CASE:BHATIA

LEADNG CAsa:BHATIA
TE SMATOMA
(2 4 11 RAMNG SA
e the isene wa
Cas, the
In
this case,

of Part I and
hawold be the be
poainde
interpretati

Part Ithe Airion nd

Conciliation Aa, 196
he Cort ob
The Court oberved that by omitfing to pr that ParI w
ly to
n o t apply t o international commercial
aritrafiomshirh 1
c e Outside India the effet worul4 be that Pan I wond d
t o intcrnational commercial atntratiuas bald cvt d lnda,
s the parties by ageement, ezpresn or imgled, euae i
or any of its provisions. Sach an interretation brs nun kad to
coaflict between any of the provisions of the uid Aa. On
this interpretation there are no lacunae in the aid ha, This
interpretation also does not leave a party remediles,
tis pot for the courts to extend the scope ofthe tatnte beyon
of the lezislature. t is entirely for the
the contemplation
into this question.]
legislature to look
there was contract between the appellant and
In this case,
an arbitrztion clause whi
espondent. This contract contained
the Rules of the
rovided that arbitration was to be as per
Commerce ("ICC). Respondent filed
International Chamber of
that the
arbitration with ICC. Parties agreed
a request for
France. ICC has appointed a soie
arbitration be held in Paris,
filed an application under
arbitrator. Thereafter, the respondent
Conciliation Aa, 1996, before the
Sec. 9 of the Arbitration and
Judge,
Additional District Indore, against the appeilant and
M.P.
the 2d respondent.
maintainability of such
an
the plea of
The appellant raised the
contention was that PartIg
main
2Pplication. The appellant's where she placz of
arbitration
aid At would not apply to arbitrations
Additional
application was dismissed by the
nOt in India. This It was heid that
the court at
Indore
District Judge on 1-2-2000. maintainable.
The
was
nad jurisdiction and the
application
Court of Madhya
petitioD before
theHigh
filed a writ Hence, tne
Ppellant which was also rejected.
radesh, Indore Bench
raferredappeal before
an the Apex Cout
 Read as a W
Must
be
Statute TRADING
S.A.
BULK
INTERNATIONAL
v
I N T E

CASE:/ BHATIA BHATIA

4 SCC 105]
LEADING
CASE (2002) possible
best
would be the
what Arbitration
and
was

of the
issue
the I
n
this
this
case,
Part I
and Part
i a
interpretation of
erTetation
Conciliation A c t , 1 9 9 6 ?
Part I will
omitting toprovidethat take
observedthatby
which
arbitrations
TheCourt
Court obs commercial

would also
apply to
intermational

be Part I that
aat would ofIndia,
Indiatheeffect held out
olaceoutside
p l a c eo u t s i d e .

commercial
arbitrations
exclude it
intenational
or implied,
agolyto agreement, express to
parties by does not lead
unlessthe Such an
interpretation
Act. On
arany ofits provisions.
between any
of the provisions of
the said
This
Act.
anyconflict n o lacunae
in the said
are there
this interpretation party
remediless.
not leave a
interpretation alsodoes statute beyond
extend the scope of the
It is not for the courts to entirely for the
of the legislature. It is
the contemplation
this question
legislatureto look into
and
there was contract between the appellant
In this case,
an arbitration clausc which
respondent. This contract contained
of the
provided that arbitration was to be as per the Rules
International Chamber of Commerce ("ICC"). Respondent filed
a request for arbitration with ICC. Parties agreed that the
arbitration be held in Paris, France. ICC has appointed a sole
arbitrator. Thereafter, the respondent iled an application under
Sec. 9 of the Arbitration and Conciliation Act,
1996, before the
Additional District Judge, Indore, M.P. against the
the 2d respondent. appellant and

The appellant raised the plea of

application. The maintainability of such an
main contention
ppellant's was thar
said Act Par I of the
would not arbirations
dppapplication wheTE the place of
is not in
India This ation was
dismissed arbutration
District Judge on 1-2-2000. It was by the
was held that
had jurisdiction and the applicatio was the court at Indore
Additional
maintain inable
appellant filed a writ petition betore the High Courtinableof Madhya
The
The
radesh, Indore Bench which also of Madhva
was

appellant preterred appeal before

an the teected
Apx Hence the
Court
54 InterretatTOn or Statutes

The council for the appellant made a

I of the said.Act only applies to submission
arbitrations wheresion th.that Pan
arbitration is in India and if the place of arbitratin the plac
Part Il of the said Act would
place
then apply. He relies on
which provides that Part I shall apply where the
place of cc 20
Sec

is in IndiaHe submitted that Sec. 2(2) makes it

provisions of Part I do not apply where the place clcar
arbitratim
tha ation
of aarbitr the
the
is not in India. Further, he submitted that if it is held
that
I applies to all arbitrations i.e. even o arbitrations whose Pan
of arbitration is not in India, then Sec. 2(2) would be Place place
redundant and/or otiose.

