Bombay High Court
Majmudar And Partners vs Michael Marshall And Brett Dale And 5 ... on 1 November, 2021
Author: S.J. Kathawalla
Bench: S.J. Kathawalla
Digitally
signed by
NITIN
NITIN DINKAR
DINKAR JAGTAP
JAGTAP Date:
2021.11.02 PA-Nitin Jagtap 1 / 11 10-CARBPL-24347-2021-UR.doc
16:21:51
+0530
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL ARBITRATION PETITION (L) NO. 24347 OF 2021
Majmudar & Partners ... Petitioner
Versus
Michael Marshall & Ors. ... Respondents
Mr.Rohaan Cama i/b. VM Legal for the Petitioner.
CORAM : S.J. KATHAWALLA, J.
DATE : 1ST NOVEMBER, 2021
(VACATION COURT)
P.C. :
1. The present Petition has been filed by the Petitioner under Section 9 of the Arbitration and Conciliation Act, 1996 ("the said Act") and has been moved before me today for urgent ad-interim relief, ex-parte. The reason for moving ex-parte has been set out in paragraph 25 of the Petition. In the circumstances set out below, it is the apprehension of the Petitioner that if notice had been given for today's hearing, there would have been a likelihood of Respondent No. 1, a law firm based in the United States of America, proceeding to institute legal proceedings in a Court in Illinois, USA, in a manner contrary to the contemplation of the Petitioner and Respondent No. 1 who have agreed for any disputes between them to be resolved under Indian law and by arbitration in Mumbai under the said Act.
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2. The brief facts leading to the filing of the Petition, and so far as they are relevant for the purpose of this order, are set out below.
3. The Petitioner is a partnership firm and a leading Indian law firm stated to be servicing clients nationally and internationally since 1943, in various fields, as set out in the Petition. Respondent No. 1 through its concerned associates, is a law firm by the name Huck Bouma P.C. based in Illinois, USA. Respondent Nos. 2 to 5 are the clients of Respondent No. 1.
4. Under a document dated 26th February 2021, referred to as the Engagement Letter, the Petitioner and Respondent No. 1 entered into an arrangement, whereby it was agreed that the Petitioner was being engaged by Respondent No. 1 for providing legal advice/services with respect to certain matters under Indian law, to clients of Respondent No. 1. Under the Engagement Letter, certain pecuniary terms were set out and clause V which deals with governing law specifically provides as under:
"V. Governing Law This agreement will be governed by Indian law and any claim hereunder will be determined by arbitration in Mumbai under the Rules of Arbitration of India's Arbitration and Conciliation Act of 1996."
5. This Engagement Letter, on the letterhead of the Petitioner, was countersigned by Michael J. Marshall, Attorney on behalf of the Respondent No. 1 law PA-Nitin Jagtap 3 / 11 10-CARBPL-24347-2021-UR.doc firm, in acceptance of the terms thereof.
6. From the record before the Court, it appears that from March 2021 onwards various emails were exchanged between the parties evidencing the work being carried out by the Petitioner for the clients of Respondent No. 1. My attention has been invited to the various emails on record to contend that at all times the Petitioner rendered good services to Respondent No. 1, and until recently no objection or protest was raised by Respondent No. 1 to the legal work / services performed by the Petitioner.
7. It appears that thereafter in or about May 2021, there were discussions on certain further steps to be taken, and by an email dated 11 th May 2021 (Exhibit 'J' to the Petition) Respondent No. 1 called upon the Petitioner to indicate the next steps in the matter, and to submit a revised fee budget. Pertinently, at this stage, there does not appear to have been any objection raised to the services provided by the Petitioner, and in fact Respondent No. 1 sought clarity on the further steps to be taken in the matter and called upon the Petitioner to furnish the budget for the same.
