CASE IN POINT

VOL. VIII IV OCTOBER 2019

Foreword We examine the Supreme Court's decision in Garware
Wall Ropes v. Coastal Marine Constructions &
It gives me immense pleasure to present to you the twenty
Engineering Ltd. where the Supreme Court held that an
third issue of Case in Point, a quarterly update on the recent
unstamped arbitration agreement would be treated as
legal developments in the Field of Dispute Resolution.
being non-existent in law and could not therefore be acted
The lead piece in this issue focuses on anti-suit injunctions. upon by courts for the appointment of an arbitrator under
We take a detailed look at the origin and evolution of anti- section 11 of the Arbitration and Conciliation Act, 1996.
suit injunctions in the UK and its use in the EU and the
We also examine the Supreme Court's decision in Madhav
United States. The articles is an essential read in
Prasad Aggarwal v. Axis Bank Ltd. where the Court has
understanding the anti-suit injunctions in a comparative
clarified the scope of Order VII Rule 11 of the Civil
perspective.
Procedure Code by clarifying that a plaint can either be
Next, we have examined recent legislations passed by the rejected as a whole or not at all.
Indian Parliament. The last session of Parliament was one
Finally, the issue is concluded by the Supreme Court's
of the most productive sessions in recent times. Parliament
decision in Reckitt Benckiser (India) Private Limited v.
passed the New Delhi International Arbitration Centre Act,
Reynders Label Printing India Private Limited, wherein
2019 (“NDIAC Act”) which aims to bring targeted
the Court has clarified whether a foreign company could be
reforms to develop the NDIAC as a flagship institution for
impleaded as a party in an arbitration proceeding despite
conducting international and domestic arbitration. Fresh
being a non-signatory to the arbitration agreement, solely
amendments have also been made to the Arbitration and
on the basis of the “group of companies” doctrine.
Conciliation Act, 1996 constituting the third major set of
changes to the law. The changes aim at regulating timelines Feedback and suggestions from our readers would be
and increasing efficiency. Parliament also brought in much appreciated.
needed amendments to the Insolvency and Bankruptcy
Please feel free to send in your comments to
Code. The amendment introduces some key changes such
[email protected].
as a maximum mandatory timeline of 330 days from
commencement for conclusion of the insolvency
Regards,
resolution process and reintroduction of payment of
liquidation value to dissenting financial creditors. The Cyril Shroff
amendments should help streamline the insolvency Managing Partner
process and bring much needed clarity to a well- [email protected]
intentioned but poorly implemented legislation.
1. Foreword ..............................................................02
Parliament also passed the Supreme Court (Number of
Judges) Amendment Bill, 2019, which increasing the 2. Antisuit Injunctions:
strength of the Supreme Court to thirty-three. It is hoped Analysis of Legal Position...................................03
that this will help the Supreme Court address the growing
backlog of cases on its docket. 3. Update on laws passed by the Indian Parliament in
2019 .....................................................................06
We have examined the recent decision of the Supreme
Court in Ssangyong Engineering & Construction Co. Ltd. 4. Madhav Prasad Aggarwal v. Axis Bank Ltd. .......07
v. National Highways Authority of India, wherein the
5. Sangyong Engineering & Construction Co. Ltd.
Supreme Court considered the scope of review to set aside
v. National Highways Authority of India.............09
an award passed in an international commercial
arbitration. In doing so, the Court has sought to clarify what 6. Validity of the arbitration clause in an unstamped
constitutes public policy and fundamental policy of Indian arbitration agreement ...........................................11
law particularly in light of the Arbitration and Conciliation
(Amendment) Act, 2015. The case also saw the Supreme 7. Reckitt Benckiser (India) Private Limited v.
Court use its power to do complete justice under Article Reynders Label Printing India Private
142 of the Constitution to convert the minority award into Limited.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
the binding award between the parties.
2
 Antisuit Injunctions:
Analysis of Legal Position
-Faraz Sagar and Pragati Sharma

