ISSUE-2

WHETHER THE AGREEMENT BETWEEN LIFELINE AND PROMOTERS

CONSTITUTE AN ARBITRATION CALUSE, AND IF DOES WHETHER THE
HIGH COURT HAS THE JURIDICTION UNDER SECTION 9 OF THE CODE OF
CIVIL PROCEDURE?

1
 SUMMARY OF ARGUMENTS

2.1 THE AGREEMENT BETWEEN LIFELINE AND PROMOTERS CONSTITUTE

AN ARBITRATION CLAUSE, THEREFORE THE HIGH COURT HAS NO
JURISDICTION UNDER SECTION 9 OF THE CODE OF CIVIL PROCEDURE
1. It is humbly contended by the Respondent that in the instant case, the Promoters
contended that the Delhi High Court has no jurisdiction as the agreement dated 23rd
March 2013 between the parties had an arbitration clause and any dispute arising
between them should be referred to arbitration. Prior to the public announcement
being made by Jeevani, certain creditors of Jeevani, mainly foreign banks (“foreign
lenders”) had jointly, invoked arbitration proceedings before a foreign arbitral tribunal
constituted in Hong Kong, against Jeevani. The arbitration was initiated for payments
to be made under a consortium agreement providing financial assistance to Jeevani,
entered into between the foreign lenders and Jeevani. On 27th July 2010 a foreign
arbitral award was passed in favour of the foreign lenders against Jeevani. Under the
foreign arbitral award Jeevani was to pay to the foreign lenders the amounts as stated
in the arbitral award. Till date no proceeding for enforcement of this foreign award
has been filed by the foreign lenders.

2
 ARGUMENTS ADVANCED

2.1 THE AGREEMENT BETWEEN LIFELINE AND PROMOTERS CONSTITUTE

AN ARBITRATION CLAUSE, THEREFORE THE HIGH COURT HAS NO
JURIDICTION UNDER SECTION 9 OF THE CODE OF CIVIL PROCEDURE
1) It is humbly contended by the Respondent that in the instant case, the Promoters
contended that the Delhi High Court has no jurisdiction as the agreement dated 23rd
March 2013 between the parties had an arbitration clause and any dispute arising between
them should be referred to arbitration. Prior to the public announcement being made by
Jeevani, certain creditors of Jeevani, mainly foreign banks (“foreign lenders”) had jointly,
invoked arbitration proceedings before a foreign arbitral tribunal constituted in Hong
Kong, against Jeevani.
2) The arbitration was initiated for payments to be made under a consortium agreement
providing financial assistance to Jeevani, entered into between the foreign lenders and
Jeevani. On 27th July 2010 a foreign arbitral award was passed in favour of the foreign
lenders against Jeevani. Under the foreign arbitral award Jeevani was to pay to the foreign
lenders the amounts as stated in the arbitral award. Till date no proceeding for
enforcement of this foreign award has been filed by the foreign lenders. The Division
Bench held that the Single Judge had erred in its decision and that the clause constitutes
an arbitration clause and accordingly referred the disputes to be decided by the
Empowered Group in terms of the agreement. Aggrieved by this Order of the Division
Bench of the Delhi High Court1.
3) The question of the Court’s intervention at the time of constitution of an arbitral tribunal
underwent a seminal shift in India in 2016. This shift was brought about by the insertion
of Section 11(6A)[i] in the Indian Arbitration and Conciliation Act, 1996 (“Act”) through
the Arbitration and Conciliation (Amendment) Act, 2015, No. 3 of 2016 (“Amendment
Act of 2015”). The introduction of Section 11(6A) limited the Court’s role at the juncture
of appointment of arbitrators. The Courts sole task now was to determine whether an
arbitration agreement ‘existed’ or not. Thus, inquiries related to ‘validity’ of an arbitration
agreement were to be decided by an arbitral tribunal itself, which had the powers to rule
on its own jurisdiction under Section 16 of the Act (a provision conforming to the
UNCITRAL Model Law on International Commercial Arbitration, 1985).
1
Moot Proposition para 10

