the Constitution Bench in the case of  Khardah
Company Ltd., cited supra, such objection was raised and considered in
para 14 of the said decision.   The Court  has held that when the
agreement itself is void, then there was no submission which was alive
on which the Arbitrators could act and the proceedings before them
would be wholly without jurisdiction.  It holds that what confers the
jurisdiction  on  the  Arbitrators  to  hear  and  decide  a  dispute  is  an
arbitration agreement, as defined in Section 2(a) of the Arbitration
Act, and where there is no such agreement, there is an initial want of
jurisdiction   which   cannot   be   cured   by   acquiescence.   The   Court
rejected the contention that the respondents therein were estopped by

their conduct from questioning the validity of the award.
32. In the decision of the Apex Court in the case of  Renusagar
Power Co. Ltd., cited supra, it is held in para 57 as under :
“57. In   view   of   the   position   which   arises   from   the
aforesaid discussion it is really  unnecessary  for  us  to  go into
and decide the question whether, in cases where the arbitration
clause contained in the underlying Commercial Contract is so
widely worded as to include within its scope the question of its
existence, validity or effect (scope).   The decided cases have
made a distinction between questions as to the existence or
validity of the agreement on the one hand and its effect (scope)
on the other and have held that in the case of the former those
questions cannot be decided by the arbitrators, as by sheer logic
the   arbitration   clause   must   fall   along   with   the   underlying
Commercial Contract which is either non­existent or illegal,
while   the   case   of   the   latter   it   will   ordinarily   be   for   the
arbitrators   to   decide   the   effect   (scope)   of   the   arbitration
agreement as is contended for by Counsel for G.E.C. because
both under the scheme of the Foreign Awards Act as well as
under the general law of arbitration obtaining in England and
in India, the decision of the arbitrator on the question of his
own jurisdiction will have to be regarded as provisional or
tentative, subject to final determination of that question by the

Court. ...”
As a general law, the Court has made a distinction between
the questions as to the existence of validity of the agreement on one
hand and its effect (scope) on the other, and has held that in the case
of the former, those questions cannot be decided by the Arbitrators, as,
by   sheer   logic,   the   arbitration   clause   must   fall   along   with   the
underlying commercial contract, which is either non­existent or illegal,
while the case of the latter, it will ordinarily be for the Arbitrators to
decide the effect (scope) of the arbitration agreement.  It is held under
the scheme of the Foreign Awards Act as well as under the general law
of arbitration obtaining in England and in India, the decision of the
Arbitrator on the question of his own jurisdiction will be regarded as
provisional or tentative, subject to final determination of that question
by the Court.  
33. In view of above, the argument that once the International
Arbitration Tribunal rightly or wrongly decides the question of its own
jurisdiction, it can be challenged only in the forum provided in the law
applicable under the arbitration agreement and the Court in India,
acting under Section 49 of the said Act, cannot go behind such award

to record the findings contrary to the contents of such award and
refuse to make a decree of the Court, is rejected.  It is held that the
decision of the International Arbitration Tribunal on such question will
be treated as tentative, subject to the decision of Court in India under
Section 49 of the said Act and there would be no question of estoppel,
waiver,   surrender   or   acquiescence,   merely   because   there   is
participation in the proceedings of arbitration.  The question No.3 is
answered accordingly.
34. Having dealt with the questions of law, I turn to the facts of
the present case. The Representation Agreements in force are signed
by   the   Director­Terry   L.   Peteete   for   and   on   behalf   of   the
applicant­Integrated   Sales   Services   Limited,   and   by   Rattan   Ram
Pathak, the   non­applicant No.3(i), in his capacity as the Managing
Director   of   the   non­applicant   No.1­DMC   Management   Consultants
Ltd., containing the clause of arbitration, making it subject to the laws
of State of Missouri, U.S.A.  Neither the non­applicant No.2­Arun Dev
s/o   Govindvishnu   Upadhyaya,   nor   the   applicant   No.3­Gemini   Bay
Transcription Pvt. Ltd., through its Directors­(i) Rattan Ram Pathak,
and   (ii)   Naresh   Kumar   Kopisetti,   have   signed   the   Representation

Agreements   in   force   in   their   individual   capacity.   Except   the
non­applicant No.2­Arun Dev s/o Govindvishnu Upadhyaya, none of
the other individual non­applicants in this application were joined as
the   party­respondents   in   the   dispute   before   the   International
Arbitration Tribunal.  The respondents before the said Tribunal were
DMC   Management   Consultants   Ltd.,   Arun   Dev   s/o   Govindvishnu
Upadhyaya,   Gemini   Bay   Consultants   Ltd.,   and   Gemini   Bay
Transcription Pvt. Ltd.  
35. The   non­applicant   Nos.2   and   3   have   neither   submitted
themselves   to   the   arbitration   nor   to   the   composition   of   the
International Arbitration Tribunal.  There did not exist or subsist any
arbitration agreement between the applicant and the non­applicant
Nos.2 and 3.   There is nothing in the Representation Agreements in
force, which permit the said Tribunal to exercise jurisdiction over the
non­signatories to it.   The invocation of the principle of lifting of
corporate   veil   and   holding   the   non­applicant   Nos.2   and   3   as
“alter ego” of the non­applicant No.1­Company and on the basis of it,
to hold them jointly and severally liable to pay the amount under the
award, is totally without jurisdiction and cannot be sustained.  Merely