Broadly speaking, an anti-suit injunction is an substantial connection” 2, the Court will not only examine
extraordinary procedure where a court issues an order to factors affecting convenience but also the law governing
the effect that proceedings in another jurisdiction should the transaction, and the places where the parties reside and
not precede, whilst preventing an irreparable miscarriage carry on business.
of justice. Anti-suit injunctions are a specific form of
Lord Goff, in Spilada Maritime Corpn v. Cansulex Ltd,3
injunctive relief and equitable relief. Commercially, an
stated: “the basic principle is that a stay will only be
antisuit injunction is an extremely viable, and cost
granted on ground of forum non conveniens where the
effective strategy where a party is facing a multi
court is satisfied that there is some other available forum,
jurisdictional dispute. Furthermore, in certain
having competent jurisdiction, which is the appropriate
jurisdictions, it may be sought to further enjoin parties and
forum for the trial of the action.”
seek declaration of non-liability.
Antisuit Injunction in India
The natural use of antisuit injunctions is to prevent forum
shopping in an increasingly expanding globalised business In India, the courts follow the principle of comity while
environment. Antisuit injunctions can be a powerful tool in exercising and accepting antisuit injunctions. Although
complex transnational disputes. The issuance of an antisuit anti-suit injunctions are directed against a person, they can,
injunction greatly increases the likelihood that the issuing in effect, cause interference in exercise of jurisdiction by
court will be the only court to hear a cause of action and another court, therefore, the power is exercised with due
dramatically decreases the chance that another court will care and extreme caution as it involves the issue of respect
pre-empt the jurisdiction of the issuing court by reaching a for corresponding courts and international forums and
final judgment first. It further prevents two virtually hence, the courts are reluctant to grant anti-suit injunction.
identical causes of action from proceeding concurrently in The Supreme Court of India held that Indian courts can
parallel courts. From a litigant perspective, the issuance of grant antisuit and anti-arbitration injunctions only if it is
an antisuit injunction may also influence the outcome of necessary or expedient to do so to prevent injustice and it is
the cause of action: to the extent that the injunction in interest to justice4. In the case of Modi Entertainment
determines the forum for litigation, it decides the choice-of Network and Anr. v. W.S.G. Cricket PTE. Ltd, the Supreme
law rules, and often the substantive law that will govern the Court laid down the principles governing threshold for
case. grant of antisuit injunctions as under:
The courts in common law jurisdictions have given In exercising discretion to grant an anti-suit
themselves an inherent jurisdiction to stay an action injunction, the Court must be satisfied of the following
brought in that country or to restrain by injunction (antisuit aspects, (a) the defendant, against whom injunction is
injunction) the institution or continuation of proceedings in sought, is amenable to the personal jurisdiction of the
a foreign court, whenever it is necessary to do so in order to Court; (b) if the injunction is declined, the ends of
prevent injustice.1 The defendant must demonstrate that justice will be defeated and injustice will be
another forum is “available”. To determine the 'natural perpetuated; and (c) the principle of comity- respect
forum' – “that with which the action has the most real and for the Court in which commencement or continuance

1 Fawcett, Declining Jurisdiction in Private International Law (Clarendon Press, Oxford, 1995); Bell, Forum Shopping and Venue in International Litigation (OUP, Oxford, 2003); Robertson (1987)
103 LQR.
2 Lord Keith in The Abidin Daver [1984] AC 398 at 415.
3 [1987] AC 460.
4 Oil and Natural Gas Commission v Western Company of North America (1987) 1 SCC 496.

3
 of action or proceeding is sought to be restrained- must grounds of forum non conveniens), but, where a
be borne in mind. In cases where multiple forums are matter is justiciable in an English and a foreign court,
available, the Indian Courts will examine as to which the party seeking an antisuit injunction must generally
is the appropriate forum and may grant antisuit demonstrate that proceeding before the foreign court
injunction in regard to proceedings which are would be or is vexatious or oppressive. The
oppressive or vexations or inconvenient (forum non prosecution of parallel proceedings in different
conveniens). The applicant must establish that the jurisdictions is undesirable but not necessarily
forum of the choice is a forum non- conveniens or the oppressive or vexatious.
proceedings therein are oppressive or vexatious.
Although arbitration is excluded from the scope of the
A contractually agreed Court can be declared as forum Brussels I Regulation, the Regulation does not prevent the
non conveniens only in exceptional circumstances English Courts from granting an injunction to restrain
though an anti-suit injunction by the Court of natural arbitral proceedings abroad, even in another Member
jurisdiction. Where one of the parties to the State. It must be demonstrated that the applicant's legal or
jurisdiction clause approaches the court of choice in equitable rights have been infringed or threatened by a
which exclusive or non-exclusive jurisdiction is continuation of the arbitration, or that its continuation will
created, the proceedings in that court cannot per se be be vexatious, oppressive or unconscionable8. However,
treated as vexatious or oppressive nor can the court be that power was limited as a result of the Brussels I
said to be forum non conveniens5. Regulation, which was superseded with effect from
January 10, 2015 by the Recast Brussels Regulation, where
The underlying principle for meeting the threshold for
the offending proceedings had been issued in the courts of
grant of antisuit injunction is that jurisdiction is
another EU Member State in breach of an exclusive
exercised over the defendant “where it is appropriate
jurisdiction or arbitration agreement.
to avoid injustice" or where the foreign proceedings
are “contrary to equity and good conscience”. The English High Court in Nori Holdings Ltd v. PJSC
BOFC 9, considered that Recital 12 of the Recast Brussels
Antisuit Injunction in the UK
Regulation was clear and did not affect the position as set
The English Courts have long had the power6 to grant out in West Tankers10 – the courts cannot grant an antisuit
antisuit injunctions) restraining a party from commencing, injunction restraining proceedings commenced in the
or continuing, proceedings in a court or tribunal overseas courts of another EU Member State in breach of an
where those proceedings were being conducted in breach arbitration agreement.
of a contractual agreement as to where disputes should be
It yet to be seen how Brexit will impact on the English
resolved (an exclusive jurisdiction or arbitration
Court's ability to grant antisuit injunctions against
agreement).
proceedings commenced/continuing in EU Member States
In Deutsche Bank AG v. Highland Crusader Offshore remains to be seen. It may be probable, following the
Partners LP 7, the England and Wales Court of Appeal set decision in Nori Holding that the English Courts may not
out a summary of the correct approach on injunctions and need to follow West Tankers post-Brexit, and grant antisuit
enjoining of foreign proceedings: injunctions restraining proceedings brought in EU
Member State Courts if the UK does not enact measures
a. Under English law, the court may restrain a defendant with similar effect to the Recast Brussels Regulation.
over whom it has personal jurisdiction from instituting
or continuing proceedings in a foreign court when it is Antisuit Injunction in the EU
necessary in the interests of justice to do so.
The Brussels I Regulation (EU Regulation No 44/2001),
b. It is too narrow to say that such an injunction may be governs the jurisdiction of EU Member State courts over
granted only on ground of vexation or oppression (on civil and commercial matters and provides guidance on