8. On 13th May 2021, the Petitioner responded by an email (Exhibit 'K' to the Petition) inter alia furnishing the revised fee budget. Upon follow up by the Petitioner on 18th May 2021 as to the proposed budget and steps set out by the Petitioner, Mr. Michael Marshall of Respondent No. 1 addressed an email of even date to the Petitioner (Exhibit 'L' to the Petition) requesting the Petitioner to " Please hold (temporarily) while we ensure we have consensus on a decision. ".
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9. The Petitioner has averred that the Petitioner had raised various invoices totaling to US$ 53,932.67, out of which US$ 14,513.33 had been paid or adjusted and a principal sum of US$ 39,419.34 was due and payable by Respondent No. 1. The Petitioner has further averred that as Respondent No. 1 failed to make the balance payment, the Petitioner was constrained to issue a notice invoking arbitration on 9 th August 2021 (Exhibit 'M' to the Petition). By the said notice, the Petitioner nominated a Senior Advocate of this Court as the proposed Sole Arbitrator to resolve the disputes.
10. Respondent No. 1 addressed an email response dated 18 th August 2021 (Exhibit 'N' to the Petition), in which it was now inter alia sought to be contended that the advice provided by the Petitioner had not been competent and that the Petitioner had exceeded its budget. Pertinently, while contending that the clients of Respondent No. 1 could not have been named in the invocation notice, Respondent No. 1 accepted and admitted that there is an arbitration agreement between the parties borne out by the aforesaid clause V, and contended that only Respondent No. 1 should have been named in the invocation notice.
11. The Petitioner responded to this email on 2 nd September 2021 (Exhibit 'O' to the Petition), reiterating its intention to institute arbitral proceedings. In response to this communication, Respondent No. 1 has addressed a letter dated 11 th October 2021, sent via email (Exhibit 'P' to the Petition), wherein Respondent No. 1 has now sought to contend that the arbitration clause in the engagement letter was PA-Nitin Jagtap 5 / 11 10-CARBPL-24347-2021-UR.doc "unconscionable" and stated that it was "prepared to file declaratory judgment action in state or federal court of Illinois". It was further sought to be contended by Respondent No. 1 that because the arbitration clause stipulated that the agreement would be governed by Indian law and determined by arbitration in Mumbai, the same was unconscionable. It was further threatened that Respondent No. 1 was prepared to file damages claims against the Petitioner in Illinois state or federal Court, notwithstanding the arbitration agreement / clause.
12. In the above circumstances, the Petitioner has filed the present Petition under Section 9 of the said Act, inter alia, seeking an ex-parte order restraining the Respondents from filing and/or pursuing any proceedings against the Petitioner in Courts in Illinois, USA in respect of the subject matter of the disputes and the claims raised by Respondent No. 1 in the letters dated 18 th August 2021 and 11th October 2021.
13. The present Petition was filed on 20 th October 2021, and mentioned on 22nd October 2021. Circulation was granted and the Petition appeared on board, but did not reach, on 26th October 2021. Accordingly, a fresh application for listing was made and the matter came to be listed before me today.
14. I have heard Mr. Cama for the Petitioner and for the reasons set out hereinafter, I am inclined to grant a limited ad-interim relief in the terms sought for in prayer clause (i) referred to below.
15. As set out from the above factual matrix, it appears that Respondent No. PA-Nitin Jagtap 6 / 11 10-CARBPL-24347-2021-UR.doc 1 had engaged the Petitioner for the purpose of providing legal services to client of Respondent No. 1 on matters pertaining to Indian law. Certain sums of money have been paid towards the work done by the Petitioner. From the record it appears that between March and May 2021, Respondent No. 1 was communicating with the Petitioner on the work being done by the Petitioner, and there does not appear to be any contemporaneous objection raised by it to the quality or nature of services provided by the Petitioner. As set out above, until May 2021, parties were discussing further steps to be taken and a further budget was called for by Respondent No. 1 and proposed by the Petitioner.