because   the   non­applicant   Nos.2   and   3   have   participated   in   the
proceedings before the International Arbitration Tribunal, they cannot
be   estopped   from   raising   the   question   of   jurisdiction   of   the   said
Tribunal in response to the application under Section 49 of the said
Act.  The question of operating estoppel, acquiescence, surrender, etc.,
to the jurisdiction of the said Tribunal, does not at all arise.   The
award passed by the International Arbitration Tribunal, in the present
case, is, therefore, hit by the conditions in clauses (c), (d) and (e) of
sub­section (1) of Section 48 of the said Act.  The said award cannot,
therefore, be enforced in India against the non­applicant Nos.2 and 3
by making a decree of the Court.
36. Though   the   International   Arbitration   Tribunal   had   no
jurisdiction to invoke the principle of lifting of corporate veil and
holding   the   non­applicant   Nos.2   and   3   as   “alter   ego”   of   the
non­applicant   No.1­Company,   this   Court   is   competent   under
Section 49 of the said Act to go into all these aspects of the matter and
hold that the non­applicant Nos.1, 2 and 3 are jointly liable to pay the
amount covered by the award passed by the said Tribunal.  However,
the applicant has to make out such a case in the proceedings under

Section 49 of the said Act.   After going through the contents of the
application, I  do not  find that any such  case is made out  by the
applicant.   In  spite  of repeated queries, Shri Deven  Chauhan, the
learned Advocate for the applicant, makes a statement that this is not
the case with which the applicant has come forward before this Court
while invoking the jurisdiction under Section 49 of the said Act.  Had
such   a   case   been   made   out,   then   the   extent   of   liability   of   the
non­applicant   No.2,   being   the   Director   of   the   non­applicant
No.1­Company,   was   required   to   be   judged   on   the   basis   of   the
provisions   of   the   Companies   Act,   1956.     In   view   of   this,   the
non­applicant Nos.2 and 3 cannot be held in this proceeding jointly
liable to pay the amount covered by the arbitration award, along with
the non­applicant No.1­Company.
37. Shri   Deven   Chauhan   for   the   applicant   submits   that   the
non­applicant   Nos.2   and   3   were   made   parties   in   the   proceedings
before   the   International   Arbitration   Tribunal   in   their   individual
capacity and they are also made parties in the same capacity before
this Court.  The award passed against them is required to be executed
against them individually by attaching their properties if such occasion

arises.   In order to make the non­applicant Nos.2 and 3(i) and (ii)
individually or severally liable to pay the sum covered by the arbitral
award   in   question,   it   must   be   shown   that   they   have   signed   the
arbitration agreement as guarantors or sureties for the debts due or
recoverable   arising   out   of   or   in   connection   with   the   contract   in
question   against   the   non­applicant   No.1,   of   which   they   are   the
Directors.  In such an event, the liability of the guarantor or surety will
be co­extensive with that of the principal debtor, and consequently
their personal assets may be attached in execution of the decree.  This
is not the case with which the applicant has approached this Court
under Section 49 of the said Act.  Hence, the award passed in question
cannot be enforced against them by passing a decree.
38. Shri Mathews, the learned Advocate for the non­applicant
No.1­Company, the judgment­debtor, has urged that the confirmation
of award has to be by the Court of Chancery at Delaware and the
confirmation of award by the District Court at Missouri is without
jurisdiction,   and   hence   it   is   liable   to   be   set   aside.   The
non­applicant   No.1   is   party   to   the   Representation   Agreements
containing the arbitration clause, and such question at their instance

cannot be entertained under Section 49 of the said Act, particularly
when there is a remedy available to challenge it in the forum provided
in the laws of State of Missouri, U.S.A.  It cannot be a question of the
said award being contrary to the public policy of India, as has been
urged   by   Shri   Mathews.     The   award   passed   by   the   International
Arbitration Tribunal against the non­applicant No.1 will have to be
enforced by making it as a decree of this Court.
39. In view of above, the following order is passed :
(1) The   award   dated   28­3­2010   passed   by   the
International   Arbitration   Tribunal   in   ICDR   Case
No.50­181­T­00327­09   becomes   unenforceable   in   India   to
the extent it operates against the non­applicant No.2­Arun
Dev   s/o   Govindvishnu   Upadhyaya   and   No.3­Gemini   Bay
Transcription Pvt. Ltd., and the claim for passing a decree
against them in terms of the said award is refused.
(2) The   award   passed   by   the   International   Arbitration
Tribunal in ICDR Case No.50­181­T­00327­09 to the extent it
operates against the non­applicant No.1­DMC Management
Consultants Ltd. is made enforceable in India and the decree

is   passed   in   terms   of   the   said   award   against   the
non­applicant No.1.
(3) Decree be drawn accordingly.
(4) The matter shall remain pending.
     JUDGE.

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