Misc. Civil Application No.1319 of 2015

18th April, 2016.

Petitioner Counsel: Shri DEVEN CHAUHAN
Respondent Counsel: Shri WILLSON MATHEW, Shri SUNIL MANOHAR, Sr. Adv., assisted by Shri A.G. GHAROTE and Ms. ROHINI JAISWAL, Shri ANAND JAISWAL, Sr. Adv., assisted by Shri SHYAM DEWANI

Cases Cited:
Hemant D. Shah and Ors. Vs. Chittaranjan D. Shah and Ors., Appeal No.658/2006 in Arbitration Petition No.295/2006, Dt.5.9.2006 [Para 11]
Oil and Natural Gas Corporation Ltd. Vs. M/s. Jindal Drilling and Industries Limited, Arbitration Petition No.587/2014, Dt.28.4.2015 [Para 11,27]
Chloro Controls India Private Limited Vs. Severn Trent Water Purification Inc. and Anr., (2013) 1 SCC 614 [Para 12,18,28,29]
POL India Projects Limited Vs. Aurelia Reederei Eugn Friederich GmbH Schiffahrtsgesellschaft & Company KG, Arbitration Petition No.75/2012, Dt.8.4.2015 [Para 12]
Renusagar Power Co. Ltd. Vs. General Electric Company, 1984 (4) SCC 679 [Para 21,32]
Khardah Company Ltd. Vs. Raymon & Co. (India) Private Ltd., AIR 1962 SC 1810 [Para 23,31]

JUDGMENT

JUDGMENT :- Admit.

2. The International Arbitration Tribunal has passed an award on 28-3-2010 in favour of the applicantIntegrated Sales Services Ltd., a Company based in Hong Kong, holding the non-applicant No.1-DMC Management Consultants Ltd., the applicant No.2-Arun Dev s/o Govindvishnu Uppadhyaya, and the non-applicant No.3-Gemini Bay Transcription Private Ltd. jointly and severally liable to pay the applicant-Company the sum of 6,948,100 dollars within a period of thirty days from the date of the award, failing which the applicant-Company would become entitled to recovery of interest computed from the date of termination of the Representation Agreement (22-7-2008) on the total sum of the award at the highest legal rate allowable under the Delaware law. The non-applicants are also held jointly and severally liable to reimburse the administrative fees and expenses of the Tribunal totaling 14,000 dollars, the compensation and expenses of the Arbitrator totaling 49,903 dollars, and the fees and expenses incurred in the matter totaling 63,903 dollars.

3. This application is filed under Section 49 of the Arbitration and Conciliation Act, 1996 read with Order XXI, Rule 1 of the Code of Civil Procedure for execution of the arbitral award dated 28-3-2010. Initially, such application was filed before the Principal District Judge at Nagpur, who heard the matter and closed it for judgment on 5-10-2015. By virtue of subsequent amendment introduced to Section 47 of the Arbitration and Conciliation Act, 1996 with effect from 23-10-2015, the jurisdiction to entertain, try and decide such application is conferred upon the High Court and the learned Principal District Judge ceased to have any jurisdiction. However, the learned Principal District Judge, by his final judgment dated 5-11-2015, has rejected all the objections raised to the executability of the award and made the said award as a decree of the Court to be executed.

4. The learned Advocates appearing for the parties agree that the judgment delivered by the learned Principal District Judge in this matter on 5-11-2015 is without jurisdiction and, therefore, this application is moved before this Court for making the arbitral award as a decree of the Court. The non-applicants have raised several objections, including those under Section 48 of the said Act, claiming refusal to enforce the award passed by the International Arbitration Tribunal, which are required to be decided now afresh. The parties have agreed that the question of leading oral evidence in support of their rival contentions does not at all arise and the pure questions of law are raised, which can be decided on the basis of the documents which are admitted and placed on record.

5. The facts in detail are as under:

On 28-9-2000, the first Representation Agreement between the Hong Kong based applicant-Integrated Sales Services Ltd. (described therein as "the representative") signed by the Director-Terry L. Peteete, and the non-applicant No.1-India based DMC Management Consultants Ltd. at Nagpur, registered under the Companies Act, 1956 (described therein as "the Company") by one Rattan Pathak as the Managing Director, was entered into for providing assistance to the non-applicant No.1-Company to sell its goods and services to prospective customers and to identify potential services of investment and investors, upon the terms and conditions agreed therein. The said agreement was brought into force with effect from 3-10-2000.

6. The first amendment to the said Representation Agreement was signed on behalf of the applicant-Company by Terry L. Peteete; and on behalf of the non-applicant No.1-Company, by Arun Dev Upadhyaya, the non-applicant No.2. By the second amendment signed by Terry L. Peteete on behalf of the applicant-Company, and by one Rattan Pathak on behalf of the non-applicant No.1-Company, the first amendment was declared as null and void. Thus, the relationship between the parties to the Representation Agreement was governed by the agreement which came into force on 3-10-2000 and the second amendment to it.

7. Clause 8(d) of the Representation Agreement brought into force on 3-10-2000 deals with the interpretation, amendment, law, arbitration and assignments. It makes the agreement subject to the laws of State of Missouri, U.S.A., and provides that in the event that a dispute arises in connection with this agreement, such dispute shall be referred to a single arbitrator in Kansas City, Missouri, U.S.A. The applicant-Company invoked the aforesaid clause of the arbitration and lodged its monetary claim before the International Arbitration Tribunal, which was registered as ICDR Case No.50-181-T-00327-09, making DMC Management Consultants Ltd, DMC Global Inc., Arun Dev Upadhyaya, Gemini Bay Consultants Ltd., and Gemini Bay Transcription Pvt. Ltd. as the respondents. The parties appeared before the International Arbitration Tribunal and filed their replies and objections. Although, the Arbitral Tribunal looked at the objections raised to its jurisdiction to entertain, try and decide the dispute raised before it, the Tribunal deferred the decision on it, stating that it shall be decided along with the dispute on merits.

