BEFORE

THE HONBLE SUPREME COURT OF

INDIA
CIVIL APPELLATE JURISDISDICTION
SPECIAL LEAVE PETITION (CIVIL APPEAL) NO. 6527 OF
2001
(Appeal by special leave from the judgment and order dated October 10, 2000
of the Madhya Pradesh High Court in Writ Petition.)

IN THE MATTER OF:

BHATIA INTERNATIONAL

PETITIONER

VERSUS

BULK TRADING S. A. & ANR.

...RESPONDENT

ADVOCATE FOR THE PETITIONER: NOMINEE PAREEK

MEMORIAL ON BEHALF OF THE PETITIONER

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TABLE OF CONTENTS

S.NO.

PARTICULARS

PAGE NO.

1.

INDEX OF AUTHORITIES

ii - iii

2.

STATEMENT OF FACTS

v - vi

3.

QUESTION OF LAW

vii

4.

SUMMARY OF ARGUMENTS

viii

5.

GROUNDS

1-7

6.

PRAYER

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I N D E X O F AU T H O R I T I E S
A. LIST OF CASES:
1. CDC
Financial
Services
(Mauritius)
Ltd
Communications
2. Marriott International Inc. v. Ansal Hotels Ltd.
3. Keventea Agro Ltd. v. Agram Company Ltd
4. Shanon Realites Ltd. vs. Sant Michael

BPL

B. BOOKS
1. LAW RELATED TO ARBITRATION AND CONCILIATION IN
INDIA DR. N.V. PARANJPEE (5TH EDITION)
C. DICTIONARIES
1. AIYAR, RAMANATHA P.: THE LAW LEXICON, WADHWA & COMPANY, 2ND EDN.
NAGPUR (2002).
2. BLACK, HENRY CAMPBELL: BLACKS LAW DICTIONARY, 6TH EDN., CENTENNIAL ED.
(1891-1991).
3. CURZON. L. B: DICTIONARY OF LAW, PITMAN PUBLISHING, 4TH EDN. NEW DELHI
(1994).
4. GARNER, BRYAN A.: A DICTIONARY OF MODERN LEGAL USAGE, OXFORD
UNIVERSITY PRESS 2ND EDN. OXFORD (1995).
5. GREENBERG, DANIEL AND ALEXANDRA, MILLBROOK: STROUDS JUDICIAL
DICTIONARY OF WORDS & PHRASES, VOL. 2, 6TH EDN., LONDON: SWEET &
MAXWELL (2000).
6. JUSTICE DESAI, M.C.

AND

AIYAR, SUBRAMANYAM:

LAW LEXICON & LEGAL

MAXIMS, 2ND EDN., DELHI: DELHI LAW HOUSE (1980).

7. MITRA, B.C. & MOITRA, A.C., LEGAL THESARUS, UNIVERSITY BOOK, ALLAHABAD
(1997).
8. MOYS, ELIZABETH M., CLASSIFICATION & THESAURUS FOR LEGAL MATERIAL,
3RD EDN., LONDON: BOWKER SAUR (1992).
9. OPPE., A.S., WHARTONS LAW LEXICON, 14TH EDN., NEW DELHI: SWEET &
MAXWELL (1997).
10. PREM, DAULATRAM, JUDICIAL DICTIONARY, 1ST EDN., JAIPUR: BHARAT LAW
PUBLICATION (1992).
D. STATUTORY COMPILATION

1. THE ARBITRATION AND CONCILIATION ACT, 1996

MEMORIAL ON BEHALF OF THE PETITIONER

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E. INTERNET SITES
1. http://www.findlaw.com
2. http://www.indiankanoon.com
3. http://www.indlawinfo.org/
4.
5.
6.
7.
8.
9.

http://www.jstor.org.
http://www.judis.nic.in
http://www.lawsofindia.org
http://www.manupatra.com
http://www.scconline.com
http://www.supremecourtcaselaw.com