3
4) Section 5 of the Arbitration and Conciliation Act, 1996 relates to the extent of judicial
intervention in the arbitration proceedings. This provision confines the intervention by the
judicial authority only in certain specified circumstances. Hence, High Court has no
jurisdiction to intervene if there is an existence of arbitration clause. The courts have
however evolved certain self-imposed restraints, such as the rule of exclusion if an
alternate, effective and efficacious remedy is available under a statute, or where the facts
are disputed, or where the determination of the lis would require an elaborate examination
of evidence, or where there is suppression or misrepresentation of facts, etc.
5) For instance, if an alternative efficacious remedy is available under a statute, the courts
would refrain from exercising their writ jurisdiction2. With respect to arbitration cases,
the Supreme Court in Bisra Lime Stone Co. Ltd. And Anr. Vs. Orissa State Electricity
Board and Anr. 3held that in cases covered by an arbitration agreement, it is for the
arbitrator to decide the merits of the dispute or differences between the parties. All
questions of law, including interpretation of the agreement, need not be withdrawn from
the domestic forum by the court under Article 226 of the Constitution.
6) The legislative policy in the 1996 Act is one of minimal judicial intervention by the
courts as enshrined in Section 5. Section 5 is couched in negative terms, and by a non-
obstante clause, states that no judicial authority shall intervene except as provided in Part
I of the Act. The 1996 Act is a self-contained code governing the law of arbitration,
which provides a complete framework for all aspects governing arbitration, including the
reliefs and remedies available at various stages of the proceedings.
7) An order of the arbitrator under Section 17 cannot be challenged under Article 226 of the
Constitution since it is not an ‘authority’ covered by “other authorities” under Article 12
of the Constitution, which would enable a party aggrieved by an order passed by an
arbitral tribunal under the 1996 Act, to invoke the extraordinary jurisdiction of the writ
court4. The issue whether the High Courts would be justified in exercising writ
jurisdiction in matters governed by the Arbitration Act, came up for consideration before
a seven-judge constitution bench in SBP and Co. vs. Patel Engineering & Anr. 5The
Supreme Court held that intervention by the High Court under Articles 226/227 of the

2
State of Orissa and Ors. Vs. Gokulananda Jena, MANU/SC/0510/2003.
3
Bisra Lime Stone Co. Ltd. And Anr. Vs. Orissa State Electricity Board and Anr., MANU/SC/0312/1975.
4
Renju Varghese vs. H.D.F.C. Bank Limited, MANU/KE/0360/2016.
5
SBP and Co. vs. Patel Engineering & Anr. MANU/SC/1787/2005. Followed in Sterling Industries vs.
Jayprakash Associates Ltd. And Ors., MANU/SC/1229/2019.

4
 Constitution, against interim orders passed by arbitral tribunals during the course of
arbitral proceedings, was not permissible.
8) If the parties have entered into an agreement to arbitrate their disputes, the courts must
decline to exercise their extra-ordinary jurisdiction under the Constitution and leave the
parties to avail their remedies under the special enactment, which is a self-contained code.
The provisions of the 1996 Act must be given effect to6. The object of minimal judicial
intervention under the 1996 Act, will be defeated if the High Courts exercise jurisdiction
under Articles 226 and 227 with interim orders or decisions of the arbitral tribunal7.
9) The decision in Modern Industries vs. Steel Authority of India Ltd. & Ors8. is an
illustration of a case where the Supreme Court held that the statutory remedy of appeal
provided under a special Act could not be bypassed by invoking the jurisdiction of the
High Court under Article 226.