8. The Arbitral Tribunal framed the following issues :

"1. Does the "alter ego" doctrine warrant piercing the corporate veil?

2. Was there a breach of the Representation Agreement and by whom?

3. Should damages be awarded, and if the answer is yes, how much?

On the first issue, the Tribunal has held that DMC Global Inc. is a wholly owned subsidiary of DMC Management Consultants Ltd., and both are jointly referred to as "DMC". Shri Arun Dev Upadhyaya is an individual entrepreneur, shareholder and former Director of DMC. Gemini Bay Consultants Ltd. and its wholly owned subsidiary Gemini Bay Transcription Pvt. Ltd. (jointly referred to as "Gemini Bay") are unrelated Corporations. The Tribunal holds that Shri Upadhyaya and Gemini Bay have challenged the jurisdiction of the Tribunal on the ground that, as non signatory parties to the Representation Agreement, they are not subject to the arbitration clause it contains, but neither did participate directly in the arbitration process. The Tribunal finds that the law applicable was Delaware law and hence the precedents of the Delaware Court of Chancery must be followed. It holds that the control of DMC by Shri Upadhyaya and the collusion with Shri Pathak and the use of the corporate forms of DMC and Gemini Bay were simply a "facade" used to shield or coverup the unjust result of eliminating ISS. It further holds that "alter ego" doctrine is, therefore, an appropriate justification for lifting the corporate veil. On the second issue, the Tribunal has observed that there was a breach of Representation Agreement by Shri Upadhyaya, DMC, and Gemini Bay colluded together and, therefore, held them jointly and severally liable to breaching the Representation Agreement by terminating it abruptly in violation of the indefinite term of that contract and by refusing to pay commissions as obligated under the Representation Agreement.

9. The operative portion of the final award passed by the Arbitral Tribunal on 28-3-2010 is reproduced below :

"1. Within thirty (30) days from the date of transmittal of this Award to the Parties, DMC Management Consultants, Ltd, DMC Global, Inc., Arun Dev Upadhyaya, Gemini Bay Consulting Limited and Gemini Bay Transcription Private limited, hereinfter referred to as Respondents, shall jointly and severally pay to Integrated Sales Services Ltd, hereinafter referred to as Claimant, the sum of six Million, nine hundred and fortyeight thousand, one hundred dollars ($6,948,100.00).

2. In the event that the award is not fully paid within thirty days from the date of this Award, Claimant shall be entitled to also seek recovery of interest computed from the date of termination of the Representation Agreement (July 22, 2008) on the total sum of the Award at the highest legal rate allowable under Delaware law.

3. The administrative fees and expenses of the International Centre for Dispute Resolution ("ICDR") totaling fourteen thousand dollars ($14,000.00), and the compensation and expenses of the arbitrator totaling fortynine thousand, nine hundred and three dollars ($49,903.00), shall be borne entirely, jointly and severally by Respondents. Therefore, Respondents shall jointly and severally reimburse Claimant the sum of sixtythree thousand, nine hundred and three dollars ($63,903.00), representing that portion of said fees and expenses (including the Arbitrator's fees and expenses) previously incurred by Claimant.

4. Since the arbitration clause did not provide for the award of the attorneys' fees, Claimant and Respondents shall be responsible for their own attorneys' fees, costs and expenses.

5. As ordered by this tribunal, all the costs and expenses of the video conference call held on Friday, March 5, 2010 shall be borne exclusively by Respondents but Claimant shall be responsible for the costs and expenses of its attorneys present during that call.

6. This award is in full settlement of all claims and counterclaims submitted to this Arbitration. Any claim or counterclaim not specifically awarded is hereby denied."

10. Heard Shri Deven Chauhan, the learned Advocate for the applicant-Company; Shri Willson Mathew, the learned Advocate for Non-Applicant No.1-Company; Shri Sunil Manohar, the learned Senior Advocate, assisted by Advocates Shri A.G. Gharote and Ms Rohini Jaiswal, for the non-applicant No.2; and Shri Anand Jaiswal, the learned Senior Advocate, assisted by Advocate Shri Shyam Dewani, for the non-applicant No.3.

11. Shri Sunil Manohar and Shri Anand Jaiswal, the learned Senior Advocates, have urged that the Arbitral Tribunal has no power to lift the corporate veil and it is only a Court which can lift the corporate veil, and hence the finding by the Arbitral Tribunal on this aspect was without jurisdiction. The reliance is placed upon the judgment rendered by the Division Bench of this Court on 5-9-2006 in Appeal No.658 of 2006 in Arbitration Petition No.295 of 2006 (Hemant D. Shah and others v. Chittaranjan D. Shah and others) and the common judgment delivered by the learned Single Judge of this Court (Shri R.D. Dhanuka, J.) on 28-4-2015 in Arbitration Petition No.587 of 2014 and other connected matters in Oil and Natural Gas Corporation Ltd. v. M/s. Jindal Drilling and Industries Limited. Inviting my attention to Section 44 of the Arbitration and Conciliation Act, 1996, it is urged that so far as the non-applicant Nos.2 and 3 are concerned, the arbitral award cannot be treated as "foreign award" for the two reasons, viz. (i) that the non applicant Nos.2 and 3 are not signatories to the Representation Agreement for arbitration to which the Convention set-forth in the First Schedule under the said Act applies; and (ii) that there exists no legal relationship between them and the applicant, out of which, the differences or the disputes before the Arbitral Tribunal arose. Further inviting my attention to Sections 46 and 48 of the said Act, it is urged that even if the arbitral award is described as "foreign award" covered by Section 44 of the said Act, the enforcement of such award needs to be refused on the grounds mentioned in clauses (b), (c) and (d) of subsection (1) of Section 48 of the said Act, and, therefore, the award does not bind the parties and cannot be made a decree of this Court. Shri Mathew, the learned Advocate for the non-applicant No.1/Company, has invited my attention to clause (b) of subsection (2) of Section 48 of the said Act to urge that the enforcement of the award against the non-applicant No.1 would be contrary to the public policy of India.