16. Thereafter, for reasons that need not detain the Court at this point in time, it appears that Respondent No. 1 was not desirous of proceeding further with the Petitioner, and the Petitioner was constrained to invoke arbitration in respect of its balance claim / dues. I must at this stage make it clear that the Court is not in any manner commenting upon the merits of the dispute per se in as much as it will be open to both parties in the course of arbitration to agitate their respective stands as to the services provided and whether Respondent No. 1 is liable to pay for the same.
17. What the Court is concerned with at the present point in time, is whether this is a fit case for grant of an injunction, which is in the nature of an anti-suit injunction, restraining Respondent No. 1 from proceeding before the Courts in Illinois. In this regard, Mr. Cama has placed reliance on a judgment of the Supreme Court in Oil & Natural Gas Commission v. Western Company North America - (1987) 1 SCC PA-Nitin Jagtap 7 / 11 10-CARBPL-24347-2021-UR.doc
496. In the matter before it, the Supreme Court was considering whether to grant an anti-suit injunction against the Respondent therein from enforcing an arbitral award in Courts in USA, when the arbitration clause in question provided that the proceedings would be governed by the then Indian Arbitration Act, 1940. It was contended by the Appellant therein that the learned Single Judge of this Court, having initially granted an ex-parte restraint order, had erroneously vacated the same after hearing the parties. The Supreme Court after considering the arguments of the parties and noting various submissions including that arguably the Appellant could approach the US Courts and make its submissions there, proceeded nonetheless to reinstate the initial restraint order granted by the learned Single Judge of this Court, in effect granting the anti-suit injunction. The Supreme Court specifically considered the fact that since the arbitration proceedings were governed by the Indian Arbitration Act, 1940, the concerned courts in India would have jurisdiction to determine the question regarding enforceability of the Award. It was further held that as per the contract, the parties were governed by the Indian Arbitration Act, and Indian Courts would have exclusive jurisdiction in the matter, and therefore the attempt by the Respondents to file proceedings under US law would violate the arbitration clause. The Supreme Court noted that when the intention of parties by entering into the arbitration clause was to exclude U.S. Courts, it would amount to an improper use of the forum in USA in violation of the stipulation to be governed by Indian law. The Supreme Court proceeded to hold that there was also a likelihood of conflicting decisions on vital PA-Nitin Jagtap 8 / 11 10-CARBPL-24347-2021-UR.doc issues, resulting in legal chaos and that it was incorrect for the Respondent to invoke the jurisdiction of a Court other than the Court which, as per the arbitration agreement, had jurisdiction in the matter. The Supreme Court then proceeded to hold that to drive the Appellant into a tight corner and oblige it to be placed in such an inextricable situation, which would arise if the Respondent was permitted to go ahead with the proceedings in the U.S. Court, would be oppressive to the Appellant therein. It was thus concluded that it would neither be just nor fair on the part of the Indian Court to deny relief to the Appellant. Accordingly, while expressing respect for the US Courts, the Supreme Court concluded that the case before it was a fit one for grant of the injunction sought restraining the Respondent therein from proceeding before the US Courts.
18. Ex-facie, in the present case there is an arbitration clause which provides for arbitration under Indian law and provides for the seat of arbitration as being in Mumbai. It is now well settled, as laid down inter alia, in Indus Mobile Distribution Private Limited v. Datawind Innovations Private Limited & Ors - (2017) 7 SCC 678, that once parties have designated an arbitral seat, it is akin to an exclusive jurisdiction clause. Once parties have agreed to exclude other Courts, it is only the Courts of the seat, i.e. Mumbai in the present case, which would have jurisdiction to the exclusion of all other Courts, as the juridical seat of the arbitration is at Mumbai.