2.1.1 The Agreement between lifeline and Promoters constitute an Arbitration

Clause

10) It is pertinent to note that in the instant case, there exists an arbitration clause between the
parties, hence High Court has no jurisdiction under Section 9 of the Code of Civil
Procedure.
11) Prior to insertion of Section 11(6A) in the Act, the law laid down by a seven -Judge
Bench of the Supreme Court of India (“Supreme Court”) in SBP & Co. v. Patel Engg.
Ltd.9(“SBP”) gave judicial powers to the Courts as opposed to a mere administrative role
and held that Courts could adjudicate preliminary aspects surrounding an arbitration
agreement. However, Section 11(6A) diluted this position vide a clear legislative intent.
What followed was a line of conflicting decisions by the Supreme Court which are
discussed in this article, with the debate finally appearing to have settled by two
conclusive judgments – A 2020 three-Judge Bench judgment of the Supreme Court in
10
Vidya Drolia & Ors. V. Durga Trading Corporation (“Vidya Drolia”) and a 2023

6
The Empire Jute Co. Ltd. And Ors. Vs. The Jute Corporation of India Ltd. And Ors., MANU/SC/8045/2007.
7
N.G. Projects Limited vs. Backbone Projects Limited and Ors., MANU/GJ/2047/2016.
8
Modern Industries vs. Steel Authority of India Ltd. & Ors, MANU/SC/0251/2010.
9
SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618
10
Vidya Drolia & Ors. V. Durga Trading Corporation, (2021) 2 SCC 1

5
 Constitution Bench judgment of N.N. Global Mercantile Private Limited v. Indo Unique
Flame Ltd. & Ors, 11(“N.N. Global”).
12) In 2017, in Duro Felguera, S.A. v. Gangavaram Port Limited 12(“Duro”), the Supreme
Court conclusively held that in the wake of introduction of Section 11(6A) in the Act, the
power of the court is confined only to examining the existence of an arbitration
agreement. The judgment marked the commencement of varied interpretations by Courts.
This has ultimately rendered Duro with selective applicability, having been distinguished,
clarified, affirmed and expanded by the Courts.
13) The issue before the Supreme Court in Duro was whether there ought to be a composite
reference/single arbitral tribunal or multiple arbitral tribunals for contracts between same
or related parties. The Supreme Court concluded that there had to be separate arbitral
tribunals for each contract, even though the disputes were interlinked. Considering the
commonality of disputes, the Supreme Court appointed two separate Arbitral Tribunals
for the ICAs with same members among them, and four separate Arbitral Tribunals for
each domestic arbitration, with same members among them13.
14) The Supreme Court undertook a detailed exercise of interpretation of erstwhile Section
11(6A) of the Act and observed that the power of the court is confined only to examining
the existence of the arbitration agreement. The Supreme Court charted the shift in
interpretation of this sub-section from Konkan Railway Corporation Limited and Others
v. Mehul Construction Company 14to SBP.
15) However, Duro has been examined by several judgments thereafter, that took exception to
the view adopted in Duro regarding Section 11(6A). The Courts were faced with a unique
situation. At the stage of considering Section 11 petitions for appointment of an arbitrator,
parties often raise questions of arbitrability of a dispute or validity of an arbitration
agreement. To decide these questions, the Courts would naturally have to travel beyond
the question of ‘existence of the arbitration clause’, to the very ‘nature of the dispute’
itself15.
16) It would be interesting to note that the scope of Hyundai Engg. (as succinctly stated by
the Supreme Court in its opening paragraph) is not very different from the Duro
conclusion. Hyundai Engg. States: “the limited mandate of the Court is to examine the

11
N.N. Global Mercantile Private Limited v. Indo Unique Flame Ltd. & Ors,, 2023 SCC Online SC 495
12
Duro Felguera, S.A. v. Gangavaram Port Limited, (2017) 9 SCC 729
13
Oriental Insurance Co. Ltd. V. Narbheram Power and Steel (P) Ltd, (2018) 6 SCC 534
14
Konkan Railway Corporation Limited and Others v. Mehul Construction Company, (2000) 7 SCC 201
15
United India Insurance Co. Ltd. V. Hyundai Engg. & Construction Co. Ltd, (2018) 17

