NATIONAL THERMAL POWER CORPORATION versus SINGER COMPANY AND ORS.

Citation: [1992] 3 S.C.R. 106 · Decided: 07-05-1992 · Supreme Court of India · Bench: T.K. THOMMEN · Disposal: Appeal(s) allowed

Cited by 4 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
NATIONAL THERMAL POWER CORPORATION 
~ 
v. 
SINGER COMPANY AND ORS. 
MAY 7, 1992 
B 
[T.KOCHU THOMMEN AND S.C. AGRAWAL, JJ.] 
-
Arbitration Act, 1940: 
\._ 
Section 1(2)-Applicability of the AcHnternational Commercial ar-
c bitration agreemenHndian company entering into contract with a foreign 
company-Arbitration clause contained in the contrac~Stipulation that laws 
in force in India applicable and Courts of Delhi would have exclusive 
jurisdiction-R.ules of conciliation and arbitration of Intemational Chamber 
of Commerce applicable as agreed upon-Dispute ref e"ed to Arbitral 
Tribunal constituted as per these Rules-Award made in London, the seat of 
D arbitration-Whether the award is governed by the Arbitration Act, 1940. 
Foreign Awards (Recognition and Enforcement) Act, 1961: 
Sections 2 and 9--/nternational commercial arbitration agreement 
E 
-Award made in a foreign country-Laws in force in India applicable as 
agreed upon by parties-Such awar~Whether to be regarded as foreign 
....... 
award or domestic award. 
Private International Law : 
International contracts--Law governing the contract-Parties at liberty 
> 
F 
to make choice of the law applicable-Substantive as also procedural-In 
absence of choice, presumption that laws of country where arbitration held 
..... 
applicable-However presumption rebuttable having regard to true intention 
of parties--Proper law of CQntrac~What is-Doctrine of renvoi-Applicability 
of. 
G 
Words & Phrases : 
'Proper Law of Contract'-Meaning of. 
_......_ 
The appellant Corporation and Respondent Company entered into 
H two agreements on 17.8.1982 at New Delhi for the supply of equipment, 
106 
--
.. J. 
N.T.P.C. v. SINGER CO. 
107 
erection and commissioning of certain works in India. It was agreed that A 
the law applicable to the contract would be the laws in force in India and 
that the Courts of Delhi would have the exclusive jurisdiction. The agree-
ments contained a specific provision that any dispute arising out of the 
contract should be decided as per the relevant clauses of the General 
conditions of the contract. According to the General Terms, the Respon-
dent being a foreign contractor it would be governed by the provisions 
relating to foreign contractors. It further provided for settlement of dis-
putes amicably, failing which by arbitration which would be conducted by 
three arbitrators one each to be nominated by the owner and the C~mtrac-
B 
tor and a third to be named by the President of the International Chamber 
of Commerce (l.C.C.). 
A dispute arose between the parties and it was referred to the 
Arbitral Tribunal constituted in terms of rules of arbitration of the ICC 
Court,s~Rule~_~nd London was chosen by the ICC Court as the place of 
arbitration. The Tribunal made an interim award. 
The appellant corporation filed an appli~ation under the provisions 
of the Arbitration Act, 1940 before the Delhi High Court for setting aside 
the said interim award. -
c 
D 
The High Court held that the award was not governed by the Ar· E 
bitration Act, 1940; the arbitration agreement on which the award was 
made was not governed by the law of India; the award fell within the ambit 
of the Foreign Awards (Recognition and Enforcement) Act, 1961; London 
being the seat of arbitration, English Courts alone had jurisdiction to set 
aside the award; and, that it had no jurisdiction to entertain the applica-
tion filed under the Arbitration Act, 1940. 
F 
Being aggrieved against the High Court's order, the appellant cor-
poration preferred the present appeal by special leave. 
On behalf of the appellant, it was contended that the substantive law G 
which governed the arbitration was Indian law and so the competent courts 
were Indian Courts. It was also contended that even in respect of proce-
dural matters, the concurrent jurisdiction of the courts .of the place of 
arbitration did not exclude the jurisdiction of Indian Courts. 
It was contended on behalf of the respondent company that while the H 
108 
SUPREME COURT REPORTS . 
[1992] 3 S.C.R. 
A 
main contract was governed by Indian law, as expressly stated by the 
1 
parties, arbitration being a collateral contract and procedural in nature, 
B 
c 
it was not necessarily bound by the proper law of the contract, but the law 
applicable to it must be determined with reference to other factors and the 
place of arbitration was an im:-ortant factor. It was further contended that 
since London was chosen to be the seat o

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