5 The Delhi High Court, in Piramal Healthcare v. DiaSorin SpA, held that since the parties have agreed to submit to the nonexclusive jurisdiction of the English Courts, such jurisdiction clause
indicates the intention of the parties as evidenced by their contract must be given effect to. Therefore, since the parties had agreed to resolve their disputes arising under the agreement, it evidences
that they had foreseen possible breach of agreement by any of the parties and provided for the resolution of the disputes which might arise therefrom.
6 The development of the doctrine of forum non conveniens can be traced through a number of landmark English judgments: The Atlantic Star [1974] AC 436, MacShannon v Rockware Glass Ltd.
[1978] AC 795, and the Abidin Daver [1984] AC 398.
7 [2009] EWCA Civ 725.
8 Claxton Engineering Services Ltd v TXM Olaj-es Gazkutato Kft [2010] EWHC 2567 (Comm).
9 Nori Holdings Ltd v PJSC BOFC [2018] EWHC 1343 (Comm) [England and Wales].
10 West Tankers Inc. v Allianz SpA (Case C-185/07) [2009] AC 1138.

4
resolving conflicts of jurisdiction between courts of the whether the recast Brussels I Regulation prohibits antisuit
various Member States. While it appears to exclude injunctions issued by Member State courts in support of
arbitration from its scope, it was unclear whether the arbitration.
Brussels I Regulation covered or restricted antisuit
Antisuit Injunction in the US
injunctions issued by arbitrators (as opposed to those
granted by courts). Contrary to the prevalent myth, the US courts tend to have
a conservative approach towards granting antisuit
In West Tankers11, the Court of Justice had held a
injunctions. The US jurisprudence on antisuit injunctions
preliminary issue concerning the application of an
can be traced back to medieval England, when common
arbitration agreement, including its validity, falls within
law courts used writs of prohibition to stop both litigants
the scope of the Brussels I Regulation if the main subject
and other tribunals from proceeding with particular
matter of the proceedings comes within scope, however, as
actions13. During the same time period, the courts of equity
a result, the Court of Justice held that it was incompatible
used antisuit injunctions to achieve essentially the same
with the Brussels I Regulation 'for a court of a Member
results, although antisuit injunctions were then and
State to make an order to restrain a person from
continue to be directed only at litigants, not at other
commencing or continuing proceedings before the courts
tribunals14.
of another Member State on the ground that such
proceedings would be contrary to an arbitration The US law concerning antisuit injunction is extremely
agreement.' complicated with respect to proceedings involving both
litigation and arbitration. The remedy is considered
In the case of Gazprom12, the Court of Justice determined
extraordinary and available only in the rarest of
that the Brussels I Regulation: 'must be interpreted as not
scenarios15.
precluding a court of a Member State from recognising and
enforcing, or from refusing to recognise and enforce, an In an international setting, although parties can seek
arbitral award prohibiting a party from bringing certain antisuit injunctions in purely domestic cases, such requests
claims before a court of that Member State, since that may be more likely to arise in matters involving a parallel
regulation does not govern the recognition and proceeding in another country. US courts can vary greatly
enforcement, in a Member State, of an arbitral award in how they analyse requests for an antisuit injunction.
issued by an arbitral tribunal in another Member State.' Antisuit injunctions may be granted in the following
The Court of Justice of EU held that antisuit injunctions scenarios: a litigant in the US can seek to prevent the
issued by arbitral tribunals are not covered by the Brussels I opposing party from bringing or continuing the same
Regulation. dispute in a foreign court or related claims may be
consolidated in the moving part's preferred forum, or a
In 2012, the Brussels I Regulation was recast to provide
party may initiate an action in the US court requesting both
unified rules on conflicts of jurisdiction in civil and
antisuit injunction and 'declaration of non-liability', or
commercial matters and to ensure the rapid recognition and
prevent subsequent litigation in another jurisdiction upon
enforcement of judgments given in Member States and
completion of proceedings in the US or prevent a party
includes revisions to the arbitration exception. Article 1 of
from obtaining an antisuit injunction in a foreign court16.
the recast Brussels I Regulation continues to exclude
arbitration from its scope. To address the issues raised by In Microsoft Corp v. Motorola Inc., the US Court of
the West Tankers ruling, amongst others, the recast Appeals for the Ninth Circuit recognized that the
Brussels I Regulation clarifies (in its Recital 12) that there availability of an antisuit injunction has never depended
is an absolute exclusion of arbitration from its scope. It “on the merits of the foreign suit under foreign law”17. The
came into effect on January 10, 2015. California Supreme Court has held that the State courts
have the power to issue antisuit injunctions; they can
In the absence of an authoritative interpretation of the
restrain litigants from proceeding in suits brought in a
recast Brussels I Regulation, it remains ambiguous
sister state or in a foreign nation18.
11 Ibid at 11.
12 Case C-536/13 Gazprom OAO v Lithuania.
13 Jason P. Waguespack, Antisuit Injunctions and Admiralty Claims: The American Approach, 24 U. S.F. Mar. L.J. 293 (2011) at 294-95.
14 Paramedics Electromedicina Comercial, Ltda. v. GE Med. Sys. Tech., Inc., 369 F.3d 645, 655 (2d Cir. 2004).
15 Strong, S I, Antisuit Injunctions in Judicial and Arbitral Procedures in the United States The American Journal of Comparative Law, Volume 66, Issue suppl_1, July 2018, at 179.
16 Strong, S I, Antisuit Injunctions in Judicial and Arbitral Procedures in the United States The American Journal of Comparative Law, Volume 66, Issue suppl_1, July 2018, at 153-56.
17 Microsoft Corp v Motorola Inc., 696 F.3d at 888 (9th Cir. 2012).
18 Advanced Bionics Corp v Medtronic Inc., 29 Cal. 4th 697, 712 (2002) (Moreno, J., concurring).