IN THE SUPREME COURT OF INDIA

[Order XVI Rule 4(1) (a)]
CIVIL APPELLATE JURISDICTION
SPECIAL LEAVE PETITION
(Under Article 136 of the Constitution of India)
S.L.P (Civil) Appeal No. 6527 Of 2001
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BETWEEN

POSITION OF PARTIES
In the Honble

In

this
High Court

BHATIA INTERNATIONAL

Honble Court

- Appellant

Petitioner

Versus
BULK TRADING S. A. & ANR. -Respondent

Respondent

To
The Hon'ble Chief Justice of India
& His Lordship's Companion Justices
of the Supreme Court of India.
The Petitioner above named

MOST RESPECTFULLY SHOWETH:

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FA C T S O F T H E C A S E
1. The Appellant entered into a contract with the 1st Respondent on 9th May,
1997.
2. This contract contained an arbitration clause which provided that arbitration
was to be as per the rules of the International Chamber of Commerce (for
short ICC).
3. On 23rd October, 1997 the 1st Respondent filed a request for arbitration with
ICC. Parties agreed that the arbitration be held in Paris, France.
4. ICC has appointed a sole arbitrator.
5. 1st Respondent filed an application under Section 9 of the Arbitration and
Conciliation Act, 1996 (hereinafter called the said Act) before the III
Additional District Judge, Indore, M.P. against the Appellant and the 2nd
Respondent.
6. One of the interim reliefs sought was an order of injunction restraining these
parties from alienating, transferring and/or creating third party right,
disposing of, dealing with and/or selling their business assets and properties.
7. The Appellant raised the plea of maintainability of such an application. The
Appellant contended that Part I of the said Act would not apply to
arbitrations where the place of arbitration is not in India.
8. This application was dismissed by the III Additional District Judge on 1st
February, 2000.
9. It was held that the Court at Indore had the jurisdiction and the application
was maintainable.

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10.The Appellant filed a Writ Petition before the High Court of Madhya
Pradesh, Indore Bench.
11.The said Writ Petition has been dismissed by the impugned Judgment dated
10th October, 2000.
12.The present Civil Appeal is being filed by the Appellant in 2001.

___________
_____________________

Q U E S T I O N O F L AW
The following questions of the law arise for
consideration by this Hon'ble Court:

ISSUE - I
WHETHER PART I OF THE ARBITRATION AND
CONCILIATION ACT, 1996 ONLY APPLIES TO
THE ARBITRATIONS WHERE THE PLACE OF
ARBITRATION IS IN INDIA?
___________
_____________________
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S U M M A RY O F A R G U M E N T S
It is humble submitted before the honble court that the present
petition is maintainable for the following reason:

1. That Part I of the said Act only applies to arbitrations where the place of
arbitration is in India. If the place of arbitration is not in India then
Part II of the said Act would apply.
2. That Part II deals with enforcement of foreign awards and makes
elaborate provisions in respect thereof.
3. That under Section 5 of the Act the principle is that a judicial authority
should not interfere except as provided in the act.
4. That the language of the Act is plain, simple and unambiguous thus the
Literal Construction should be taken.

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___________
_____________________

A R G U M E N T S A D VA N C E D
(GROUNDS)
It is humbly submitted that the grounds to allow the Special
Leave Petition are:
A. Because

it

is

apparent

on

the

face

of

entire

proceeding that Part I of the Arbitration & Conciliation

Act, 1996 only applies to the arbitrations where the
place of arbitration is in India.
1. It is humbly submitted that Sub-section (2) of Section 2 of the Act provides
that Part I shall apply where the place of arbitration is in India. That
would mean that in the case of arbitration between Indian Nationals and also
where one party is not an Indian National and where the place of the
Arbitration is in India, Part I of the Act will apply.
Thus it is clear by the act itself that Part I of the Act will not apply to the
present case as the place of arbitration is not in India.
2. Next it is submitted that the Act is based on UNCITRAL (United Nations
Commission on International Trade Law) Model Law on International
Commercial Arbitration.

