GEMINI BAY TRANSCRIPTION PVT. LTD. versus INTEGRATED SALES SERVICE LTD. & ANR.

Citation: [2021] 7 S.C.R. 957 · Decided: 10-08-2021 · Supreme Court of India · Bench: R.F. NARIMAN · Disposal: Dismissed

cites 10 · see the full citation network in Lexace

Judgment (excerpt)

A
B
C
D
E
F
G
H
957
GEMINI BAY TRANSCRIPTION PVT. LTD.
v.
INTEGRATED SALES SERVICE LTD. & ANR.
(Civil Appeal Nos. 8343-8344 of 2018)
AUGUST 10, 2021
[ROHINTON FALI NARIMAN AND B. R. GAVAI, JJ.]
Arbitration and Conciliation Act, 1996:
ss. 44, 47, 48 – Foreign awards – Recognition and enforcement
of, against non-signatories to the arbitration agreement – On facts,
Hong Kong based company-respondent no. 1-ISS and Indian
company-DMC entered into a Representation Agreement – In terms
thereof, ISS had to assist DMC to sell its goods and services to the
prospective customers and in consideration was to receive
Commission – By amendment, the agreement was subject to laws of
the State of Delaware, USA – Dispute between the parties – Initiation
of arbitration by ISS, claiming that DMC allegedly terminated its
contract with the customers introduced by ISS and executed new
contracts with the appellant company-GBT, a company owned and
controlled by the Chairman of DMC, thereby depriving ISS of its
Commission – ISS claimed damages on the basis of accounting for
lost Commissions – Chairman of DMC, DMC, DMCG, GBC and
appellant company filed claim as respondents – Issuance of award
by the arbitrator directing the DMC, DMCG, Chairman of DMC,
GBC and the appellant company to jointly and severally pay the
amount awarded to ISS – As regards, the enforcement of award, the
Single Judge of the High Court held that the award would be
enforceable against DMC as it was a party to the agreement, and
not against non-signatories to the arbitration agreement – However,
the Division Bench set aside the order of the Single Judge – Appeal
by non-signatories – Held: Foreign award could be enforced against
non-signatories to the arbitration agreement – s. 47(1)(c) being
procedural in nature does not go to the extent of requiring
substantive evidence to “prove” that a non-signatory to an
arbitration agreement can be bound by a foreign award – s. 47(1)(c)
speaks of only evidence as may be necessary to prove that the award
is a foreign award – A non-party to the agreement, alleging that it
[2021] 7 S.C.R. 957
957
A
B
C
D
E
F
G
H
958
SUPREME COURT REPORTS
[2021] 7 S.C.R.
cannot be bound by an award made under such agreement, is outside
the literal construction of s. 48(1)(a) – Non-signatory’s objection
cannot possibly fit into s. 48(1)(a) – Application of the alter ego
doctrine under Delaware law would depend primarily upon the
Arbitrator applying the oral and documentary evidence led before
him to arrive at this conclusion on facts – Furthermore, perversity
not a ground to set aside an award in an international commercial
arbitration held in India –Expression ‘submission to arbitration’ u/
s. 48(1)(c) only deals with disputes outside the scope of the
arbitration agreement between the parties-and not to whether a
person who is not a party to the agreement can be bound by the
same – As regards, the plea that the Award should be set aside since
no proper reasons given by the Arbitrator, being breach of natural
justice, s. 48(1)(b) does not speak of absence of reasons in an
arbitral award at all – Plea that since damages were given in tort,
they would be outside the scope of the arbitration agreement cannot
be accepted since u/s. 44, the tort claims may be decided by an
arbitrator provided they are disputes that arise in connection with
the agreement – Furthermore, s.46 does not speak of “parties” at
all, but of “persons” who may, thus, be non-signatories to the
arbitration agreement – Thus, on facts, actual loss can be said to
have been occasioned to ISS, and the damages awarded cannot be
said to shock the conscience of this Court – Damages – Doctrine of
alter ego.
s. 44 – Foreign awards – Ingredients to an award being
foreign award – Stated.
s. 47 – Pre-requisites for the enforcement of a foreign award
– Stated.
s. 48(1)(a), (b) and (c) – Conditions for enforcement of foreign
awards – Interpretation and scope of – Explained.
Dismissing the appeals, the Court
HELD: 1.1 A reading of Section 44 of the Arbitration and
Conciliation Act, 1996 would show that there are six ingredients
to an award being a foreign award under the said Section. First, it
must be an arbitral award on differences between persons arising
out of legal relationships. Second, these differences may be in
contract or outside of contract, for example, in tort. Third, the
A
B
C
D
E
F
G
H
959
legal relationship so spoken of ought to be considered
“commercial” under the law in India. Fourth, the

Excerpt shown. Read the full judgment & AI analysis in Lexace.