5
In contrast to obtaining antisuit injunction, in the US,
parties may obtain a writ of prohibition precluding both a
litigant and another tribunal from proceeding with a second
action19. Additionally, abstention doctrines clarify the
relative competence of the state and federal courts and
restrict the ability of federal courts to interfere with
ongoing litigation in US State courts20. Thirdly, the Courts
are more amenable to granting consolidation and joinder of
proceedings under the Civil Procedure Rules21.
Conclusion
An antisuit injunction requires exercise of caution by the
Court granting it as by definition, it involves interference
with the process or potential process of a foreign court. The
decision to grant an antisuit injunction involves an exercise
of discretion, caution, and the principles governing it
contain an element of flexibility.
Practitioners who arbitrate or litigate in multi-
jurisdictional disputes, must converse themselves with
exercising and defending against antisuit injunctions. It is
very a powerful legal remedy if used effectively, and can
make the difference between success and failure. Antisuit
injunction is also a cost effective mechanism to bring
strategic advantage to a party which are multi-
jurisdictional and/or where there are multiple courses of
action in different jurisdictions.

19 Jason P. Waguespack, Antisuit Injunctions and Admiralty Claims: The American Approach, 24 U. S.F. Mar. L.J. 293 (2011) at 294-95.
20 Margarita Treviño de Coale, Stay, Dismiss, Enjoin, or Abstain? A Survey of Foreign Parallel Litigation in the Federal Courts of the United States, 17 B.U. Int'l L.J. 83 (1999).
21 Fed. R. C iv. P. 19–20, 42. Matters may also be transferred between different federal courts “[f]or the convenience of parties and witnesses, in the interest of justice.” 28 U.S.C. § 1404 (2017).

