SUPREME COURT OF INDIA
DIVISION BENCH
AMWAY INDIA ENTERPRISES PRIVATE LIMITED — Appellant
Vs.
RAVINDRANATH RAO SINDHIA AND ANOTHER — Respondent
( Before : R.F. Nariman and B.R. Gavai, JJ. )
Civil Appeal No. 810 of 2021 (Arising out of SLP(Civil) No. 15982 of 2020)
Decided on : 04-03-2021
Arbitration and Conciliation Act, 1996 – Sections 2(1)(f) and 11(6) – Appointment of
arbitrator – Jurisdiction – There is no international flavour to the transaction between
the parties has no legs to stand on – Indeed, an analysis of Section 2(1)(f) would show
that whatever be the transaction between the parties, if it happens to be entered into
between persons, at least one of whom is either a foreign national, or habitually resident
in, any country other than India; or by a body corporate which is incorporated in any
country other than India; or by the Government of a foreign country, the arbitration
becomes an international commercial arbitration notwithstanding the fact that the
individual, body corporate, or government of a foreign country referred to in Section
2(1)(f) carry on business in India through a business office in India – High Court had no
jurisdiction to appoint an arbitrator – Appeal allowed.
Cases Referred
Ashok Transport Agency v. Awadhesh Kumar, (1998) 5 SCC 567
L&T Ltd v. MMRDA, 2016 SCC OnLine Bom 13348
Larsen & Toubro Ltd. – SCOMI Engineering Bhd v. MMRDA, (2019) 2 SCC 271
TDM Infrastructure (P) Ltd. v. UE Development India (P)Ltd., (2008) 14 SCC 271
JUDGMENT
R.F. Nariman. J. – Leave granted.
2. This appeal arises out of a petition filed under Section 11(6) of the Arbitration and Conciliation
Act, 1996 [“Arbitration Act”] by the respondents in the Delhi High Court for appointment of a sole
arbitrator. The brief facts of the case are noted in the impugned order dated 03.12.2020 thus:
“2. The facts of the case, as noted from the petition are, in the year 1998, the petitioners were
appointed as Distributor for respondent for undertaking sale, distribution and marketing of its
products in India and were registered as Amway Business Owner (ABO)/ Amway Direct Seller
(ADS), in the name of the sole proprietorship ‘Sindhia Enterprises’ with ABO No. 141935.
According to the petitioners, they have set up a vast Line of Sponsorship in the respondent
Company, and nurtured and supported close to 1500 ADSs, who have now set up their own
networks, and are in the category of Silver/ Gold/ Platinum/ Sapphire/ Emerald. From 2015, the
renewal process for existing ADSs became automatic, each year, without payment of any fee.
The respondent issued a Code of Ethics and Rules of Conduct in 2015 to govern the terms of
the relationship between the respondent and the ADSs. The respondent also started promoting
registration of Preferred Customers (PCs) directly through the respondent’s website, as
customers of the concerned ADS.
3. On the requirement of the respondent, necessary documents were executed by the petitioners
including contract for distributorship, setting out the terms and conditions of the distributorship,
and to inter alia confirm the Code of Ethics and Rules of Conduct, Legal Entity Authorisation
Form (LEAF) etc. Since then, the contract of the petitioners has been renewed from time to
time. The petitioners recorded client volume/sales from their ABO account. The petitioners
have also received income on the sales generated by them for the months of January to March,
2019 by the respondent. However, in April, 2019, upon logging into the respondent’s website,
the petitioners noted that they could not access their ABO account, or view their LoS. They
could only access their account as a PC. Accordingly, between April, 2019 and December,
2019, the petitioners raised a query with their Major Accounts Manager, who informed them
that their account had been reclassified as a ‘PC account, since they have not complied with the
criteria of are corded re-sale related purchase in the last 12 months. The petitioners learnt that
this was a criteria in the fresh set of Terms and Conditions issued by the respondent in
December, 2016, which was mandatorily required to be accepted by all ADSs, by clicking on
the ‘By clicking here you agree to abide by the new Terms & Conditions’ button, immediately
upon logging in on the respondent’s website, to proceed further to their account.
According to the petitioner, this requirement was never communicated to the petitioners in the
past, nor was any notice of termination issued by the respondent. This criterion is also in
violation of the Direct Selling Guidelines dated September 09, 2016.
