Case Law Details

Case Name : The Governmnet of India, Ministry of Petroleum and Natural Gas Vs Cairn Energy India Pvt Ltd & Ors (Delhi High Court)
Appeal Number : O.M.P. 411/2011
Date of Judgement/Order : 24/04/2012
Related Assessment Year :
Courts : All High Courts (3699) Delhi High Court (1173)

In view of the judgment of the Supreme Court in Videocon Industries Ltd. v. Union of India this Court would not have jurisdiction to entertain the present challenge to the impugned Award by way of a petition under Section 34 of the Act. In this view of the matter, the preliminary objection of the Respondent to the maintainability of the present petition under Section 34 of the Act requires to be upheld. This will not preclude, of course, the Petitioner from seeking other appropriate remedies that may be available in accordance with law.

HIGH COURT OF DELHI

O.M.P. 411/2011

THE GOVERNMENT OF INDIA, MINISTRY OF PETROLEUM AND NATURAL GAS

Versus

CAIRN ENERGY INDIA PTY LTD & ORS

O R D E R

25.04.2012

1. The Government of India in the Ministry of Petroleum and Natural Gas (‘MOPNG’) has filed this petition under Section 34 of the Arbitration and Conciliation Act, 1996 (‘Act’) challenging an Award dated 18th January 2011 passed by the Arbitral Tribunal constituted in terms of Para 34.3 of the Production Sharing Contract (‘PSC’) entered into between the Petitioner, The Oil and Natural Gas Corporation Limited (‘ONGC’) the Respondent No.3, Videocon Industries Limited (‘VIL’), Command Petroleum (India) Pty. Ltd. [which was subsequently substituted by Cairn Energy India Pty. Limited (Respondent No.1 herein)] and Ravva Oil (Singapore) Pte. Limited (Respondent No.2 herein).

2. In terms of the said PSC executed on 28th October 1994, the Consortium of the aforementioned companies was granted an exploration licence and mining lease to explore and produce the hydrocarbon resources owned by the Petitioner. The relevant clauses of the PSC read as under:-

“33.1 Indian Law to Govern-. Subject to the provisions of Article 34.12, this Contract shall be governed and interpreted in accordance with the laws of India.

33.2 Laws of India Not to be Contravened-. Subject to Article 17.1 nothing in this Contract shall entitle the Contractor to exercise the rights, privileges and powers conferred upon it by this Contract in a manner which will contravene the laws of India.

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34.3 Unresolved Disputes-. Subject to the provisions of this Contract, the Parties hereby agree that any matter, unresolved dispute, difference or claim which cannot be agreed or settled amicably within twenty one (21) days may be submitted to a sole expert (where Article 34.2 applies) or otherwise to an arbitral tribunal for final decision as hereinafter provided.

34.12. Venue and Law of Arbitration Agreement-. The venue of sole expert, conciliation or arbitration proceedings pursuant to this Article, unless the Parties otherwise agree, shall be Kuala Lumpur, Malaysia, and shall be conducted in the English language. Insofar as practicable, the Parties shall continue to implement the terms of this Contract notwithstanding the initiation of arbitral proceedings and any pending claim or dispute.

Notwithstanding the provisions of Article 33.1, the arbitration agreement contained in this Article 34 shall be governed by the laws of England.

35.2 Amendment-. This Contract shall not be amended, modified, varied or supplemented in any respect except by an instrument in writing signed by all the Parties, which shall state the date upon which the amendment or modification shall become effective.”

3. The disputes that arose between the parties were referred to the Arbitral Tribunal constituted under Article 34.3 of the PSC. The challenge by the Petitioner to a partial Award dated 31st March 2005 of the Arbitral Tribunal, before the High Court of Malaysia in Kuala Lumpur, was resisted by the Respondent No.3 VIL, before that Court by contending that in view of Article 34.12 of the PSC only English courts had jurisdiction to entertain any challenge to the partial Award. After filing of the above petition before the High Court, the Petitioner requested the Arbitral Tribunal to conduct the remaining arbitral proceedings at Kuala Lumpur. By order dated 24th April 2006, while rejecting such request, the Arbitral Tribunal decided to hold its remaining proceedings in London.