12. Shri Deven Chauhan, the learned Advocate for the applicant-Company, has invited my attention to paras 99, 102, 103, 103.1, 103.2, 104 and 105 of the decision of the Apex Court in the case of Chloro Controls India Private Limited v. Severn Trent Water Purification Inc. and another, reported in (2013) 1 SCC 614, to urge that joinder of a nonsignatory party to arbitration is not unknown to the arbitration jurisprudence and various legal bases may be applied to bind a nonsignatory to an arbitration agreement. The doctrines of agentprincipal relations, apparent authority, piercing of veil (also called "alter ego"), joint venture relations, succession and estoppel are the issues, which can be dealt with by the Arbitral Tribunal. Relying upon the decision of the learned Single Judge of this Court (Shri R.D. Dhanuka, J.) delivered on 8-4-2015 in Arbitration Petition No.75 of 2012 (POL India Projects Limited v. Aurelia Reederei Eugn Friederich GmbH Schiffahrtsgesellschaft & Company KG), it is urged that once the issues are raised by the non-applicants in the objections filed before the Arbitral Tribunal, which have been negatived, resulting in passing an arbitral award, it could only be challenged by adopting remedy provided under the law applicable. He has relied upon paras 81, 82, 87, 88, 91, 97, 101, 102, 104, 105, 106, 111, 119 and 120 of the aforesaid decision of this Court. It is further urged that the non-applicants were parties to the proceedings before the Arbitral Tribunal and the only remedy was to challenge the arbitral award before the Court of competent jurisdiction in terms of the law agreed to be applicable under clause 8(d) of the Representation Agreement, which was in the present case, the United States District Court, Missouri. He has invited my attention to the certificate produced from the United States District Court at Missouri, stating that no appeal has been filed against the arbitral award in question, which is on page 114 of this application.

13. From the rival submissions, the questions, which fall for determination by this Court, are as under :

Sr. No.	Questions	Answers
1.	Whether the arbitral award dated 28-3-2010 passed by the International Arbitration Tribunal can be considered as the “foreign award” within the meaning of Section 44 of the Arbitration and Conciliation Act, 1996?	Yes
2.	Whether the International Arbitration Tribunal has jurisdiction to pass an award against the non- applicant Nos.2 and 3, who are non signatories to the arbitration agreement, recording a finding that they are the “alter ego” of the non- applicant No.1-Company?	No
3.	Once the International Arbitration Tribunal decides the question of its own jurisdiction, which can be challenged in the forum provided in the law applicable (in the present case, the law of the State of Missouri, U.S.A.) whether this Court, acting under Section 49 of the said Act, can go behind such award to record the findings contrary to the contents of such award and thereby refuse to make it a decree of a Court?	Yes

Chapter I in Part II of the said Act containing Sections 44 to 52 is a complete code in respect of the enforcement of certain foreign awards. In order to answer the aforesaid questions, the scheme for enforcement of award and the extent and manner of judicial interference in setting aside the award permissible under the said Act, need to be seen.

As to Question No.1 :

14. Section 44 under the said Act contains the definition of "foreign award", and it runs as under :

"44. Definition.-In this Chapter, unless the context otherwise requires, "foreign award" means an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India, made on or after the 11th day of October, 1960

(a) in pursuance of an agreement in writing for arbitration to which the Convention set forth in the First Schedule applies, and

(b) in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made may, by notification in the Official Gazette, declare to be territories to which the said Convention applies."

The aforesaid provision states that unless the context otherwise requires, "foreign award" means an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India, made on or after the 11th day of October, 1960, in pursuance of an agreement in writing for arbitration to which the Convention set forth in the First Schedule applies. The foreign award, therefore, contains an adjudication over the differences between the persons arising out of the legal relationships, considered as commercial under the law in force in India. The "legal relationships" contemplated must contain in the agreement in writing for arbitration in accordance with the Convention set forth in the First Schedule.

15. Clause 1 under Article II of the First Schedule states that each Contracting State shall recognise an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of defined legal relationship, whether contractual or not, concerning a subject-matter capable of settlement by arbitration. Clause 2 therein states that the term "agreement in writing" shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams. Thus, the existence of the defined legal relationship in writing, undertaking to submit to arbitration all or any differences concerning a subject-matter capable of settlement by arbitration, is the sine qua non to constitute a "foreign award", as defined under Section 44 of the said Act, as has been rightly urged by the learned Senior Advocate Shri Sunil Manohar.