4. The petitioners made repeated requests to restore their ABO account. The petitioners
attempted to resolve the aforesaid disputes and differences amicably by mutual discussions with
the representatives of the respondent from April till December, 2019. However, the respondent
has failed to consider the petitioners’ request for restoration of their ADS account. On June 26,
2020, the petitioners referred the matter for redressal and review to Mr. Jon Sherk, Vice
President and Deputy General Counsel of Amway Global in January, 2020. The petitioners were
communicated about the rejection of their request for restoration of their ADS account on June
26, 2020. According to the petitioners, the respondent has now, with effect from July, 2020
notified a new Code of Ethics & Rules of Conduct wherein the respondent has now been given
benefit of a 2 year period for establishing sales, in accordance with the DSG, and carved a
provision for restoration of the ADS account. Accordingly, the petitioners caused issuance of
notice invoking arbitration dated July 28, 2020 to the respondent invoking the arbitration clause,
Clause 12 of the Terms and Conditions enclosed with the Amway Direct Seller Application
Form (Form-SA-88-ID), which is reproduced as under:
“12. Dispute Settlement. The parties shall endeavour to settle any dispute or difference arising
out of or in connection with the Direct Seller Contract through mutual discussions within 30
days of such dispute arising. The Direct Seller agrees that in the event it is not satisfied by any
decision of Amway, or in the event that any issue raised by the Direct Seller has remained
unresolved for a period of more than two months, and / or during the subsistence of this
agreement or upon or after its termination, any issue or dispute that the Direct Seller may have
regarding the interpretation or operation of the clauses of this arrangement or any issues arising
there from shall be referred to Grievance Redressal Committee set up by the company. Any
dispute, difference or claim remaining unresolved post reference to the Grievance Redressal
committee discussions shall be submitted to binding arbitration under the provisions of the
Indian Arbitration and Conciliation Act, 1996. The venue of such arbitration shall be at New
Delhi and the award of the Arbitrator shall be final and binding on all Parties. Subject to the
above, courts at New Delhi shall alone have jurisdiction in relation to the Direct Seller Contract
and matters connected here to.”
5. The respondent replied vide letter dated August 20, 2020 wherein the respondent
communicated that the name of the Arbitrator as recommended by the petitioners was not
acceptable by it and sought time to respond with the name of another Arbitrator. However, the
respondent has till the filing of the petition failed to issue any follow up reply further to its reply
dated August 20, 2020 even after expiry of 30 days’ time.”
3. The main plea taken by the learned counsel appearing on behalf of the appellant, Amway India
Enterprises Pvt. Ltd., in the Delhi High Court was that a petition before the High Court is not
maintainable as the dispute relates to an international commercial arbitration, being covered by
Section 2(1)(f)(i) of the Arbitration Act inasmuch as the respondents are husband and wife who are
both nationals of and habitually resident in the United States of America. This plea was turned down
by the impugned judgment stating:
“23. Even the judgment of the Supreme Court in the case of TDM Infrastructure (P) Ltd. v.
UE Development India (P)Ltd., (2008) 14 SCC 271 is not applicable in the facts of this case,
which have been noted above. Rather, the learned counsel for the petitioners is justified in
relying upon the judgment in the case of Larsen & Toubro Ltd. – SCOMI Engineering Bhd v.
MMRDA, (2019) 2 SCC 271, wherein the Supreme Court was concerned with a consortium
consisting of an Indian company and a foreign company and the Court took note of the fact that
the office of an unincorporated entity, i.e. the consortium, being in Mumbai, as one of the
factors for arriving at the conclusion that the arbitration proceedings would not be international
commercial arbitration. No doubt a sole proprietorship has no separate legal identity but in the
case in hand, two individuals, husband and wife, by joining together as a proprietorship have
taken a single Distributorship. The Code of Ethics and Rules of Conduct issued by the
respondent under Clause 3.17.1 contemplates and recognises that a husband and wife shall
operate their Distributorship as single entity. The proprietorship is an association or body of
individuals with central management in India.
24. The plea of Ms. Kumar that the petitioners being individuals and habitual residents of USA,
the case shall be covered by Section 2 (1) (f) (i) of the Act of 1996 is not appealing in view of
my conclusion in the above paragraph.”
4. It was held that since the central management and control of this association or body of individuals
is exercised only in India under Section 2(1)(f)(iii), the dispute is not an international commercial
arbitration, as a result of which the High Court has jurisdiction under Section 11(6) to appoint an
arbitrator. Justice Brijesh Sethi, a retired Judge of the Delhi High Court was, therefore, appointed as
sole arbitrator.