5
 Update on laws passed
by the Indian Parliament
in 2019

The New Delhi International Arbitration Centre Act, 2019 were brought into force with effect from August 30, 2019
(“NDIAC Act”) received the President's assent on July 26, by way of a notification dated August 30, 2019 in the
2019 and has been published in the official gazette. It shall Official Gazette.
be deemed to have entered into force on the March 2, 2019.
The 2019 Amendment contemplates several significant
The NDIAC Act envisages the transfer and vesting of the
changes to the arbitration regime, such as clarifying that
undertakings of the International Centre for Alternative
the provisions of the Arbitration and Conciliation Act,
Dispute Resolution (ICADR) in the Central Government,
1996 as amended in 2015 (“Act”) shall apply only to
which will subsequently vest the undertakings in NDIAC.
(i) arbitration proceedings commenced after October 23,
The NDIAC Act aims to bring targeted reforms to develop 2015; and (ii) to court proceedings arising out of such
the NDIAC as a flagship institution for conducting aforementioned arbitrations. The 2019 Amendment also
international and domestic arbitration, by providing cost provides for appointment of arbitrators by "arbitral
effective facilities and administrative assistance for institutions" designated for this purpose by the Supreme
conciliation, mediation and arbitral proceedings. The Court or High Court, and states that where no graded
NDIAC Act also provides for the NDIAC to maintain arbitral institutions are available, the Chief Justice of the
panels of accredited arbitrators, conciliators and concerned High Court may maintain a panel of arbitrators
mediators, promote studies and training in the field of for discharging the functions and duties of arbitral
alternative dispute resolution and related matters, and to institutions. Further the 2019 Amendment attempts to
promote reforms in the system of settlement of disputes. soften the effect of Section 29A of the Act by providing that
The NDIAC will comprise seven members including: the timelines under Section 29A shall: (i) begin to run from
(i) a Chairperson who has been a Judge of the Supreme the date of completion of pleadings (and not from the date
Court or a High Court, or an eminent person with special of constitution of the arbitral tribunal as was the case under
knowledge and experience in the conduct or administration the Act) and (ii) shall only be mandatory in arbitrations
of arbitration, (ii) two eminent persons having substantial other than international commercial arbitrations, and shall
knowledge and experience in institutional arbitration, be directory in nature for international commercial
(iii) three ex-officio members, including a nominee from arbitrations. It also makes provisions for confidentiality of
the Ministry of Finance and a Chief Executive Officer the arbitral proceedings and award subject to certain
(responsible for the day-to-day administration of the narrow exceptions, and also provides for the establishment
NDIAC), and (iv) a representative from a recognised body of the Arbitration Council of India, having its head office at
of commerce and industry, appointed as a part-time Delhi, which will grade arbitral institutions, recognize
member, on a rotational basis. professional institutes providing accreditation of
arbitrators, and maintain an electronic depository of
Arbitration and Conciliation (Amendment) Act 2019
arbitral awards.
Notied
Bill passed to bolster the bench strength of the Supreme
The Arbitration and Conciliation (Amendment) Act, 2019
Court
(“2019 Amendment”) was published for general
information by way of a notification dated August 9, 2019 The Supreme Court (Number of Judges) Amendment Bill,
in the Official Gazette after receiving presidential assent. 2019, which increasing the strength of the Supreme Court
Certain key provisions of the 2019 Amendment (including to thirty-three (33), excluding the Chief Justice of India,
in relation to interim measures, time limits for passing of was passed by Parliament and assented to by the President
awards, and applicability of the amending Act of 2015) in August. The increase in the strength of the Supreme

6
Court is intended to deal with the rise in pendency of cases
in the Supreme Court. As on June 1, 2019, there were
58,669 cases pending in the Supreme Court. An increase in
the number of judges is likely to help reduce the backlog on
the Court's docket and ensure speedier justice.
The Bombay High Court frames new Rules on Arbitral
Tribunal Fees
Section 11 of the Arbitration and Conciliation Act, 1996
(“Act”), which deals the procedure for appointment of
arbitrators, was amended in 2015 to include a new Section
11 (14) and Fourth Schedule in relation to setting fees for
arbitrators appointed by a court under the Act. Under these
provisions, the High Court was empowered to frame such
rules as may be necessary for determination of the fees of
the arbitral tribunal and the manner of their payment after
taking into consideration the rates specified in the Fourth
Schedule. Years after the amendments kicked in (on and
from October 23, 2015), the Bombay High Court issued the
Bombay High Court (Fee Payable to Arbitrators) Rules,
2018, pursuant to Section 11 (14) and the Fourth Schedule
(“Rules”). An analysis of the salient features of the Rules
may be accessed at the following link: https://
corporate.cyrilamarchandblogs.com/2019/07/bombay-
high-courts-new-rules-arbitral-tribunal-fees/
Act to amend the IBC receives presidential assent
The Insolvency and Bankruptcy Code (Amendment) Act,
2019 received the President's assent on August 5, 2019, and
shall come into force on such date as the Central
Government may appoint by notification in the official
Gazette. The amendment introduces some key changes
such as a maximum mandatory timeline of 330 days from
commencement for conclusion of the insolvency
resolution process, reintroduction of payment of
liquidation value to dissenting financial creditors, and an
express clarification that a resolution plan seeking the
insolvency resolution of corporate debtor as a going
concern may include the provisions for corporate
restructuring, including by way of merger, amalgamation
and demerger. An analysis of the salient features
of the amendment may be accessed at: https://
corporate.cyrilamarchandblogs.com/2019/07/2019-ibc-
amendment-bill-insolvency-bankruptcy/ .