16. It is not in dispute that the Representation Agreements in force containing clause 8(d) of arbitration brought into force from 3-10-2000 undertaking to submit to arbitration all or any differences concerning the s-ubjectmatter capable of settlement by arbitration, are signed by the Director Terry L. Peteete of the applicant-Company, and by the non-applicant No.-3(i)Rattan Ram Pathak in his capacity as the Managing Director of the non-applicant No.1-Company. There exists a defined legal relationship in writing in the form of the Representation Agreements. The arbitral award passed on 28-3-2010 by the International Arbitration Tribunal is on the differences between the parties to the arbitration agreement. The said award, therefore, satisfies the test of "foreign award", as defined under Section 44 of the said Act. The question No.(1) is answered accordingly.

As to Question No.2 :

17. Section 45 of the said Act confers a power upon a judicial authority to refer the parties to arbitration, and it is reproduced below :

"45. Power of judicial authority to refer parties to arbitration.-Notwithstanding anything contained in Part I or in the Code of Civil Procedure, 1908 (V of 1908), a judicial authority, when seized of an action in a matter in respect of which the parties have made an agreement referred to in Section 44, shall, at the request of one of the parties or any person claiming through or under him, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed."

Perusal of the aforesaid provision shows that the jurisdiction of a judicial authority under the aforesaid provision is twofold (i) to refer the parties to arbitration, if it finds that the matter pending before it is such that in respect of it the parties have made an agreement referred to in Section 44 of the said Act, and (ii) to decide the question as to whether the arbitration agreement produced before it is null and void, inoperative or incapable of being performed.

18. In the decision of the Apex Court in the case of Chloro Controls India Private Limited, cited supra, relied upon by Shri Deven Chauhan, the learned Advocate for the applicant, the Apex Court was considering the question of invocation of jurisdiction of the Court under Section 45 of the said Act, and in para 59, it holds that the applicant should satisfy the prerequisites stated in Section 44 of the said Act. In para 63, the Apex Court holds that for proper interpretation and application of Chapter I of Part II, it is necessary that those provisions are read in conjunction with Schedule I of the Act. To examine the provisions of Section 45 without the aid of Schedule I would not be appropriate as that is the very foundation of Section 45 of the said Act. Para 83 of the said decision being relevant, is reproduced below :

"83. Where the court which, on its judicial side, is seized of an action in a matter in respect of which the parties have made an arbitration agreement, once the required ingredients are satisfied, it would refer the parties to arbitration but for the situation where it comes to the conclusion that the agreement is null and void, inoperative or incapable of being performed. These expressions have to be construed somewhat strictly so as to ensure that the court returns a finding with certainty and on the correct premise of law and fact as it has the effect of depriving the party of its right of reference to arbitration. But once the court finds that the agreement is valid then it must make the reference, without any further exercise of discretion (refer General Electric Co. v. Renusagar Power Co. (1987) 4 SCC 137). These are the issues which go to the root of the matter and their determination at the threshold would prevent multiplicity of litigation and would even prevent futile exercise of proceedings before the Arbitral Tribunal."

It is thus a mandate of Section 45 of the said Act to refer the parties to arbitration if the judicial authority finds that the matter pending before it is in respect of the subject covered by an agreement referred to in Section 44 of the said Act. However, the right to reference cannot be construed strictly as an indefeasible right. One can claim the reference only upon satisfaction of the prerequisites stated under Sections 44 and 45 read with Schedule I of the said Act. Thus, it is a legal right, which has its own contours and is not an absolute right, free of any obligations/limitations, as has been held in para 69 of the said decision. If the judicial authority decides that the arbitration agreement produced before it is null and void, or inoperative, or incapable of being performed, it has to refuse to refer the parties to arbitration. This provision covers or deals with the stage before the parties are referred to arbitration.

19. In a situation where the parties go before the Arbitral Tribunal without involvement of the judicial authority, as contemplated by Section 45 of the said Act, a dispute may be raised before the Arbitral Tribunal that the arbitration agreement in question is nonexistent, or is null and void, inoperative, or incapable of being performed. A dispute may also be raised about the jurisdiction of the Arbitral Tribunal to pass an award against the persons or parties, who are not signatories to the arbitration agreement. The Arbitral Tribunal may record its finding either one way or the other. If the objections raised are rejected, then the Arbitral Tribunal may proceed further to arbitrate the disputes or the differences referred to it on merits and pass an award against the parties, or nonparties, or signatories, or nonsignatories to the arbitration agreement. In case of the foreign award passed by the International Arbitration Tribunal, unless it is made a decree of Court in India, as contemplated by Section 49 of the said Act, it does not become enforceable. Section 49 of the said Act deals with the enforcement of the foreign awards, and it states that where the Court is satisfied that the foreign award is enforceable under Chapter I of Part II under the said Act, the foreign award shall be made as a decree of the Court, which becomes binding upon the parties and enforceable.

20. In the application filed under Section 49 of the said Act to make the foreign award as a decree of the Court in India, Section 48 of the said Act provides an opportunity to the party against whom such an award is made to raise objections touching the jurisdiction of the International Arbitration Tribunal to pass such an award and upon production of the proof, to claim the order of refusal to enforce the award. Section 48 of the said Act deals with the conditions for the enforcement of the foreign awards, and it reads as under :

"48. Conditions for enforcement of foreign awards.-

(1) Enforcement of a foreign award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the Court proof that

(a) the parties to the agreement referred to in section 44 were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made, or

(b) the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(c) the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:

Provided that, if the decisions on merits submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be enforced; or

(d) the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or

(e) the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

(2) Enforcement of an arbitral award may also be refused if the Court finds that

(a) the subject-matter of the difference is not capable of settlement by arbitration under the law of India; or

(b) the enforcement of the award would be contrary to the public policy of India.

