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

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