5
 Madhav Prasad Aggarwal
v. Axis Bank Ltd.

In Madhav Prasad Aggarwal v. Axis Bank Ltd.1, the claimed by Axis in its Motion, wherein the principal
Supreme Court (“Court”) held that under Order VII and singular substantive relief sought was to reject the
Rule 11(d) of the Code of Civil Procedure, 1908 Suit only qua Axis. The Court found the decision in
(“CPC”), the power of a court is limited to rejecting a Sejal Glass Limited v. Navilan Merchants Private
plaint as a whole or not at all. Limited [(2018) 11 SCC 780] to be directly on this
point, since the Court in that case had held that a plaint
A suit was filed by the Madhav Aggarwal. Axis Bank
can either be rejected as a whole or not at all. The
sought to have the suit rejected qua itself on the basis
Court in Sejal Glass had further clarified that it is not
that the suit against itself was barred under Section 34
permissible to reject a plaint qua any particular
of The Securitisation and Reconstruction of Financial
portion of a plaint including against some of the
Assets and Enforcement of Security Interest Act,
defendants, while continuing against the others, and
2002. The issue before the Court was whether the
held that if a plaint survives against certain defendants
plaint could be rejected only qua Axis in exercise of
and/or properties, Order VII Rule 11(d) of the CPC
powers under Order VII Rule 11(d) of the CPC, which
will have no application at all, and the suit as a whole
provision allows a court to reject a plaint in cases
must proceed to trial. The Court observed that the
where the suit appears from the statement in the plaint
objection that one or some of the reliefs claimed
to be barred by any law.
against Axis in the Suit were barred by law, could be
The Supreme Court held that relief under Order VII raised by invoking other remedies including under
Rule 11(d) of the CPC cannot be pursued only in Order VI Rule 16 of CPC at the appropriate stage,
respect of one of the defendants to the Suit (and which could be considered by the court on its own
consequently, deemed it unnecessary to deal with the merits and in accordance with law.
remaining grounds of appeal). In arriving at its
decision, the Court considered the nature of reliefs

1 (2019) 7 SCC 158.

7
 Ssangyong Engineering &
Construction Co. Ltd. v.
National Highways
Authority of India
In Ssangyong Engineering & Construction Co. Ltd. v. under the amended Section 34(2)(b)(ii) of the
National Highways Authority of India1, the Supreme Arbitration Act. In this regard, the Supreme Court
Court considered the scope of review to set aside an noted Explanation 1 to Section 34(2)(b)(ii) of the
award passed in an international commercial Arbitration Act which provides that an award is in
arbitration, on the ground that it was in violation of the conflict with the public policy of India, only if (i) the
public policy of India, contrary to the fundamental making of the award was induced or affected by fraud
policy of Indian law and against the most basic or was in violation of Section 75 or Section 81 of the
notions of justice and morality under Section Arbitration Act; (ii) the award is in contravention with
34(2)(b)(ii) of the Arbitration and Conciliation Act, the fundamental policy of Indian law; or (iii) it is in
1996 (“Arbitration Act”), particularly in light of the conflict with the most basic notions of morality or
Arbitration and Conciliation (Amendment) Act, 2015 justice and thereafter dealt with the scope of review
(“Amendment Act”). under each of these heads.
Disputes arose thereafter and the issue in the Dealing with fundamental policy of Indian law, the
arbitration was regarding the applicability of the Supreme Court held that after the coming into force of
circular to the agreement between Ssangyong and the Amendment Act, 'violation of fundamental policy
NHAI. The majority award was passed in favour of of Indian law' would be as explained in Renusagar
NHAI and it held that the circular issued by NHAI Power Co. Ltd. v. General Electric Co. 2 i.e.
could be applied to the contract between Ssangyong disregarding orders of superior courts in India,
and NHAI as it was within the contractual disregarding binding effect of the judgment of a
stipulations. On the other hand, the dissenting superior court or contravention of a statute linked to
arbitrator favoured Ssangyong's argument and ruled public policy or public interest. The Supreme Court
that the new circular could not be applied since it was also interpreted the meaning of 'most basic notions of
de hors the contract between the parties. Ssangyong morality or justice', stating that this ground can be
filed appeals under Section 34 and Section 37 of the attracted only in very exceptional circumstances
Arbitration Act to set aside the award but these where infraction of the fundamental notions or
appeals were dismissed and the majority award was principles of justice will shock the conscience of the
upheld by the Delhi High Court. Therefore, court.
Ssangyong filed an appeal before the Supreme Court
Based on the parameters stated above, the Supreme
challenging the majority award passed by the arbitral
Court proceeded to examine whether the majority
tribunal.
award was in violation of the public policy of India.
The Supreme Court proceeded to examine the The Supreme Court noted that circular and guidelines
changes made by the Amendment Act and the scope of were neither in evidence before the tribunal nor were
review in a challenge to the award (in an international they disclosed during the arbitration proceedings. The
commercial arbitration) on the public policy ground Court therefore held that the award ought to be set

1 2019 (3) ArbLR 152 (SC).

2 1994 Supp (1) SCC 644.