[Explanation 1.For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,

(i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or

(ii) it is in contravention with the fundamental policy of Indian law; or

(iii) it is in conflict with the most basic notions of morality or justice.

Explanation 2.For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.

(3) If an application for the setting aside or suspension of the award has been made to a competent authority referred to in clause (e) of subsection(1) the Court may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security."

If the objections, as contemplated by the aforesaid provisions, are raised before the Court in India, those are required to be adjudicated on their own merits. If the Court is satisfied about the proof in support of such objections, then it may hold that the foreign award is not binding upon such objectors and refuse to make such award enforceable by making it a decree of the Court. It is thus apparent that before enforcing the foreign award, the Court has to record its satisfaction under Section 49 of the said Act that such foreign award is binding upon the parties before it and is, therefore, enforceable in India.

21. In the decision of the Apex Court in the case of Renusagar Power Co. Ltd. v. General Electric Company, reported in 1984(4) SCC 679, the question considered was whether on merits, the claims referred to the Court of arbitration were beyond the scope/purview of the arbitration clause contained in the commercial contract. The Court holds that amongst other factors, the answer would depend upon the question as to whether it embraces even questions of the existence, validity and effect of the arbitration agreement, as stated in para 15 of the said decision. After considering various judgments, four propositions are laid down by the Apex Court in para 25 of the said decision, which is reproduced below :

"1. Whether a given dispute inclusive of the arbitrators jurisdiction comes within the scope of purview of an arbitration clause or not primarily depends upon the terms of the clause itself; it is a question of what the parties intend to provide and what language they employ.

2. Expressions such as "arising out of" or "in respect of" or "in connection with" or "in relation to" or "in consequence of" or "concerning" or "relating to" the contract are of the widest amplitude and content and include even questions as to the existence, validity and effect (scope) of the arbitration agreement.

3. Ordinarily as a rule an arbitrator cannot clothe himself with power to decide the questions of his own jurisdiction (and it will be for the Court to decide those questions) but there is nothing to prevent the parties from investing him with power to decide those questions, as for instance, by a collateral or separate agreement which will be effective and operative.

4. If, however, the arbitration clause, so widely worded as to include within its scope questions of its existence, validity and effect (scope), is contained in the underlying commercial contract then decided cases have made a distinction between questions as to the existence and/or validity of the agreement on the one hand and its effect (scope) on the other and have held that in the case of former those questions cannot be decided by the arbitrator, as by sheer logic the arbitration clause must fall along with underlying, commercial contract which is either nonexistent or illegal while in the case of the latter it will ordinarily be for the arbitrator to decide the effect or scope of the arbitration agreement, i.e. to decide the issue of arbitrability of the claims preferred before him."

The Apex Court holds as a general principle of law that ordinarily as a rule, an arbitrator cannot clothe himself with power to decide the questions of his own jurisdiction (and it will be for the Court to decide those questions), but there is nothing to prevent the parties from investing him with power to decide those questions, as for instance, by a collateral or separate agreement which will be effective and operative. It is further held that a distinction has to be made in respect of commercial contract between the questions as to the existence and/or validity of the agreement on the one hand and its effect (scope) on the other and have held that in the case of former, those questions cannot be decided by the arbitrator, as the arbitration clause must fall along with the underlying commercial contract, which is either nonexistent or illegal, while in the latter case, it will ordinarily be for the arbitrator to decide the effect of scope of the arbitration agreement, i.e. to decide the issue of arbitrability of the claim preferred before him.

22. Thus, the scheme of the Act clearly postulates the filtration of the disputes or the differences on the touchstone of various expressions used under the arbitration agreements, like "arising out of" or "in respect of" or "in connection with" or "in relation to" or "in consequence of" or "concerning" or "relating to the contract between the parties" containing the clause of arbitration at two stages, viz. (i) at the initial stage under Section 45 of the said Act before the matter is referred to the International Arbitration Tribunal, and (ii) at the stage of enforceability of the foreign award under Section 49 of the said Act by the Court in India. The questions of existence and validity of commercial contract cannot be decided by the Arbitration Tribunal, as the arbitration clause must fall along with the underlying commercial contract, which becomes nonexistent and invalid. However, it will be the exclusive jurisdiction of the Arbitral Tribunal to decide the effect and scope of the arbitration agreement, including that of arbitrability of the dispute. This case is not concerned with the filtration of the arbitration agreement under Section 45 of the said Act, but it is essentially concerned with the enforceability of the foreign award under Section 49 of the said Act.

23. In the decision of the Apex Court in the case of Khardah Company Ltd. v. Raymon & Co. (India) Private Ltd., delivered by the Constitution Bench of the Apex Court, and reported in AIR 1962 SC 1810, it is held in para 4 as under :

"(4) It cannot be disputed that the expression "arising out of" or "concerning" or "in connection with" or "in consequence of" or "relating to this contract" occurring in Cl. 14 are of sufficient amplitude to take in a dispute as to the validity of the agreement dated September 7, 1955. Vide Ruby General Insurance Co. Ltd. v. Pearey Lal Kumar, 1952-3 SCR 501 : (AIR 1952 SC 119). But the question is not whether Cl. 14 is all comprehensive but whether it could be enforced when the agreement of which it forms an integral part is held to be illegal. Logically speaking, it is difficult to conceive how when an agreement is found to be bad, any portion of it can be held to be good. When the whole perishes, its parts also must perish. 'Ex nihilo nil fit'. On principle therefore it must be held that when an agreement is invalid every part of it including the clause as to arbitration contained therein must also be invalid."