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Article 1(2) of UNCITRAL Model Law provides that the law, except
Articles 8, 9, 35 and 36 of the Model Law, would apply only if the
Arbitration takes place in the territory of the State.
Article 9 of the UNCITRAL Model Law permits a party to request a court
for interim measure even if the arbitration is not in the territory of the state.
While framing the Act the Legislature has purposely not adopted Article 1(2)
of the UNCITRAL Model Law. This clearly shows the intention of the
Legislature that they did not want Part I to apply to arbitrations which take
place outside India.
And therefore the Respondents can only approach to the court under
Article 9 of the UNCITRAL Model Law.
3. Further it is submitted that Section 2(f) of the said Act defines an
"international commercial arbitration. According to it, an international
commercial arbitration could take place either in India or outside India. If the
international commercial arbitration takes place out of India then Part I
of the Act would not apply.
4. Further it is submitted that Sub-sections (3), (4) and (5) of Section 2, which
read as follows:
(3) This Part shall not affect any other law for the time being in force by
virtue of which certain disputes may not be submitted to arbitration.
(4) This Part except sub-section (1) of section 40, sections 41 and 43 shall
apply to every arbitration under any other enactment for the time being in
force, as if the arbitration were pursuant to an arbitration agreement and as if
that other enactment were an arbitration agreement except in so far as the
provisions of this Part are inconsistent with that other enactment or with any
rules made thereunder.
(5) Subject to the provisions of sub-section (4), and save in so far as is
otherwise provided by any law for the time being in force or in any agreement
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in force between India and any other country or countries, this Part shall apply
to all arbitrations and to all proceedings relating thereto."
Sub-sections (3), (4) and (5) of Section 2 would necessarily only apply to
arbitration which take place in India.

Even though the sub-section (4) of Section 2 uses the words "every
arbitration" and sub-section (5) of Section 2 uses the words "all
arbitrations and to all proceedings relating thereto", they must necessarily
refer only to arbitrations which take place in India. Otherwise there would
be a conflict between sub section (2) on one hand and sub sections (4)
and/or (5) on the other.

Thus sub section (4) & (5) should not be read in contravention of sub
section (2) of Section 2 of the Act.

5. Further it is submitted that, if it is held that Part I applies to all arbitrations

i.e. even to arbitrations whose place of arbitration is not in India, then Sub
section (2) of Section 2 would become redundant and/or otiose.
Thus it is submitted that the present matter of arbitration is being held
in Paris i.e. out of India. And to such arbitrations Part I do not apply.
Sections 9 and 17 fall in Part I. Thus Sections 9 and 17 would not apply
and cannot be used in cases where the place of arbitration is not in
India.

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B. Because Part II deals with enforcement of foreign

awards and makes elaborate provisions in respect
thereof.
1. It is humbly submitted that in Part II there is no provision similar to Sections
9 and 17. The Legislature, while providing for foreign awards, has purposely
omitted to make any provision for interim measures either by the Court or by
arbitral tribunal.
Where arbitrations take place outside India, they would be governed by the
rules of the country or the body under whose jurisdiction they are being
conducted.
Under the ICC Rules of Arbitration Article 23 provides for interim
measures. The remedy, if any, is to apply for interim relief under Article 23.
A plain reading of Section 9 also makes it clear that it would not apply to
arbitrations which take place outside India.
Section 9 provides that an application for interim measure must be
made before the award is enforced in accordance with Section 36.
AND Section 36 deals with enforcement of domestic awards only. And
provisions for enforcement of foreign awards are contained in Sections 48,
49, 57 and 58. It is very significant that Section 9 does not talk of
enforcement of the award in accordance with Sections 48, 49, 57 and 58.

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Thus this also makes it clear that the provisions of Part I of the said Act do
not apply to arbitrations which do not take place in India as Part II has
make elaborate provisions for Foreign Awards.
C. Because under Section 5 of the Act the underlying
principle is that a judicial authority should not interfere
except as provided in the act.
1. It is humbly submitted that the rationale behind this contention is that there
should be minimum interference by Courts.
Two points are noteworthy in it:
i. Section 5 (departing from the Model Law) contains a non-obstante clause.
Section 8 also departs from the Model Law. The corresponding provision
(Art 8 of the Model Law) permits the court to entertain an objection to the
effect that the arbitration agreement is null and void inoperative or
ii.

incapable of being performed.

