Bhatia International v. Bulk Trading S.A. & Anr

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http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 12submitted that a conjoint reading of the provisions shows that Part I isto apply to all arbitrations. He submits that unless the parties by theiragreement excludes its provisions Part I would also apply to allinternational commercial arbitrations including those that take placeout of India.14. At first blush the arguments of Mr. Sen appear very attractive.Undoubtedly sub-section (2) of Section 2 states that Part I is to applywhere the place of arbitration is in India. Undoubtedly, Part II appliesto foreign awards. Whilst the submissions of Mr. Sen are attractive onehas to keep in mind the consequence which would follow if they areaccepted. The result would :-a) amount to holding that the Legislature has left a lacunae in the saidAct. There would be a lacunae as neither Part I or II would apply toarbitrations held in a country which is not a signatory to the New YorkConvention or the Geneva Convention (hereinafter called a nonconventioncountry). It would mean that there is no law, in India,governing such arbitrations.b) lead to an anomalous situation, inasmuch Part I would apply toJammu and Kashmir in all international commercial arbitrations butPart I would not apply to the rest of India if the arbitration takes placeout of India.c) lead to a conflict between sub-section (2) of Section 2 on one handand sub-sections (4) and (5) of Section 2 on the other. Further subsection(2) of Section 2 would also be in conflict with Section 1 whichprovides that the Act extends to the whole of India.d) leave a party remediless inasmuch as in international commercialarbitrations which take place out of India the party would not be ableto apply for interim relief in India even though the properties andassets are in India. Thus a party may not be able to get any interimrelief at all.15. It is thus necessary to see whether the language of the said Actis so plain and unambiguous as to admit of only the interpretationsuggested by Mr. Sen. It must be borne in mind that the very objectof the Arbitration and Conciliation Act of 1996, was to establish auniform legal framework for the fair and efficient settlement ofdisputes arising in international commercial arbitration. Theconventional way of interpreting a statute is to seek the intention of itsmakers. If a statutory provision is open to more than oneinterpretation then the Court has to choose that interpretation whichrepresents the true intention of the legislature. This task often is notan easy one and several difficulties arise on account of variety ofreasons, but at the same, it must be borne in mind that it is impossibleeven for the most imaginative legislature to forestall exhaustivelysituations and circumstances that may emerge after enacting a statutewhere its application may be called for. It is in such a situation theCourts’ duty to expound arises with a caution that the Court should nottry to legislate. While examining a particular provision of a statute tofind out whether the jurisdiction of a Court is ousted or not, theprinciple of universal application is that ordinarily the jurisdiction maynot be ousted unless the very statutory provision explicitly indicates oreven by inferential conclusion the Court arrives at the same when sucha conclusion is the only conclusion. Notwithstanding the conventionalprinciple that the duty of judges is to expound and not to legislate.The Courts have taken the view that the judicial art of interpretationand appraisal is imbued with creativity and realism and sinceinterpretation always implied a degree of discretion and choice, theCourt would adopt particularly in areas such as, constitutionaladjudication dealing with social and defuse rights. Courts aretherefore, held as "finishers, refiners, and polishers of legislatures
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 12which gives them in a state requiring varying degrees of furtherprocessing". (see Corrocraft Ltd. vs. Pan American Airways (1968) 3WLR 714 at page 732, AIR 1975 SC 1951 at page 1957. If a languageused is capable of bearing more than one construction, in selecting thetrue meaning, regard must be had to the consequences, resulting fromadopting the alternative constructions. A construction that results inhardship, serious inconvenience, injustice, absurdity or anomaly orwhich leads to inconsistency or uncertainty and friction in the systemwhich the statute purports to regulate has to be rejected andpreference should be given to that construction which avoids suchresults. (see Johnson vs. Moreton (1978) 3 All. ER 37 and Stock vs.Frank Jones (Tipton) Ltd. (1978) 1 All. ER 948). In selecting out ofdifferent interpretations the Court will adopt that which is justreasonable and sensible rather than that which is none of those things,as it may be presumed that the legislature should have used the wordin that interpretation which least offends our sense of justice. InShanon Realites Ltd. vs. Sant Michael (924) A.C. page 185 at page192-193 Lord Shaw stated, "where words of a statute are clear, theymust, of course, be followed, but in their Lordships opinion wherealternative constructions are equally open that alternative is to bechosen which will be consistent with the smooth working of the systemwhich the statute purports to be regulating and that alternative is tobe rejected which will introduce uncertainty, friction or confusion intothe working of the system." This principle was accepted by SubbaRao, J. while construing Section 193 of the Sea Customs Act and incoming to the conclusion that the Chief of Customs Authority was notan officer of custom. (AIR 1961 SC 1549).16. A reading of the provisions shows that the said Act applies toarbitrations which are held in India between Indian nationals and tointernational commercial arbitrations whether held in India or out ofIndia. Section 2(f) defines an international commercial arbitration.The definition makes no distinction between international commercialarbitrations held in India or outside India. An international commercialarbitration may be held in a country which is a signatory to either theNew York Convention or the Geneva Convention (hereinafter called theconvention country). An international commercial arbitration may beheld in a non-convention country. The said Act nowhere provides thatits provisions are not to apply to international commercial arbitrationswhich take place in a non-convention country. Admittedly Part II onlyapplies to arbitrations which take place in a convention country. Mr.Sen fairly admitted that Part II would not apply to an internationalcommercial arbitration which takes place in a non-convention country.He also fairly admitted that there would be countries which are notsignatories either to the New York Convention or to the GenevaConvention. It is not possible to accept submission that the said Actmakes no provision for international commercial arbitrations whichtake place in a non-convention country.17. Section 1 of the said Act reads as follows:"1. Short title, extent and commencement.- (1) ThisAct may be called the Arbitration and Conciliation Act,1996.(2) It extends to the whole of India:Provided that Parts I, III and IV shall extend to theState of Jammu and Kashmir only in so far as they relateto international commercial arbitration or, as the case maybe, international commercial conciliation."The words "this Act" means the entire Act. This shows that the entireAct, including Part I, applies to the whole of India. The fact that allParts apply to whole of India is clear from the proviso which providesthat Parts I, III and IV will apply to the State of Jammu and Kashmir
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