The Apex Court considered all sorts of expressions normally used under the agreement containing the clause of arbitration. The Court has held that the question is not whether such clause is comprehensive, but whether it could be enforced when the agreement of which it forms an integral part is held to be illegal. The Court holds that logically speaking, it is difficult to conceive how when an agreement is found to be bad, any portion of it can be held to be good. When the whole perishes, it parts also must perish. It, therefore, holds that when an agreement is invalid, every part of it, including the clause of arbitration therein must also be invalid.

24. In respect of domestic arbitration, Section 16 contained in Chapter IV of the said Act deals with the competence of the Arbitral Tribunal to rule on its jurisdiction, and subsections (1), (2) and (3) of Section 16 of the said Act being relevant, are reproduced below :

"16. Competence of arbitral tribunal to rule on its jurisdiction.- (1) the arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose,

(a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and

(b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.

(2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator.

(3) A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings."

In view of the aforesaid statutory provisions, the domestic Arbitral Tribunal is made competent to rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement. Such a plea has to be raised not later than the submission of the statement of defence. However, a party is not precluded from raising such a plea merely because he has appointed or participated in the appointment of an Arbitrator. There is no provision in Chapter I of Part II under the said Act making the International Arbitration Tribunal competent to rule on its own jurisdiction, as is contained in subsection(1) of Section 16 in respect of the domestic arbitration. The presumption would be that the Legislature has consciously excluded the jurisdiction of the International Arbitration Tribunal to decide the question of its own jurisdiction, including the question of existence and validity of an arbitration agreement.

25. It is now wellsettled that the exclusion of the ordinary jurisdiction of the Civil Courts in India to adjudicate all the civil disputes cannot be readily inferred unless it is barred by the express provision of law or by necessary implication. The Arbitral Tribunals, whether domestic or international, are the forums of limited jurisdiction. It exercises the jurisdiction only to the extent it is conferred and only over the persons or the parties, who have agreed to surrender themselves to such jurisdiction. The source of jurisdiction of the Arbitral Tribunals to adjudicate the disputes or the differences between the parties to the arbitration agreement flows from the consent of parties - implied or express, the agreement to that effect in writing, or waiver or surrender to the jurisdiction of such Tribunal by conduct of parties. In the absence of these things, it is not possible for the Arbitral Tribunals, whether domestic or international, to assume the jurisdiction in respect of the subject-matter, which is to be arbitrated and/or to pass an award against the person/s or party/ies, who are nonsignatories to the arbitration agreement.

26. Even if the Arbitral Tribunal decides the disputes or differences under the arbitration agreement which is nonexistent or illegal or decides the disputes or differences not covered by the arbitration agreement or exercises jurisdiction over nonsignatories to it and passes an award against them or against the persons or parties who are not joined in such proceedings, the jurisdiction of the Civil Courts in India under Section 34 in respect of domestic awards and under Section 49 of the said Act in respect of an award by the International Arbitration Tribunal, to review such decision is saved. Not only that, but such decision of the Court in India is made appealable under Sections 37 and 50 of the said Act, as the case may be. Though the second appeal thereafter is barred under the said provisions, the jurisdiction of the Supreme Court of India is kept unaffected with an addition under Sections 37(3) and 50(2) that it shall not take away right of appeal to the Supreme Court. In view of this, the jurisdiction of the Arbitral Tribunal to decide the questions and pass an award, as contemplated earlier, stands excluded by necessary implication.

27. There is a decision of the learned Single Judge of this Court (Shri R.D. Dhanuka, J.) delivered on 28.4.2015 in Arbitration Petition No.587 of 2015 and other connected matters in Oil and Natural Gas Corporation Ltd. v. M/s. Jindal Drilling and Industries Limited, holding in para 37 of the said decision that the Arbitral Tribunal has no power to lift the corporate veil and such power can be exercised only by a Court if the strongest case is made out. The Court rejected the argument advanced by the petitioner therein that the Arbitral Tribunal should have lifted the corporate veil to find out that the other respondents in the said petition were forming part of the respondent No.1 and were one and the same entity - bound to discharge the liabilities of the respondent No.1. The Court found that the decision of the Arbitral Tribunal refusing to lift the corporate veil cannot, therefore, be interfered with under Section 34 of the said Act.

28. Shri Deven Chauhan, the learned Advocate for the applicant-Company, has invited my attention to clause 8(d) contained in the Representation Agreement in force, which is reproduced below :

"8(d) Interpretation, Amendment, Law, Arbitration and Assignments.

(i) This Agreement is subject to the laws of the State of Missouri, U.S.A.

(ii) In the event that a dispute arises in connection with this Agreement such dispute shall be referred to a single arbitrator in Kanas City, Missouri, U.S.A. to be appointed by agreement between the parties hereto, or failing agreement to be appointed according to the rules of the American Arbitration Association, the same rules under which any dispute shall be decided.

(iii) In the event a dispute is committed to arbitration, the party deemed at fault shall reimburse the full cost of the arbitration and legal process to the aggrieved party.

(iv) This Agreement shall not be amended in any way other than by agreement in writing, signed by both parties."

It is urged by him, relying upon the observations made in paras 97, 99, 100, 102, 103, 103.1, 103.2 and 143 of the decision of the Apex Court in the case of Chloro Controls India Private Limited, cited supra, that the expression "a dispute arises in connection with this Agreement" is of the widest amplitude and confers a jurisdiction upon the International Arbitration Tribunal not only to decide the questions of existence, validity and effect (scope) of the arbitration agreement, but also the rights and liabilities of the persons, who are nonsignatories to the agreement, if it finds that the cause of action is directly relatable to the contract and that the nonsignatories are the "alter ego" of the non-applicant No.1-Company liable to pay the compensation/damages for breach of contract or payment of amount arising out of the contract.

