VENTURE GLOBAL ENGINEERING versus SATYAM COMPUTER SERVICES LTD. AND ANR.

Citation: [2008] 1 S.C.R. 501 · Decided: 10-01-2008 · Supreme Court of India · Bench: TARUN CHATTERJEE · Disposal: Case Allowed

Cited by 7 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2008] 1 S.C.R. 501 
VENTURE GLOBAL ENGINEERING 
A 
II. 
SATYAM COMPUTER SERVICES LTD. AND ANR. 
(C.A. No. 309 of 2008) 
JANUARY 10, 2008 
B 
[TARUN CHATTERJEE AND P. SATHASIVAM, JJ.] 
~ 
Arbitration and Conciliation Act, 1996: 
Part I - Applicability of - Held: Would apply to all c 
arbitrations including international commercial arbitrations 
and to all proceedings relating thereto - Where such arbitration 
is held in India, the provisions would compulsorily apply -
Would also apply in case of international commercial 
arbitrations held out of India, unless parties by agreement, 
express or implied, exclude all or any of its provisions -
D 
International Commercial Arbitration . 
.... 
ss. 34 and 48 - Arbitral award - Foreign award - Setting 
~ 
aside of - Rjght of judgment-debtor - Held: Judgment-debtor 
cannot be deprived of his right to invoke the public policy of E 
India to set aside the award passed by a foreign court -
Respondent no. 1 in enforcing award in US Court instead of 
Indian court was motivated by intention of evading the legal 
and regulatory scrutiny to which such transaction would be 
subjected to had it been enforced in India - Intention of 
F 
l-
respondent no. 1 was to avoid enforcement of award under s.48 
• of the Act which would have given the appellant benefit of the 
public policy Rule and for avoiding jurisdiction of Courts of 
India though award had an intimate and close nexus in India 
- Hence suit for declaration filed in Indian court to set aside 
the award passed by the foreign court maintainable. 
G 
t 
The appellant-company and respondent No.1 a 
registered company having its office in India entered into 
a Joint Venture Agreement to constitute respondent no.2 
company (SVES) in which both the appellant and H 
501 
502 
SUPREME COURT REPORTS 
[2008] 1 S.C.R. 
A respondent no.1 had 50% equity shareholding. Another 
),._ 
agreement was executed between the same parties on 
the same day being the Shareholders Agreement (SHA) 
which contained arbitration clause. Disputes arose 
between the parties. Respondent No.1 exercised its 
B option to purchase the appellant-company's shares in 
SVES at its book value on the allegation that the appellant 
had committed an event of default under the SHA owing ,. 
to several venture companies becoming insolvent. 
c 
Respondent No.1 filed a request for arbitration with 
the London Court of International Arbitration whereby a 
sole arbitrator was appointed. The sole arbitrator passed 
an award directing the appellant company to transfer the 
shares to respondent No.1. Respondent No.1 filed a 
petition for seeking enforcement of the award before the 
... 
D Eastern District Court of Michigan (US Court). The 
appellant entered appearance to defend this proceeding 
before the US Court by filing a cross petition. Thereafter, 
j-. 
the appellant filed a suit in Indian Court for declaration to 
• " 
set aside the award and permanent injunction on the 
E transfer of shares under the Award. The District Court 
passed an ad-interim ex parte order of injunction, 
restraining respondent No.1 from effecting the transfer 
of shares. Respondent no.1 appealed before the High 
Court. The High Court admitted the appeal and directed 
F interim suspension of the order of the District Court but 
i 
made it clear that respondent No.1 would not effect the 
~ 
transfer of shares until further orders. In response to the 
summons, respondent No.1 appeared in the Court and -
filed a petition under Order VII Rule 11 CPC for rejection 
G of the plaint. The trial Court, allowed the said application 
and rejected the plaint of the appellant. The High Court 
dismissed the appeal holding that the award cannot be 
.J 
challenged even if it is against public policy and in 
contravention of statutory provisions. Hence the appeal. 
H 
Allowing the appeal, the Court 
VENTURE GLOBAL ENGINEERING v. SATYAM 
503 
t 
COMPUTER SERVICES LTD. AND ANR. 
~ ' 
...x 
HELD: 1. The provisions of Part I of the Arbitration A 
ii> 
and Conciliation Act, 1996 would apply to all arbitrations 
including international commercial 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 to deviate to the extent permitted B 
by the provisions of Part-I. Even in the case of international 
~ 
commercial arbitrations held out of India provisions of 
\ 
Part-I would apply unless the parties by agreement

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