5. Shri Parag Tripathi, learned Senior Advocate appearing on behalf of the appellant, has argued that
his predecessor’s plea in the High Court was incorrectly turned down in that this case is really
governed by Section 2(1) (f)(i) and not by Section 2(1)(f)(iii). Once it is found that a party to an
arbitration agreement is an individual who is a national of, or habitually resident in, any country
other than India, it is not necessary to go to any other sub-clauses of Section 2(1)(f), and as it is clear
that the respondents, who applied to the High Court under Section 11(6), are individuals who are
nationals of and habitually resident in the USA, would fall under Section 2(1)(f)(i), the High Court
would have no jurisdiction, such petition having to be filed only under Section 11(6) read with
Section 11(9) to the Supreme Court.
6. Ms. Manmeet Arora, learned counsel appearing on behalf of the respondents, has supported the
judgment under appeal, and has referred to various documents which, according to her, make it clear
that the respondents, husband and wife, would have to be pigeonholed under “association or body of
individuals” under Section 2(1)(f)(iii) and not under Section 2(1)(f)(i).
7. The question lies in a very narrow compass. As rightly contended by Ms. Arora, the documentary
evidence in this case would be decisive of whether the requirements of sub-clause (i) to Section 2(1)
(f) have been met, in which case it is unnecessary to go to sub-clause (iii), as under Section 2(1)(f),
“at least one of the parties” must fall under sub-clauses (i) to (iv) of Section 2(1)(f).
8. In a document entitled “Code of Ethics of Amway Direct Sellers”, under “Rules of Conduct”, it is
stipulated as follows:
“2.1.17 Legal Entity Authorisation Form” (LEAF) means the document that must, in
addition to the Direct Seller Contract, be completed by a Direct Seller required to or electing to
operate an Amway Business in the name of an applicable legal entity.”
xxx xxx xxx
“3.1 Application and Starter Guide: In order to be considered for an Amway distributorship,
an individual(s) must, in his/her/their own name(s) or on behalf of a legal entity, submit a
signed, completed Direct Seller Application(in Form SA-88-ID), together with all required
supporting documentation.
A distributorship may be taken up in individual capacity or as a sole proprietorship concern,
partnership firm or company. Amway reserves the right to require that Applicants having NonResident Indian (NRI), Person of Indian Origin (PIO) or Overseas Citizen of India (OCI) status
operate distributorships via certain types of legal entities.”
xxx xxx xxx
“3.14 Legal Entity Distributorships: A Direct Seller may own and operate his or her
Distributorship as a sole proprietary concern or registered partnership firm or limited liability
company (LLC), provided it complies with certain requirements and conditions. …”
xxx xxx xxx
“3.14.5 The sole business of the legal entity must be the operation of an Amway
Distributorship. No other business may be conducted by such an entity.”
xxx xxx xxx
“3.17 Husband and Wife Distributorships: If both husband and wife wish to become Direct
Sellers, they must be sponsored together for a single Distributorship. Husbands and wives may
not be sponsored in different Lines of Sponsorship. Husbands and wives may not sponsor each
other. If one spouse is already a Direct Seller, the other spouse, upon electing to become a
Direct Seller, must join the same Distributorship as his or her spouse.
3.17.1 A husband and wife shall operate their Distributorship as a single entity. Therefore, each
is held accountable for the actions of the other so far as the Rules of Conduct are concerned
regardless of whether a husband or wife is active in the distributorship or not.”
xxx xxx xxx
“4.13 Franchises and Territories: No Direct Seller shall represent to anyone that there are
exclusive franchises or territories available under the Amway Sales and Marketing Plan.
No Direct Seller shall represent that he or she, or anyone else has the authority to grant, sell,
assign, or transfer such franchises or to assign or designate territories. No Direct Seller or
Sponsor may state or imply that he or she has a given territory, nor that any other Direct Seller
is operating outside his territory.
Amway Direct Sellers have no territorial limits. They can operate anywhere within India.”
xxx xxx xxx
“4.16 Exporting Amway Products: Amway Direct Sellers must sell Amway products and/or
sponsor prospective Amway Direct Sellers within India only. No Direct Seller may export, or
knowingly sell to others who exports, Amway Products from India, or from any other country in
which Amway has established operations, into any country regardless of whether or not Amway
is doing business in that country.
For important legal reasons, including trade names and trademark protections; local laws on
product registration, packaging, labelling ingredient content and formulation, product liability;
customs and tax laws; and literature content or language requirements. Amway must limit the
resale of Amway Products by Direct Sellers to only other Direct Sellers or retail customers
located within country in which the Direct Seller legitimately buys the Amway Products and is
authorised to do business. The term “products” includes, without limitation, all literature, sales
aids, and any other items obtained by a Direct Seller from Amway or from his sponsor or
Platinum.