19. Admittedly, in the present case Respondent No. 1 has agreed for and accepted a contractual provision stipulating arbitration in Mumbai under the PA-Nitin Jagtap 9 / 11 10-CARBPL-24347-2021-UR.doc governing law of India. Respondent No. 1 has reiterated the existence of the arbitration clause and its applicability to Respondent No. 1 even in the correspondence referred to above. Respondent No. 1 has clearly, knowingly and consciously rendered itself amenable to the jurisdiction of Indian Courts, and more particularly the exclusive jurisdiction of the Courts in Mumbai. Having agreed to the arbitration in Mumbai, prima facie, it is clear that Respondent No. 1 is amenable to orders being passed by this Court.
20. On the facts of the present case, I am of the prima facie view that the Respondent is attempting to overreach and avoid the binding arbitration clause and the binding governing law clause which provide for arbitration in Mumbai and exclusive jurisdiction to Indian Courts. To all of a sudden contend, as stated in respondent No. 1's letter dated 11th October 2021, that the arbitration clause providing for arbitration in Mumbai would be unconscionable, is a clear attempt on the part of Respondent No. 1 to wriggle out of the binding arbitration clause. Clearly, the parties had agreed to arbitration in Mumbai, and were satisfied that Mumbai would be the most convenient forum for adjudication of any disputes in respect of the Engagement Letter. By express provision for a Mumbai seated arbitration, the parties are deemed to have excluded any other forum as being a forum conveniens for resolving their disputes.
21. With utmost respect to the Courts of Illinois, USA, I am of the view that causing the Petitioner to have to defend a litigation in the local Illinois Courts, contrary to the agreed contractual mandate of arbitration in Mumbai, and presumably PA-Nitin Jagtap 10 / 11 10-CARBPL-24347-2021-UR.doc at not insignificant cost, would be oppressive and unfair to the Petitioner and would amount to relegating the Petitioner to a forum non-conveniens, for no fault of its own. On the contrary Respondent No. 1, having agreed to arbitration in Mumbai, can conveniently appear in the arbitration and raise any claims/counter-claims as it may be advised. Hence the balance of convenience is squarely in favour of the Petitioner in the present case.
22. As per the well settled tests laid down by the Supreme Court in Modi Entertainment Network & Anr. v. W.S.G. Cricket Pte Limited - (2003) 4 SCC 341 , and having regard to the judgment in ONGC ( supra), I am of the view that if the injunction is declined the ends of justice will be defeated. Respondent No. 1 cannot be permitted to wriggle out of a binding arbitration clause and to threaten initiation of proceedings in a foreign country, which parties have consciously excluded by entering into an agreement providing for arbitration in Mumbai, governed by Indian law. As noted in ONGC's case before the Supreme Court, and as applicable here, there is a legitimate apprehension of there being conflicting decisions by the arbitral tribunal constituted here and the US courts in which Respondent No. 1 has threatened to file proceedings.
23. In the above circumstances, I am of the view that the Petitioner has made out a strong prima facie case for grant of an ad-interim ex-parte injunction. In the light of Respondent No. 1's stand in the letter dated 11 th October, 2021, I am inclined to accept the Petitioner's submission that were notice to be given there is a PA-Nitin Jagtap 11 / 11 10-CARBPL-24347-2021-UR.doc legitimate apprehension that Respondent No. 1 may file proceedings in Illinois prior to a hearing been afforded by this Court, particularly given the present Diwali vacation.
24. Accordingly, I pass the following order:
i. There will be an ad-interim injunction against Respondent No. 1 in terms of prayer clause (i) which reads as under:
"(i) be pleased to pass an order of injunction restraining Respondents, including their servants, agents, assignees and/or any other person claiming by, through or under them from filing and pursuing any proceedings against the Petitioner in Courts in Illinois, USA or any other court, forum, tribunal in USA in relation to the subject matter of the dispute and the alleged claim raised in their letters dated August 18, 2021 and October 11, 2021, respectively"
ii. A copy of this order alongwith a copy of the Petition shall be served on the Respondents forthwith by email.
iii. The Petition is made returnable on 15 th November 2021, at which time the Respondents will be heard and appropriate further orders may be passed.
iv. Stand over to 15th November 2021.
( S.J. KATHAWALLA, J. )