The departures made by the Indian law demonstrate the legislative intent to
keep the courts out and let the arbitral stream flow unobstructed.

2. Next it is submitted that by and large the Indian courts have well understood
the spirit and intent behind the principle of non-intervention.
Hence in CDC Financial Services (Mauritius) Ltd v BPL
Communications1 the respondent obtained an anti-arbitration injunction
from the High Court on the ground that the pledge of shares which was
sought to be enforced through arbitration would enable the claimants to take
control of a telecom company which (as it was a foreign company) would be
contrary to Indian law. On appeal, the Supreme Court rejected this
contention, stating that this was a plea on merits and thus within the sole
jurisdiction of the arbitrators. Interestingly, the court not only vacated the
injunction, it also restrained the respondent from moving any further
1 2004 121 CompCas 374 Bom, 2004 56 SCL 665 Bom

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applications which would have the effect of interfering with the

continuance and conclusion of the arbitration proceedings.
Thus it is submitted that the Court in Indore could not have entertained the
application under Section 9 as Part I did not apply to arbitrations which take
place outside India. The Court in Indore and the High Court were wrong in
rejecting the application of the Appellant and in holding that the Court had
jurisdiction.
3. Next it is submitted that a number of High Courts including the High
Courts at Orissa, Bombay, Madras, Delhi and Calcutta have held that
Part I of the Act would not apply to arbitrations which take place
outside India. A Division Bench of the Delhi High Court has held that
Part I does not apply to arbitrations which take place outside India.
In the case of Marriott International Inc. v. Ansal Hotels Ltd.2 and
Judgment of a Division Bench of the Calcutta High Court dated 27th
January, 1998 in the case of Keventea Agro Ltd. v. Agram Company Ltd,
it was held that Part I of the Act would not apply to Arbitrations which
take place outside India.
The Delhi High Court further notices that this reasoning may lead to a situation
where a party may be left remedy-less and, therefore, would work hardship on a
party. The Delhi High Court however observed as follows:
"We may agree with the learned counsel for the appellant that it may, in some
cases, lead to hardship to a party, however, when the language of the statute is
plain and unambiguous and admit of only one meaning. The question of
construction of statute arises, for the Act speaks for itself even if the result is
strange or surprising, unreasonable or unjust or oppression as it is not for the
Courts to extend the scope of the statute beyond the contemplation of the
legislature. It is entirely for the legislature to look into this question."
2 AIR (2000) Delhi 377

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D. Because the language of the Act is plain, simple and

unambiguous thus the Literal Construction should be
taken.
In Shanon Realites Ltd. vs. Sant Michael3 Lord Shaw stated, "where
words of a statute are clear, they must, of course, be followed, but in their
Lordships opinion where alternative constructions are equally open that
alternative is to be chosen which will be consistent with the smooth working
of the system which the statute purports to be regulating and that alternative
is to be rejected which will introduce uncertainty, friction or confusion into
the working of the system.
Thus, it is clear that if the Part I of the Act is followed then it will be in
contravention of the provision of Part II of the Act, and thus introduce
uncertainty and confusion.

3 (924) A.C. page 185 at page 192-193

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P R AY E R
In view of the above, it is most respectfully and humbly prayed that
this Hon'ble Court may be pleased:
a) To allow the Special Leave petition & struck down the decision
of the honble High Court.
b) To declare that Part I of the Arbitration & Conciliation Act, 1996
would not apply to arbitrations where the place of arbitration is
not in India.
c) To pass such other orders and further orders as may be deemed
necessary on the facts and in the circumstances of the case.
AND FOR THIS ACT OF KINDNESS, THE PETITIONER AS IS
DUTY BOUND SHALL EVER PRAY.

Filed by:
Nominee Pareek
(Advocate of the Petitioner)
New Delhi
Drawn on:......
Filed on:......

MEMORIAL ON BEHALF OF THE PETITIONER