4.16.1 Exporting Rule: Personal Use
Globally, Amway’s Rules and Commercial Principles include prohibitions on exporting and
importing Amway products from one market to another. Amway Direct Sellers may, however,
take Amway products across borders for personal use, with the following limitations:
The Amway Direct Seller is visiting another country and personally places the product order in
that country.
The Amway Direct Seller physically picks up/receives the products in one country and
personally carries the products to another country. There may be no couriers, shipping
companies, or freight forwarders involved.
If the Amway Direct Seller has a Multiple Business in the country visited, the order cannot be
placed as a customer order for an overseas customer.
The products are for the Amway Direct Sellers personal use only.
The products may not be resold, distributed, or given away under any circumstances.
The products ordered must not be available in the Amway Direct Seller’s home market.
Durables (e.g. water treatment systems, air treatment systems) may not be carried from one
market to another under any circumstances.
The Amway Direct Seller order must not be for more than a reasonable amount of product:
under 300 USD annually.
The personal use exclusion may not be used as a business-building strategy.”
9. In what is referred to as the “Legal Entity Authorisation Form”, what was filled up was “Legal
Entity Authorisation Form: Sole Proprietor”. The said form which was filled in by the respondents
reads as follows:
“LEGAL ENTITY AUTHORISATION FORM:
SOLE PROPRIETORSHIP
Where an Amway Independent Business (“Amway Business”) will be operated in India via a
Sole Proprietorship (the “Entity”) held by a Resident Indian, Non-Resident Indian (“NRI”),
Person of Indian Origin (“PIO”) or Overseas Citizen of India (“OCI”), the Sole Proprietorship
must, through the sole proprietor (the “Sole Proprietor”), complete this Legal Entity
Authorisation Form for Amway Business Owners (the “Entity Agreement”) and submit it to
Amway India Enterprises Pvt. Ltd. (“AIE”). The Sole Proprietor must agree to remain and
ensure that the Entity remains in full compliance with the Rules of Conduct for Amway
Business Owners. This Entity Agreement shall become effective if and when AIE signs the
completed form. This Entity Agreement incorporated into and forms an integral part of the
Amway Distributor Agreement, which includes any and all documents incorporated therein (the
“ABO Contract”). In the event of any conflict, the terms and conditions of this Entity
Agreement shall prevail.
xxx xxx xxx
” 5. The Sole Proprietor agrees that:
A. The sole purpose of the Entity is to own and operate the Amway Business identified above,
unless AIE expressly allows the Entity to own and operate more than one Amway business.
Neither the Entity nor the Sole Proprietor will own or operate any other business or business
interest.
xxx xxx xxx
C. Any NRI, PIO or OCl investment in the Entity, if and as applicable, has been made on a nonrepatriatable basis in accordance with applicable foreign exchange laws of India.
xxx xxx xxx
G. The Entity shall, in accordance with the laws of India and for all matters connected to the
Amway Business, exclusively use a duly authorised Indian rupee bank account which, if
applicable, operates on a non-repatriatable basis.
H. The Sole Proprietor shall be responsible for his or her, and the Entity’s, compliance with the
Amway Rules of Conduct and the applicable laws with respect to the operation of the Amway
Business by the Entity, including foreign exchange laws. Any violation of the aforesaid entitles
AIE to terminate the ABO Contract and the Entity Agreement.
xxx xxx xxx”
10. Under “authorised signature”, the entity’s name was filled in as Sindhia Enterprises and the
proprietor was filled in as Ravindranath Rao Sindhia (respondent no. 1 herein). This was done
pursuant to an application again filed in a printed form, given by the appellant to the respondents,
which reads as follows:
11. A reading of the application form as filled in, together with the Code of Ethics, would show that a
distributorship may be taken up either in individual capacity, a sole proprietorship concern,
partnership firm, or company. When it comes to a husband and wife’s distributorship, they are
entitled not to two, but to a single distributorship, it being made clear under clause 3.17 of the Code
of Ethics that they are to operate only as a single entity. The form that was filled in made it clear that
the respondents applied to become a distributor as a sole proprietorship, it being made clear that the
husband, Ravindranath Rao Sindhia, was the sole proprietor / “primary applicant”, the wife,
Indumathi Sindhia, being a “co-applicant”.