29. The Apex Court in the case of Chloro Controls India Private Limited, cited supra, was dealing with a case under Section 45 of the said Act, which concerns the power of the judicial authority to refer the parties to arbitration, as has been rightly pointed out by Shri Sunil Manohar, the learned Senior Advocate for the non-applicant No.2. The decision can be used as an authority for the proposition advanced by Shri Manohar that it is the jurisdiction of the Court in India to decide the question of existence, validity, binding nature and enforceability of the agreement against nonsignatories by invoking the doctrine of "lifting of corporate veil" or "alter ego". The factual background in which the principles are laid down and the object and purpose of laying down such principles will have to be kept in mind. A decision is an authority for what it actually decides and not for what logically follows from it, is a wellsettled principle of judicial precedents. It was not the question raised and decided in the said decision as to whether the jurisdiction to decide all such issues lies with the Arbitral Tribunal. The decision in Chloro Controls India Private Limited is not an authority for the proposition that the Arbitral Tribunal is competent or empowered either to rule on its own jurisdiction or to make nonsignatories to the arbitration agreement bound by the award passed by it. The decision is, therefore, no avail to the applicant.

30. In view of above, the argument that the International Arbitration Tribunal has jurisdiction to pass an award against the nonsignatories to the arbitration agreement on the basis of finding that they are the "alter ego" of the party to the agreement, is rejected and it is held that such jurisdiction does not vest in the International Arbitration Tribunal. The question No.2 is answered accordingly.

As to Question No.3 :

31. Now coming to the question as to whether the non-applicants, who had appeared in the proceedings before the International Arbitration Tribunal and filed their reply raising all such objections, are estopped from raising such objections in the proceedings under Section 49 of the said Act, asking the Court to go behind the findings recorded by the International Arbitration Tribunal. No doubt, that in terms of clause 8(d)(i) of the Representation Agreement in question, there may be a forum available under the laws of the State of Missouri, U.S.A., which is the agreed law, to challenge the award passed in question. In the decision of the Apex Court, delivered by the Constitution Bench in the case of Khardah Company Ltd., cited supra, such objection was raised and considered in para 14 of the said decision. The Court has held that when the agreement itself is void, then there was no submission which was alive on which the Arbitrators could act and the proceedings before them would be wholly without jurisdiction. It holds that what confers the jurisdiction on the Arbitrators to hear and decide a dispute is an arbitration agreement, as defined in Section 2(a) of the Arbitration Act, and where there is no such agreement, there is an initial want of jurisdiction which cannot be cured by acquiescence. The Court rejected the contention that the respondents therein were estopped by their conduct from questioning the validity of the award.

32. In the decision of the Apex Court in the case of Renusagar Power Co. Ltd., cited supra, it is held in para 57 as under:

"57. In view of the position which arises from the aforesaid discussion it is really unnecessary for us to go into and decide the question whether, in cases where the arbitration clause contained in the underlying Commercial Contract is so widely worded as to include within its scope the question of its existence, validity or effect (scope). The decided cases have made a distinction between questions as to the existence or validity of the agreement on the one hand and its effect (scope) on the other and have held that in the case of the former those questions cannot be decided by the arbitrators, as by sheer logic the arbitration clause must fall along with the underlying Commercial Contract which is either nonexistent or illegal, while the case of the latter it will ordinarily be for the arbitrators to decide the effect (scope) of the arbitration agreement as is contended for by Counsel for G.E.C. because both under the scheme of the Foreign Awards Act as well as under the general law of arbitration obtaining in England and in India, the decision of the arbitrator on the question of his own jurisdiction will have to be regarded as provisional or tentative, subject to final determination of that question by the Court. ..."

As a general law, the Court has made a distinction between the questions as to the existence of validity of the agreement on one hand and its effect (scope) on the other, and has held that in the case of the former, those questions cannot be decided by the Arbitrators, as, by sheer logic, the arbitration clause must fall along with the underlying commercial contract, which is either nonexistent or illegal, while the case of the latter, it will ordinarily be for the Arbitrators to decide the effect (scope) of the arbitration agreement. It is held under the scheme of the Foreign Awards Act as well as under the general law of arbitration obtaining in England and in India, the decision of the Arbitrator on the question of his own jurisdiction will be regarded as provisional or tentative, subject to final determination of that question by the Court.

33. In view of above, the argument that once the International Arbitration Tribunal rightly or wrongly decides the question of its own jurisdiction, it can be challenged only in the forum provided in the law applicable under the arbitration agreement and the Court in India, acting under Section 49 of the said Act, cannot go behind such award to record the findings contrary to the contents of such award and refuse to make a decree of the Court, is rejected. It is held that the decision of the International Arbitration Tribunal on such question will be treated as tentative, subject to the decision of Court in India under Section 49 of the said Act and there would be no question of estoppel, waiver, surrender or acquiescence, merely because there is participation in the proceedings of arbitration. The question No.3 is answered accordingly.