9
aside under section 34(2)(a)(iii). The Supreme Court Interestingly, in this case, the Supreme Court has for
observed that it was not correct to say that the formula the first time in its history, used its inherent power
under the agreement could not be applied in light of under Article 142 of the Constitution to uphold the
NHAI's circular. A circular which was unilaterally minority award and opened up a possibility whereby
issued by one party could not bind the other party parties are not forced to arbitrate again. However, it
without its consent. The Court noted that Ssangyong remains to be seen whether the Supreme Court is keen
had accepted the circular only conditionally and to adopt this approach more frequently, especially as it
without prejudice to its argument that the circular does might not be possible to use Article 142 where the
not and cannot apply. This being the case, the majority decision has been made by a sole arbitrator or where a
award had created a new contract for the parties by unanimous award has been passed. Further, the power
applying the unilateral circular and by substituting a under Article 142 of the Constitution is only available
workable formula under the agreement with another to the Supreme Court and such power is not available
formula de hors the agreement. The Supreme Court to the lower courts. Accordingly, if the award is set
held that in doing so, a fundamental principle had aside by a court lower than the Supreme Court, the
been breached i.e. a unilateral addition or alteration of dispute will have to be referred to arbitration afresh.
a contract can never be foisted upon an unwilling
party, nor can a party to the agreement be liable to
perform a bargain not entered into with the other party.
The Court held that such a course of conduct was
contrary to the fundamental principles of justice and
shocked the conscience of the Court. On this basis, the
Supreme Court set aside the majority award as well as
the decisions of the Delhi High Court upholding the
majority award.
As the majority award was set aside, the Supreme
Court noted that the dispute would then need to be
referred afresh to arbitration which would cause
considerable delay and be contrary to one of the
important objectives of the Arbitration Act, namely,
speedy resolution of disputes. Therefore, in order to
do complete justice between the parties, the Supreme
Court invoked its inherent power under Article 142 of
the Constitution of India to uphold the minority award
instead of referring the parties to fresh arbitration
proceedings.

10
 Validity of the arbitration
clause in an unstamped
arbitration agreement

In Garware Wall Ropes v. Coastal Marine held that an arbitration clause could not exist if the
Constructions & Engineering Ltd. [Civil Appeal No. agreement itself was unstamped or insufficiently
3631 of 2019 arising out of SLP(C) No. 9213 of stamped and therefore unenforceable under law.
2018], the Supreme Court recently clarified a Accordingly, the Court held when dealing with
nebulous area of arbitration law. It held that an unstamped or insufficiently stamped arbitration
unstamped arbitration agreement would be treated as agreements, courts would have to impound the
being non-existent in law and could not therefore be agreement and had over the agreement to the relevant
acted upon by courts for the appointment of an authority under the Stamp Act which must deal with
arbitrator under section 11 of the 1996 Arbitration Act. all stamping issues expeditiously and (preferably)
within a period of 45 days after which the agreement
The Court in Garware examined whether the earlier
could be enforced by courts.
judgment of the Supreme Court in SMS Teas Estates
(P) Ltd v. Chandmari Tea Co (P) Ltd, (2011) 14 SCC In so doing, the Supreme Court also overruled a full-
66, would continue to apply to the introduction of judge bench of the Bombay High Court in Gautam
Section 11 (6A) of the 1996 Arbitration Act, by way of Landscapes Pvt. Ltd. v. Shailesh Shah (2018 SCC
the 2015 Amendment Act 2015. In SMS Teas, the SC OnLine SC 1045) where the Bombay High Court had
had held that when there is an arbitration clause in an held that courts need not await adjudication of stamp
unstamped / insufficiently agreement, the provisions duty by stamp authorities when appointing arbitrators
of the Indian Stamp Act 1899 require the judge under Section 11 of the Arbitration Act.
hearing the application under Section 11 application
to impound the agreement and ensure that stamp duty
and/ or penalty is paid before proceeding with the
Section 11 application. The Supreme Court therefore
reinforced this decision in Garware.
Under Indian law unstamped documents cannot be
admitted into evidence. In Garware, the Court was
considering a Section 11 application. Under Section
11(6A), courts can only inquire whether an arbitration
agreement is in place, and not enter issue on its
validity and enforceability. The Court sought to
overcome the clear language of Section 11(6A) by
ruling that the arbitration clause would only become a
binding contract “if it is enforceable by law” and
under the Indian Stamp Act, an agreement does not
become a binding contract “unless it is duly stamped”.
The Court also saw the stamp law as a special statute
and gave it greater import on that basis. The Court