12. However, Ms. Arora argued, from a reading of the Code of Ethics and correspondence between
the parties, that there was no international flavour whatsoever to the transaction as the business that
is to be conducted can be conducted only in India, an exception being made only for personal use
under clause 4.16.1. Most importantly, the address of the so-called sole proprietorship in all the
correspondence between the parties was the address of the Bangalore office of the sole
proprietorship.
13. Ms. Arora also strongly relied upon the judgment of this Court in Larsen & Toubro Ltd.-
SCOMI Engineering Bhd v. MMRDA, (2019) 2 SCC 271. This Court was concerned with an
agreement between the MMRDA, an Indian company, and a consortium of Larsen and Toubro, an
Indian company together with Scomi Engineering Bhd, a Malaysian company. The argument that
was pressed in the appeal before this Court was that since a Malaysian company was involved, it
would be a body corporate which is incorporated in a country other than India, which would attract
the provisions of Section 2(1)(f)(ii) of the Arbitration Act. This Court repelled the aforesaid
argument, stating:
“9. Under the general conditions of contract, the “contractor”, in Clause 1.1.2.3 is defined as
meaning an individual, firm, company, corporation, joint venture or Consortium, whether
incorporated or not. “Bidder” is also defined under Clause 1.1.2.10 as meaning an individual,
firm, company, corporation, joint venture or Consortium which could submit a bid. What is
important to notice is that the contract was signed by the employer viz. MMRDA and by the
contractor under the head sub-clauses (A) and (B) in which L&T India signed as ‘A and Scomi
Engineering Bhd has signed as ‘B’. When we come to the consortium agreement that is entered
into between the Indian company and the Malaysian company as aforestated, we find in the
definition clause that “Consortium” shall mean L&T and Scomi Engineering Bhd, acting in
collaboration, for the purpose of this agreement and shall be called “the L&T-SEB” Consortium
“unincorporated”. The contract is defined in Sub-Clause 6 as meaning, “the contract to be
entered by the Consortium with the employer for the execution of the Project”. Under SubClause 7, “the lead Member of the Consortium” or “Consortium Leader” shall mean L&T, that
is, the Indian Company. Under Sub-Clause 8, the “Supervisory Board” (hereinafter referred to
as “the SB”) shall mean a Board constituted under Clause 11 of the GCC. When we come to
Clause 11.2, it is clear that the Members of this Supervisory Board will consist of four
members, two appointed by each Member. One of the Members nominated by the Consortium
leader and agreed to by all members shall then act as the Chairman of the Supervisory Board,
which is, by Clause 11.5, to decide on various matters relating to the execution of the contract.
Clause 21.1(g) provides that the Consortium leader shall lead all arbitration proceedings.
xxx xxx xxx
11. It is important, at this juncture, to refer to an order made by the High Court of Bombay
dated 20-10-2016 [L&T Ltd. v. MMRDA, 2016 SCC OnLine Bom 13348] which, as has been
stated earlier, arises between the self-same parties, under the same contract. An interim award
made by the arbitrators qua different claims arising under the same contract had made it clear
that the claim could be filed only in the name of the Consortium and not separately, as was
contended by Shri Jain’s client. The preliminary issue framed on this count was “whether the
claimants are entitled to file this claim as Claimant 1 and Claimant 2 or only as the Consortium
of L&T and Scomi Engineering Bhd?” The High Court of Bombay agreed with the interim
award of the arbitrators, and held as follows: [L&T Ltd. case [L&T Ltd. v. MMRDA, 2016
SCC OnLine Bom 13348] , SCC OnLine Bom para 10)
“10. Considering the terms and conditions of the contract as well as the decision cited by Mr.
Ankhad, in my opinion, in the facts and circumstances of the present case, it is not open for the
petitioners to rely upon their independent identities while dealing with the respondent and that
they will have to deal with the respondent as a Consortium only. Therefore, there is no infirmity
in the impugned order. For the same reason the present petition as filed would also not been
maintainable. Hence, the same is dismissed.”
12. Shri Gopal Jain did not dispute the fact that this judgment was final inter-partes as no appeal
has been preferred. Therefore, to stress the fact that it pertains only to “this claim” and would
therefore, not apply to a different set of claims under the arbitration clause is not an argument
that appeals to us.
13. It is clear, as has been held by the judgment [L&T Ltd v. MMRDA, 2016 SCC OnLine
Bom 13348] of the High Court of Bombay, and which is binding inter-partes, that it is not open
for the petitioner to rely upon their status as independent entities while dealing with the
respondent and they will have to deal with the respondent as a Consortium only.
