JUDICIAL PRECEDENTS ON ANTIARBITRATION INJUNCTIONS:

The most famous case which created a controversy was an anti-arbitration injunction issued in the case McDonald vs Mr Vikram Bakshi case reported in (2016) SCC online Del 3949, restraining an arbitration seated in London. Even though the said injunction issued by the single Judge was revoked by the Division bench of the High Court, it created a lot of ripples in the arbitration circles across the world. The Single Judge came to a conclusion that the arbitration clause having Indian laws as applicable laws, cause of action arose in India, except one party all are from India and hence having the arbitration in London is a forum inconvenience and hence granted the injunction against the London seated arbitration. Hence Mc Donald filed an appeal before the Division Bench and the judgment of which is the subject matter of the present Appeal.

The Division Bench held that no court has powers to grant injunction against an arbitration, when the said arbitration agreement is a valid one. The court also held following the judgment of the Hon’ble Supreme Court of India in the case of World Sports Group Vs MSM Satellite (Singapore) PTE limited reported in (2014) 11 SCC 639 that the existence of multiple legal proceedings can also not be a valid reason for granting an anti-arbitration injunction.

In a recent decision in the case of Bina Modi and Ors. v. Lalit Modi and Ors. (in short ‘Bina Modi’) a single judge of the Delhi High Court has cast doubt on the jurisdiction of Indian courts to grant injunctions restraining arbitral proceedings. In Bina Modi, one of the trustees of a family trust had initiated arbitral proceedings against the other trustees for resolution of disputes arising under the trust deed. The other trustees filed two civil suits before the Delhi High Court, seeking inter alia an anti-arbitration injunction against such arbitral proceedings and a declaration that the arbitration agreement in the trust deed was null, void, inoperative and unenforceable. The Delhi High Court, while dealing with the suits, limited its adjudication to whether it has the power to injunct the arbitral proceedings “notwithstanding the [purported] bar” set out in a 2001 decision of a three judge bench of the Supreme Court of India (“Supreme Court”) in Kvaerner Cementation India Limited v. Bajranglal Agarwal and Anr. (in short ‘Kvaerner Cementation‘) reported in (2012) 5 SCC 214.

The Delhi High Court ultimately relied on Kvaerner Cementation and concluded that a civil court did not have jurisdiction to entertain suits to declare invalidity of an arbitration agreement or injunct arbitral proceedings. In doing so, the Delhi High Court noted that Kvaerner Cementation had recently been approved by the Supreme Court in A. Ayyasamy v. A. Paramasivam and Ors. (in short ‘Ayyaswamy’) reported in (2016) 10 SCC 386 and National Aluminium Company Limited v. Subhash Infra Engineers Private Limited and Anr (in short ‘National Aluminium’) reported in 2019 SCC Online SC 1091. The importance of Section 41 (h) of the Specific Relief Act, 1963 was also considered in the case of Bina Modi.

However, the argument that an arbitral tribunal has competence, to the complete exclusion of civil courts, to determine its jurisdiction was soundly rejected by a seven-judge bench of the Supreme Court in SBP & Co. v. Patel Engineering Limited (in short ‘SBP & Co.) reported in (2005) 8 SCC 618 and subsequent decisions. Thus, it may be argued that Kvaerner Cementation has been implicitly overruled.

However, it needs to be considered that a number of judgments of the Hon’ble Supreme Court subsequent to Kvaerner Cementation have also affirmed the jurisdiction of civil courts to grant anti-arbitration injunctions. In Chatterjee Petrochem Company and Anr. v. Haldia Petrochemicals Limited and Ors (in short ‘Chatterjee Petrochem’) reported in (2014) 14 SCC 574, the Supreme Court affirmed civil courts’ jurisdiction to entertain suits seeking grant of antiarbitration injunctions. Similarly, in World Sport Group (Mauritius) Ltd. v. MSM Satellite (Singapore) Pte. Ltd (in short ‘Worlds Sport Group’) reported in (2014) 11 SCC 639, the Supreme Court unequivocally held that a civil court in India had the inherent jurisdiction under Section 9 of the Code of Civil Procedure, 1908 to grant injunctions in restraint of arbitration.

While Kvaerner Cementation has subsequently been cited in two Supreme Court decisions, Ayyaswamy and National Aluminium, the following may be borne in mind. Ayyasamy did not appreciate that Kvaerner Cementation had been implicitly overruled by SBP & Co. Similarly, in National Aluminium, the Supreme Court relied on Kvaerner Cementation and held that any objection with regard to the existence or validity of an arbitration agreement may be raised before the arbitrator. The National Aluminium did not consider the decisions in Chatterjee Petrochem and World Sport Group, therefore, the value of these decisions as binding precedent to negate civil courts’ jurisdiction to grant such injunctions is doubtful at best.

Presently, an appeal against the decision in Bina Modi is pending before a division bench of the Delhi High Court. The division bench has in the interim restrained the respondents from pursuing proceedings before the emergency arbitrator till the disposal of the appeal. Therefore, what remains to be seen is whether the division bench hearing the appeal from Bina Modi would follow the single judge’s approach and deny jurisdiction to grant anti-arbitration injunctions or instead follow the position in Chatterjee Petrochem and World Sports Group.

Recently, the High Court at Calcutta in the case of Super Smelters Limited vs Visa Resources Pte Limited has granted an ad-interim order of anti-arbitration injunction against Visa Resources Pte Limited. In another matter i.e. Lindsay International Private Limited & Ors vs Laxmi Niwas Mittal & Ors. the Hon’ble High Court at Calcutta has once again passed an order of anti-arbitration injunction in a suit thereby restraining the defendant from proceeding with the arbitral proceedings before the ICC in relation to certain disputes under a Share Holders’ Agreement. Although, the orders passed in both the matters as aforesaid have been passed at an adinterim stage, what can be inferred from the said orders is that the power of Court to grant an anti-arbitration injunction has been recognized by the Hon’ble High Court at Calcutta.