11
 Reckitt Benckiser (India)
Private Limited v. Reynders
Label Printing India
1
Private Limited
In Reckitt Benckiser (India) Private Limited v. Reynders Private Limited v. Severn Trent Water Purication Inc.
Label Printing India Private Limited, a question arose and Ors2, where the Supreme Court had invoked the
before the Supreme Court as to whether a foreign company doctrine of “group of companies” to hold that although
could be impleaded as a party in an arbitration proceeding ordinarily, an arbitration takes place between the persons
despite being a non-signatory to the arbitration agreement, who are parties to the agreement and the substantive
solely on the basis of the “group of companies” doctrine. underlying contract, an arbitration agreement entered into
by a company, being one within a group of corporate
Reckitt filed a petition under Sections 11(5), 11(9) and
entities, can, in certain circumstances, bind its non-
11(12)(a) of the Arbitration and Conciliation Act, 1996
signatory affiliates. This exposition was followed and
(“Act”) for the appointment of a sole arbitrator. Reckitt
applied by another three judge bench of the Supreme Court
argued that the 1st Respondent Reynders Label and its
in the case of Cheran Properties Limited v. Kasturi and
parent/holding company, Reynders Ttiketten NV the 2nd
Sons Limited and Ors3, where the court held as follows:
Respondent incorporated in Belgium, entered into
negotiations with Reckitt, pursuant to which the “In holding a non-signatory bound by an arbitration
Respondents were to supply packaging materials to agreement, the court approaches the matter by attributing
Reckitt. Reckitt circulated an email to Mr. Frederik to the transactions a meaning consistent with the business
Reynders attaching a draft of the agreement along with the sense which was intended to be ascribed to them.
code of conduct and its anti-bribery policy. Clause 13 of the Therefore, factors such as the relationship of a non-
draft agreement contained the arbitration clause and signatory to a party which is a signatory to the agreement,
Clause 9 was an indemnity clause, providing Reckitt the the commonality of subject-matter and the composite
right to be indemnified by the Reynders Ttiketten on nature of the transaction weigh in the balance. The group
account of any loss or damage caused to Reckitt due to any of companies doctrine is essentially intended to facilitate
act or omission of Reynders Ttiketten. the fulfilment of a mutually held intent between the parties,
where the circumstances indicate that the intent was to
Mr. Frederick Reynders responded to Reckitt's e-mail and
bind both signatories and non-signatories. The effort is to
attached the draft agreement with 'comments from the
find the true essence of the business arrangement and to
Respondent's headquarters in Belgium'. On this basis that
unravel from a layered structure of commercial
Reckitt alleged that Reynders Ttiketten was aware that the
arrangements, an intent to bind someone who is not
indemnity was being extended to Reckitt and that although
formally a signatory but has assumed the obligation to be
Reynders Ttiketten did not sign the final agreement dated
bound by the actions of a signatory.”
May 1, 2014 (“Agreement”), the Reynders Label acted on
behalf of Reynders Ttiketten in signing the Agreement as if In the present case, the Supreme Court, while keeping in
the latter were its undisclosed principal. mind the exposition laid down in Chloro Controls and
Cheran Properties, sought to inquire whether it was
On the issue of whether a non-signatory to an arbitration
manifest from the correspondence between the parties that
agreement can be impleaded and subjected to arbitration
the intention was to bind both the signatory and the non-
proceedings, the Supreme Court stated that the same is no
signatory parties qua the existence of an arbitration
more res integra. The Supreme Court referred to a three
agreement between Reckitt and the Respondents.
judge bench decision in the case of Chloro Controls India

1 2019 SCC Online SC 809.

2 (2013) 1 SCC 641.
3 (2018) 16 SCC 413.

13
Based on the averments made by the parties and the
correspondence between them preceding the execution of
the Agreement, the Supreme Court observed that Reynders
Ttiketten had sufficiently proven that Mr. Frederick
Reynders was in no way associated with Reynders
Ttiketten and was in fact an employee of Reynders Label,
acting in that capacity during the negotiations. Therefore,
Reynders Ttiketten was neither a signatory nor did it have
any causal connection with the negotiations preceding the
execution of the Agreement. The Supreme Court stated that
the main plank of Reckitt's argument was based on the
premise that Mr. Frederick Reynders was acting on the
instructions of Reynders Ttiketten, a premise which has
been disproved by Reynders Ttiketten. Consequently, it
followed that Reynders Ttiketten was not a party to the
stated agreement nor had it given assent to the arbitration
agreement and, in absence thereof, even if Reynders
Ttiketten happens to be a constituent of the group of
companies of which Reynders Label is also a constituent,
the same will be of no avail. The burden of proof to show
that Reynders Ttiketten intended to consent to the
arbitration agreement lay on Reckitt who had failed to
discharge this burden. The Supreme Court accordingly
rejected the application as against Reynders Ttiketten.
This case emphasises the principle of not binding non-
signatories to arbitration and upholds party autonomy. The
Supreme Court in passing this decision reiterated the
principle laid down in its previous decisions where the
“group of companies” doctrine has been applied sparingly.

15
CONTRIBUTORS TO THIS ISSUE:
1. Shaneen Parikh
2. Faraz Alam Sagar
3. Shalaka Patil
4. Jeet Shroff
5. Pragati Sharma
6. Purav Shah
7. Anand Mohan
8. Ifrah Shaikh
9. Surabhi Saboo

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Mangaldas and should you have any queries in relation to any of the issues set out herein or on other areas of law, please
feel free to contact us on [email protected] or write to following coordinates with the copy to
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Cyril Shroff
Managing Partner
[email protected]

Shaneen Parikh
Partner
[email protected]

Faraz Alam Sagar

Partner
[email protected]

Cyril Amarchand Mangaldas

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