34. Having dealt with the questions of law, I turn to the facts of the present case. The Representation Agreements in force are signed by the Director-Terry L. Peteete for and on behalf of the applicant-Integrated Sales Services Limited, and by Rattan Ram Pathak, the non-applicant No.3-(i), in his capacity as the Managing Director of the non-applicant No.1-DMC Management Consultants Ltd., containing the clause of arbitration, making it subject to the laws of State of Missouri, U.S.A. Neither the non-applicant No.2-Arun Dev s/o Govindvishnu Upadhyaya, nor the applicant No.3-Gemini Bay Transcription Pvt. Ltd., through its Directors(i) Rattan Ram Pathak, and (ii) Naresh Kumar Kopisetti, have signed the Representation Agreements in force in their individual capacity. Except the non-applicant No.2-Arun Dev s/o Govindvishnu Upadhyaya, none of the other individual non-applicants in this application were joined as the party-respondents in the dispute before the International Arbitration Tribunal. The respondents before the said Tribunal were DMC Management Consultants Ltd., Arun Dev s/o Govindvishnu Upadhyaya, Gemini Bay Consultants Ltd., and Gemini Bay Transcription Pvt. Ltd.

35. The non-applicant Nos.2 and 3 have neither submitted themselves to the arbitration nor to the composition of the International Arbitration Tribunal. There did not exist or subsist any arbitration agreement between the applicant and the non-applicant Nos.2 and 3. There is nothing in the Representation Agreements in force, which permit the said Tribunal to exercise jurisdiction over the non-signatories to it. The invocation of the principle of lifting of corporate veil and holding the non-applicant Nos.2 and 3 as "alter ego" of the non-applicant No.1-Company and on the basis of it, to hold them jointly and severally liable to pay the amount under the award, is totally without jurisdiction and cannot be sustained. Merely because the non-applicant Nos.2 and 3 have participated in the proceedings before the International Arbitration Tribunal, they cannot be estopped from raising the question of jurisdiction of the said Tribunal in response to the application under Section 49 of the said Act. The question of operating estoppel, acquiescence, surrender, etc., to the jurisdiction of the said Tribunal, does not at all arise. The award passed by the International Arbitration Tribunal, in the present case, is, therefore, hit by the conditions in clauses (c), (d) and (e) of subsection (1) of Section 48 of the said Act. The said award cannot, therefore, be enforced in India against the non-applicant Nos.2 and 3 by making a decree of the Court.

36. Though the International Arbitration Tribunal had no jurisdiction to invoke the principle of lifting of corporate veil and holding the non-applicant Nos.2 and 3 as "alter ego" of the non-applicant No.1-Company, this Court is competent under Section 49 of the said Act to go into all these aspects of the matter and hold that the non-applicant Nos.1, 2 and 3 are jointly liable to pay the amount covered by the award passed by the said Tribunal. However, the applicant has to make out such a case in the proceedings under Section 49 of the said Act. After going through the contents of the application, I do not find that any such case is made out by the applicant. In spite of repeated queries, Shri Deven Chauhan, the learned Advocate for the applicant, makes a statement that this is not the case with which the applicant has come forward before this Court while invoking the jurisdiction under Section 49 of the said Act. Had such a case been made out, then the extent of liability of the non-applicant No.2, being the Director of the non-applicant No.1 Company, was required to be judged on the basis of the provisions of the Companies Act, 1956. In view of this, the non-applicant Nos.2 and 3 cannot be held in this proceeding jointly liable to pay the amount covered by the arbitration award, along with the non-applicant No.1-Company.

37. Shri Deven Chauhan for the applicant submits that the non-applicant Nos.2 and 3 were made parties in the proceedings before the International Arbitration Tribunal in their individual capacity and they are also made parties in the same capacity before this Court. The award passed against them is required to be executed against them individually by attaching their properties if such occasion arises. In order to make the non-applicant Nos.2 and 3(i) and (ii) individually or severally liable to pay the sum covered by the arbitral award in question, it must be shown that they have signed the arbitration agreement as guarantors or sureties for the debts due or recoverable arising out of or in connection with the contract in question against the non-applicant No.1, of which they are the Directors. In such an event, the liability of the guarantor or surety will be co-extensive with that of the principal debtor, and consequently their personal assets may be attached in execution of the decree. This is not the case with which the applicant has approached this Court under Section 49 of the said Act. Hence, the award passed in question cannot be enforced against them by passing a decree.

38. Shri Mathews, the learned Advocate for the non-applicant No.1-Company, the judgment-debtor, has urged that the confirmation of award has to be by the Court of Chancery at Delaware and the confirmation of award by the District Court at Missouri is without jurisdiction, and hence it is liable to be set aside. The non-applicant No.1 is party to the Representation Agreements containing the arbitration clause, and such question at their instance cannot be entertained under Section 49 of the said Act, particularly when there is a remedy available to challenge it in the forum provided in the laws of State of Missouri, U.S.A. It cannot be a question of the said award being contrary to the public policy of India, as has been urged by Shri Mathews. The award passed by the International Arbitration Tribunal against the non-applicant No.1 will have to be enforced by making it as a decree of this Court.

39. In view of above, the following order is passed :

(1) The award dated 28-3-2010 passed by the International Arbitration Tribunal in ICDR Case No.50-181-T-00327-09 becomes unenforceable in India to the extent it operates against the non-applicant No.2-Arun Dev s/o. Govindvishnu Upadhyaya and No.3-Gemini Bay Transcription Pvt. Ltd., and the claim for passing a decree against them in terms of the said award is refused.

(2) The award passed by the International Arbitration Tribunal in ICDR Case No.50-181-T-00327-09 to the extent it operates against the non-applicant No.1-DMC Management Consultants Ltd. is made enforceable in India and the decree is passed in terms of the said award against the non-applicant No.1.

(3) Decree be drawn accordingly.

(4) The matter shall remain pending.

Ordered accordingly.