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 factum of existence of an arbitration agreement. No more and no less.” It is important to
mention that the Supreme Court in Hyundai Engg. Does not expressly overrule Duro, but
paves way for interpretation of Section 11(6A) of the Act in what was otherwise a
watertight conclusion drawn out by the Supreme Court in the Duro16.
17) Likewise, It is pertinent to note that in the instant case, there exists an arbitration clause
between the parties, hence High Court has no jurisdiction under Section 9 of the Code of
Civil Procedure. . Prior to the public announcement being made by Jeevani, certain
creditors of Jeevani, mainly foreign banks (“foreign lenders”) had jointly, invoked
arbitration proceedings before a foreign arbitral tribunal constituted in Hong Kong,
against Jeevani. The arbitration was initiated for payments to be made under a consortium
agreement providing financial assistance to Jeevani, entered into between the foreign
lenders and Jeevani.
2.1.2 Clause 2.1 of the Agreement constitutes an arbitration
18) The extract of relevant clause from the Share Sale Agreement as relied upon by the
Promoters are stated below:- 1. Governing Law 1.1. This Agreement shall be interpreted
and construed in accordance with the laws of India. 2. Dispute Resolution 2.1. Decision
of an empowered committee comprising of (three) executive level personnel of the
Company shall be final, binding and conclusive on parties to this Agreement upon all
questions and issues relating to the meaning, scope, instructions, claims, right or matters
of interpretation of and under this Agreement. 2.2. The parties shall endeavor to amicably
resolve the above mentioned issues.
17
19) In United India Insurance Co. Ltd. V. Antique Art Exports (P) Ltd. (“Antique
Exports”) (incidentally pronounced only a few days before Garware) a two-Judge Bench
of the Supreme Court, was called upon to examine a challenge to the High Court’s
decision of appointing an arbitrator under Section 11(6) of the Act. The Supreme Court
ventured into the question of whether any arbitral dispute existed and ultimately
concluded that the claim already stood settled between the parties, leaving no arbitral
dispute to be examined by an arbitrator. Even though there was no dispute between the
parties as to the existence of a valid arbitration agreement, the Supreme Court saw it fit to
travel beyond the issue of existence of an arbitration agreement into the merits of the
dispute. The Court built upon the reasoning of Hyundai Engg. (though not expressly
citing the judgment), holding that the exposition in Duro was a general observation on

16
Id.
17
United India Insurance Co. Ltd. V. Antique Art Exports (P) Ltd, (2019) 5 SCC 362

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 Section 11(6A), which came to be examined under reference to six arbitrable agreements.
Antique Exports cemented that appointment of an arbitrator is a judicial power and is not
a mere administrative function leaving some degree of judicial intervention, to ensure that
the dispute resolution process does not become unnecessarily protracted. Thus, Antique
Exports traversed significantly beyond the reasoning of Hyundai Engg. To hold that
observations in Duro on Section 11(6A) of the Act were borne out of its unique facts
alone.
20) Hence, in the instant case, there exists an arbitration clause and due to that existence,
High Court has no jurisdiction to take up the matter.
2.1.3 In the instant case, Contract is not of fraud
21) A contract would mean a valid contract; an arbitration agreement would mean an
agreement which is enforceable in law”. Therefore, when a party’s case proceeds on
serious allegations of fraud. In the case in hand, there is no such fraud on the basis of
contract there in between the parties.
22) On 30th March 2012, Jeevani and Lifeline filed an application under Section 391 of the
Companies Act, 1956 (the “Companies Act”) for initiating the process of approval of the
Scheme by the Hon’ble Delhi High Court. The Hon’ble Company Judge in accordance
with the mandate of Chapter V of the Companies Act ordered for a meeting of the
creditors to be convened. Jeevani issued a notice of meeting to its creditors by publishing
an advertisement in a local English language newspaper and local language newspaper
containing the terms of the proposal and explaining its effect. A meeting of the creditors
to whom notice was sent, was accordingly held and resolutions supporting the Scheme
were passed by a vote of majority18.
23) Hence, it is humbly contended by the Respondent that in the instant case, the Promoters
contended that the Delhi High Court has no jurisdiction as the agreement dated 23rd
March 2013 between the parties had an arbitration clause and any dispute arising between
them should be referred to arbitration.

18
Moot Proposition para 5