Further, he argued that Part I deals with enforcemen

foreign awards and makes elaborate provisions in respect therene
He pointed out that in Part I1 there is no provision
similar th
Secs. 9 and 17 (Part I) and that the legislature, whilst providina
for foreign awards, has purposely omitted to make any provision
for interim measures either by the court or by the
Arbitral
Tribunal. He submitted that the reason for this is obvious that in
such cases where arbitrations take place qutside India they would
be governed by the rules of
the country or the body under whose
jurisdiction they are being cenducted.
On the other hand, the counsel for the
respondents by explaining
the various provisions of the said Act submitted that a conjoint
reading of the provisions shows that Part I is to apply to all abitrations.
He submits that unless the
parties by their agreement exclude 15
provisions Part I would also apply to all international commercal
arbitrations including those that take
place out of India.
The learned court
observed that if the arguments of tne
appellant accepted then it would amount to holding that
are
legislature has left a lacuna in the said Act. There would beua
lacuna as neither Part I nor II would
in a
country which is not a apply to arbitration> el
Geneva Convention signatory to the New York Conver
or the ention

(hereinafter called "a non-conve

country"). It would mean that ention

such arbitrations. here is no law, in India, verning

gov
The court
counsel for the
further held: "We
the lea
appellant that it may agree
gree with
witn
may, in Some
lead to
some cases
 Statute Must be Read as a Whole 55
when the language of the statute is
rdship
to a party, however,
hardsunambiguous and admits of only one mcaning. The

plain of tatute arises, for the Act speaks for

p n of
question of construction unreasonable or unjust
qu even fthe result is strange surprising,
or

the scope of the statute

isell
J as it is
notfor the courts to extend
the legislature. It is entircly for the
opprexsive.

or o n t e m p l a t i o n of
the
n t o this question."
hyon
ok iinto
to looi
gislature

held that a reading of the provisions

shows
court.
learned
The
to arbitrations which are
held in India
said Act applies commercial
thatt the Indian nationals and to international
e r w e e n

ardvitrations whether
whet held in India or out of India. Sec. 2(1)(f)
hitrations commercial arbitration. The definition
intemational
international commercial arbitrations
an
detincs
dsnction betweeni
that
makes The said Act nowhere provides
in Indiaor outside India.
to apply to
international commercial
international commercial
are not
Isprovisions a
non-convention country
hitrations which take place in
arbitration
as meaning any
defines "arbitration"
Section 2(1Xa) arbitral institution.
administered by a permanent
whether or not could be under
that the arbitration
recognizes
Thus, this definition Commerce or the
International
Indian Chamber of
iady ike the under the
International Chamber
Arbitrations
Cramiber of Commerce. Sec. 2(1Xe)
most cases, out of India.
d Commerce vwould be held, in otherwise have
court is one which would
Fines "court" as a not
subject-matter. The definition does
sdiction in respect of the
have jurisdiction if
an
TDVide that the courts in India will not
Tabonal conmmercial arbitration takes place
outside India. Courts
of an international
WOuld havejurisdiction even in respect
euTErCal arbitration. An ouster of jurisdiction cannot be impliea.
OUtCr of jurisdiction has to be
express.
The learned court further observed that Sec. 2(2) provides
hatPart Iwould apply where the place of arbitration is in India.
Io be immediately
TOL app y noted, that it is not providing that Part1 shall
tC r e the place of arbitration is not in India. It is also
providing that Part I will "only" pply where the place of
atlismtnotration is in India.Thus
to " the legislature has notprovided that Part

the apply arbitrations which

e of to
take place outside India. The
language is
significant and important. The legislature
 Interpretation of Statutes
56
is emphasizing that the provisions of P'art I would apply

place in lndia, but not providingtho

arbitrations which take
to arbitrations which a
provisions of Part I will not apply
place out of India. By omiting to provide that Pan I will not apply
to intermational commercial arbiratrons which take place outside id
tdia
the cfect would be that Part 1 wOuld also apply to international
commercial arbitrations held out of India. But by not specificall
providing that the provisions O rán I apPIy to international
commercial arbitrations held out of India, the intention oft
he
legisiature appcars to be to ally (sie allow) parties to provide by
agrecment that Part I or any provISion therein will not apply.
Thus in respect of arbitrations which take place outside India
the nonderogable provisions of Part I can be excluded.
Such an agreement may be express or implied.
To conclude, the learmed court observed: "We hold that the
provisions of Part I would apply to all arbitrations and to all
proceedings relating thereto. Where such arbitration is held in
India the provisions of Part I would compulsorily
apply and parties
are free deviate only to the extent permitted by the
to
derogable
provisions of Part L In cases of international commercial arbitrations
held out of India
provisions of Part I would apply
unless the
parties by agreement express or implied, exclude all or any of its
provisions. In that the laws or rules chosen by the
case
Would parties
prevail. Any provision, in Part I, which is contrary to or
excluded by that law or rules will
not apply."
Lastly, the court opined that it must be stated that the said
Act does not
appear to be a well-drafted
High Courts of Orissa, legislation. Therefore the
cannot be faulted Bombay, Madras, Delhi and Calcutta
for not
interpreting it in the right manner.
However, a
indicates that Partproper
and conjoint
I shall reading of all the provisions
arbitrations which take apply also to international commere
agreement, express or place out of India, unless the paries
implied,
Such
of the
an
interpretation does notexclude it or any of its
lead to any conflict provisio
provisions of the said between a
no
lacunae in the said Act. Act. On this interpretation there are
a
party remediless. With This interpretation also does not a*
this view the lea
appeal was dismissed.
dismisseu