4. The Petitioner then filed OMP No.255 of 2006 under Section 9 in this Court seeking stay of the arbitral proceedings. It also filed OMP No.329 of 2006 questioning the partial Award dated 31st March 2005 on the issue of exchange rate. VIL objected to the maintainability of the OMP No.255 of 2006 on the ground that the courts in India did not have jurisdiction to entertain a challenge to the arbitral Award. A Single Judge of this Court referred to the decision in Bhatia International v. Bulk Trading S.A., (2002) 4 SCC 105 and concluded that this Court did have jurisdiction to entertain the said petition. The said order was taken in appeal before the Supreme Court by VIL. In Videocon Industries Ltd. v. Union of India (2011) 6 SCC 161 the Supreme Court allowed the appeal and set aside the order of this Court, after referring to its earlier decisions in Bhatia International v. Bulk Trading S.A. and Venture Global Engg. v. Satyam Computer Services Ltd. (2008) 4 SCC 190. It also affirmed the judgment of the Gujarat High Court in Hardy Oil & Gas Ltd. v. Hindustan Oil Exploration Co. Ltd., (2006) 1 Guj LR 658. The Supreme Court concluded as under:

“33. In the present case also, the parties had agreed that notwithstanding Article 33.1, the arbitration agreement contained in Article 34 shall be governed by laws of England. This necessarily implies that the parties had agreed to exclude the provisions of Part I of the Act.

As a corollary to the above conclusion, we hold that the Delhi High Court did not have the jurisdiction to entertain the petition filed by the Respondents under Section 9 of the Act and the mere fact that the Appellant had earlier filed similar petitions was not sufficient to clothe that High Court with the jurisdiction to entertain the petition filed by the Respondents.”

5. Consequently, arising from the very same PSC, the disputes out of which have been decided by the impugned Award of the Arbitral Tribunal, the Supreme Court has ruled that this Court did not have jurisdiction to entertain any petition under the Act, as the parties had impliedly agreed to exclude the applicability of Part-I of the Act.

6. It requires to be mentioned that during the pendency of the present petition, the Petitioner challenged the impugned Award in the court in Malaysia. Meanwhile, Respondent No.1 filed an antei-suit injunction proceeding in Malaysia. This Court has been informed that the said anti-suit injunction proceedings were rejected by the Court in Malaysia. However, as far as the Petitioner is concerned, it did not withdraw its petition filed in the Malaysian court challenging the impugned Award.

7. On 20th December 2011, this Court noted in its order as under:

“1. Mr. Chandhiok, learned Additional Solicitor General appearing for the Petitioner states that in the event that in the anti-suit injunction proceeding, which is stated to be listed in a Court in Malaysia in January 2012, it is held that the Indian courts do not have jurisdiction then the present proceedings, will not be pursued. On the other hand, if the said Court holds that the Indian Courts have jurisdiction, then the Petitioner will withdraw the petition filed in the Malaysian Court challenging the Award.

2. In the meanwhile, the Petitioner will file an affidavit placing on record the details of the proceedings initiated by the Petitioner in the Malaysian courts.

3. List on 5th March, 2012.”

8. Opportunities were given to learned counsel for the Petitioner on 5th March 2012 and 20th April 2012 to inform the Court whether the Petitioner was continuing with its challenge to the impugned Award in the Malaysian court.

9. Nevertheless, as already noticed hereinbefore, in view of the judgment of the Supreme Court in Videocon Industries Ltd. v. Union of India this Court would not have jurisdiction to entertain the present challenge to the impugned Award by way of a petition under Section 34 of the Act. In this view of the matter, the preliminary objection of the Respondent to the maintainability of the present petition under Section 34 of the Act requires to be upheld. This will not preclude, of course, the Petitioner from seeking other appropriate remedies that may be available in accordance with law.

10. The petition is, accordingly, dismissed with above observations.

S. MURALIDHAR, J

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