14. This being the case, it is clear that the unincorporated “association” referred to in Section
2{l){f){iii) would be attracted on the facts of this case and not Section 2(l)(f)(ii) as the
Malaysian body cannot be referred to as an independent entity following the judgment [L&T
Ltd. v. MMRDA, 2016 SCC OnLine Bom 13348] of the High Court of Bombay.
xxx xxx xxx
18. This being the case, coupled with the fact, as correctly argued by Shri Divan, that the Indian
company is the lead partner, and that the Supervisory Board constituted under the consortium
agreement makes it clear that the lead partner really has the determining voice in that it appoints
the Chairman of the said Board (undoubtedly, with the consent of other members); and the fact
that the Consortium’s office is in Wadala, Mumbai as also that the lead member shall lead the
arbitration proceedings, would all point to the fact that the central management and control of
this Consortium appears to be exercised in India and not in any foreign nation.”
14. This case is distinguishable on facts, inasmuch as a final judgment between the parties made it
clear that it would not be open for the consortium to rely upon their status as independent entities
while dealing with MMRDA. This being the case, the consortium was held to be an association of
persons falling under Section 2(1)(f)(iii), and that since the lead member is to lead arbitral
proceedings, the central management and control of the consortium being exercised by Larsen and
Toubro in India, it was held that Section 2(1)(f)(iii) would not be attracted on the facts of that case.
15. By way of contrast, we have seen how the respondents have themselves applied to become
distributors of Amway products in India as a sole proprietorship concern under the relevant forms
issued by the appellant, read with the Code of Ethics referred to hereinabove. In Ashok Transport
Agency v. Awadhesh Kumar, (1998) 5 SCC 567, this Court has clearly held that a sole proprietary
concern is equated with the proprietor of the business as follows:
“6. A partnership firm differs from a proprietary concern owned by an individual. A partnership
is governed by the provisions of the Indian Partnership Act, 1932. Though a partnership is not a
juristic person but Order XXX Rule 1 CPC enables the partners of a partnership firm to sue or
to be sued in the name of the firm. A proprietary concern is only the business name in which the
proprietor of the business carries on the business. A suit by or against a proprietary concern is
by or against the proprietor of the business. In the event of the death of the proprietor of a
proprietary concern, it is the legal representatives of the proprietor who alone can sue or be sued
in respect of the dealings of the proprietary business. The provisions of Rule 10 of Order XXX
which make applicable the provisions of Order XXX to a proprietary concern, enable the
proprietor of a proprietary business to be sued in the business names of his proprietary concern.
The real party who is being sued is the proprietor of the said business. The said provision does
not have the effect of converting the proprietary business into a partnership firm. The provisions
of Rule 4 of Order XXX have no application to such a suit as by virtue of Order XXX Rule 10
the other provisions of Order XXX are applicable to a suit against the proprietor of proprietary
business “insofar as the nature of such case permits”. This means that only those provisions of
Order XXX can be made applicable to proprietary concern which can be so made applicable
keeping in view the nature of the case.
7. In the present case A.C. Basu, Proprietor of Ashok Transport Agency, had died before the
date of the institution of the suit and on the date of the institution of the suit, the proprietary
concern was not in existence. Only the legal representatives of A.C. Basu could be sued with
regard to any cause of action arising against A.C. Basu in connection with the proprietary
business. We find it difficult to understand how the provisions of Rule 4 Order XXX CPC,
could be extended to such a case.”
16. In this view of the matter, the argument that there is no international flavour to the transaction
between the parties has no legs to stand on. Indeed, an analysis of Section 2(1)(f) would show that
whatever be the transaction between the parties, if it happens to be entered into between persons, at
least one of whom is either a foreign national, or habitually resident in, any country other than India;
or by a body corporate which is incorporated in any country other than India; or by the Government
of a foreign country, the arbitration becomes an international commercial arbitration notwithstanding
the fact that the individual, body corporate, or government of a foreign country referred to in Section
2(1)(f) carry on business in India through a business office in India. This being the case, it is clear
that the Delhi High Court had no jurisdiction to appoint an arbitrator in the facts of this case.
17. Ms. Arora made an impassioned plea to this Court to use its power under Article 142 of the
Constitution to straightaway appoint an arbitrator, now that the matter is before this Court. We are
afraid we cannot countenance such a suggestion as the respondents would have to now follow the
drill of Section 11(6) read with Section 11(9) of the Arbitration Act.
18. The appeal is allowed, and the judgment under appeal is set aside.