THAKKAR - (1.) WAS the High Court 'right' in granting the restraint order earlier, and 'wrong' in vacating the said order later?
(2.) BY the order in question the Respondent, Western Company of North America (Western Company), was restrained from proceeding further with an action instituted by it in a USA Court against the appellant, Oil and Natural Gas Commission (ONGC). The said action was targeted at seeking a judgment from the concerned Court in U.S.A. on the base of an arbitral award rendered by an Umpire in arbitration proceedings held in London but governed by the Indian ARBITRATION AND CONCILIATION ACT, 1940, which was the law of choice of the parties as per the arbitration clause contained in the drilling contract entered into between the parties. The Western Company has moved the USA Court for a judgment in terms of the award notwithstanding the fact that :- 1) ONGC had already initiated proceedings in an Indian Court to set aside the award and the said proceeding was as yet pending in the Indian Court. 2) The said award was not as yet enforceable in India as a domestic award inasmuch as a judgment in accordance with the Indian law had yet to be procured in an Indian Court, by the Western Company. The events culminating in the order under appeal may be briefly and broadly recounted. The appellant, ONGC, and the Respondent Western Company, had entered into a drilling contract. The contract provided for any differences arising out of the agreement being referred to arbitration. The arbitration proceedings were to be governed by the Indian Arbitration Act 1940 read with the relevant rules. A dispute had arisen between the parties. It was referred to two Arbitrators and an Umpire was also appointed. The Arbitrators entered on the reference in London which was the agreed venue for hearing as per the Arbitration Clause contained in the contract. On 1/10/1985 the Arbitrators informed the Umpire that they were unable to agree on the matters outstanding in the reference. Consequently the Umpire entered upon the arbitration, and straightway proceeded to declare his nospeaking award (styled as interim award) on October 17, 1985 without affording any hearing to the parties on the matters outstanding in the reference. The Umpire did not afford a hearing subsequent to his entering upon the arbitration presumably because even when the matter was within the domain of the Arbitrators (and not of the Umpire), and the Arbitrators were seized of the matter, the Umpire used to remain present at the hearings conducted by the Arbitrators. Having been present throughout the proceedings whilst the Arbitrators were in charge of the same, the Umpire presumably considered it unnecessary to hear the parties or their counsel after he was seized of the matter and it came within his domain in the wake of the disagreement between the two Arbitrators. And the Umpire straightway proceeded to declare the interim award or 17/10/1985. Thereafter on 5/11/1985, the Respondent, Western Company requested the Umpire to authorise one Shri D. C. Singhania to file the award date 17/10/1985 in the appropriate Court in India. The Umpire accordingly authorised the said Shri Singhania in this behalf. And pursuant to the said authority the award rendered by the Umpire was lodged in the Bombay High Court on 22/11/1985. Subsequently, on 28/11/1985 the Umpire rendered a supplementary award relating to costs which has been termed as 'final' award. About a month after the lodging of the award in the High Court of Bombay by the Umpire at the instance of the Respondent, Western Company, the latter lodged a plaint in the U.S. District Court, inter alia, seeking an order (1) confirming the two awards dated 17/10/1985 and 28/11/1985 rendered by the Umpire; (2) a Judgment against the ONGC, (Appellant herein) in the amount of $ 256,815.45 by way of interest until the date of the Judgment and costs etc.
(3.) ON 20/01/1986, appellant ONGC on its part instituted an Arbitration Petition (Petition No. 10 of 1986), under Sections 30 and 33 of the Indian Arbitration Act 1940 for setting aside the awards rendered by the Umpire. Inter alia the challenge was rooted in the following reasoning. While as per the Indian Arbitration Act 1940 which admittedly governed the arbitration proceedings the Umpire would come on the scene only provided and only when the Arbitrators gave him notice in writing that they were unable to agree, and the Umpire would enter upon the reference in lieu of the Arbitrators only subsequent there to, in the present case the Umpire had neither held any proceedings nor had afforded any opportunity of being heard to the ONGC after entering upon the reference. The appellant, ONGC, also prayed for an interim order restraining the Western Company from proceeding further with the action instituted in the U.S. Court. The learned single Judge granted an ex parte interim restraint order (ON 20/01/1986) but vacated the same after hearing the parties by his impugned order (Interim Order No. 11 of 1986 passed on 3/04/1986 in Arbitration Petition No. 10 of 1986), giving rise to the present appeal by Special Leave.;