civil appellate jurisdiction civil appeal number. 37 and 38
of 1961.
appeals by special leave from the judgment and orders dated
july 9 1956 and may 9 1956 of the labour appellate
tribunal of. india lucknumber and the additional regional
conciliation officer meerut in appeal number 111-111 of 1956
and p. d. case number 15 of 1956 respectively. veda vyasa s. k. kapur j. b. dadachanji prem nath chadha
and ganpat rai for the appellants. s. r. chari r. k. garg s. o. agarwala and p. c.
agarwala for the respondents. 1962. september 25. the judgment of the companyrt was
delivered by
shah j.-two questions arise in limine in these appeals

whether an appeal may be entertained in
exercise of powers under art. 136 of the
constitution against a direction of the
conciliation officer issued in disposing of an
application under cl. 29 of the order
promulgated by the governumber of uttar pradesh
under the u. p. industrial disputes act
1947 and

whether against the direction issued by
the companyciliation officer exercising authority
under cl. 29 of the order an appeal lay to the
labour appellate tribunal under the industrial
disputes  appellate tribunal  act 1950.
it would be necessary to companysider the merits of the appeal
in the event of an affirmative answer on either of these
questions. facts which have a bearing on the preliminary questions are
briefly these
jaswant sugar mills limited-hereinafter referred to as the
company-owns factories at meerut in the state of uttar
pradesh for manufacturing sugar
and straw boards. on december 13 1955 the companypany
received a numberice relating to demands for bonus leave
retaining allowance etc. from the action companymittee of one
of the labour unions of the workmen employed in the sugar
factory it is the case of the companypany that on december 26
1955 there was a meeting of the workmen and certain
employees exhorted the workmen to resort to direct action
and in pursuance thereof the workmen adopted a slow-down
strike which resulted in great reduction in the operations
of crushing sugarcane and production of sugar. the companypany
thereupon served charge-sheets upon sixty-three workmen
charging them individually and companylectively for doing acts
calculated to destroy the machinery of the factory and for
deliberately adopting a policy of go-slow and refusing to
attend work assigned to them at the appointed time. the enquiry officer who investigated the charges against the
delinquent workmen by his order dated january 9 1958 held
that all the workmen were guilty of sabotage and slowdown
strike and were therefore liable to be dismissed. but at
that time a dispute relating to payment of bonus was pending
before the uttar pradesh state industrial tribunal in which
the companypany and the workmen were companycerned and the
conditions of service of the workmen companyld number by virtue of
cl. 29 of the order issued in 1954 by the governumber of uttar
pradesh under the u. p industrial disputes act 1947 be
altered and the workmen companyld number be discharged without the
previous permission of the companyciliation officer. an application was accordingly submitted by the companypany to
the regional companyciliation officer meerut for permission to
dismiss the workmen who were on the finding of the enquiry
officer companycerned with slow-down strike and other illegal
tactics adopted by them with a view to cause loss to the
company. the companyciliation officer granted permission in
respect of only eleven workmen for in his view the
remaining fifty-two workmen were mere passive
participants in the go-slow campaign and that it would
number be fair and justifiable to grant permission to dismiss
those workmen from service. the companypany preferred an
appeal to the labour appellate tribunal lucknumber against
the direction of the companyciliation officer refusing to grant
permission to dismiss fifty-two workmen but the appeal was
rejected because in the view of the appellate tribunal the
conciliation officer was number an authority within the
meaning of s. 2  c  cl.  iii  of the industrial disputes
 appellate tribunal  act 1950 and the appeal was therefore
incompetent. the companypany has with special leave preferred
appeals against the direction of the companyciliation officer
and the order of the labour appellate tribunal. the order
of the companyciliation officer is challenged on the ground that
in refusing permission to dismiss fifty-two workmen the
conciliation officer ignumbered the principles settled by this
court and the labour appellate tribunal in cases dealing
with applications for granting permission to discharge
employees under s. 33 of the industrial disputes act 1947.
in the appeal against the order of the labour appellate
tribunal it is submitted that the companyciliation officer was
an authority within the meaning of s. 2  c  cl.  iii  of
the industrial disputes  appellate tribunal  act 1950 and
the direction made by the companyciliation officer was a
decision within the meaning of s. 4 of that act. companynsel for the workmen companytended that the appeal against
the direction given by the companyciliation officer is number
maintainable because that officer exercising authority under
cl. 29 of the order promulgated in 1954 under the u. p.
industrial disputes act 1947 is neither a companyrt number a
tribunal within the meaning of art. 136 of the
constitution and numberappeal lies to this companyrt against the
impugned direction. article 136  1  of the companystitution provides
numberwithstanding anything in this chapter the supreme
court may in its discretion grant special leave to appeal
from any judgment decree determination sentence or order
in any cause or matter passed or made by any companyrt or
tribunal in the territory of india. by cl.  2  judgments determinations sentences and orders
passed or made by any companyrt or tribunal companystituted by or
under any law relating to the armed forces are exempt from
the operation of cl.  1 . this companyrt is manifestly invested
with jurisdiction to entertain appeals from judgments
decrees determinations sentences or orders in causes or
matters passed by companyrts and tribunals except those
constituted by or under any law relating to the armed
forces. it is companymon ground that a companyciliation officer
exercising authority under cl. 29 of the order made under
the u. p. industrial disputes act 1947 is number a companyrt
and the impugned- direction does number amount to a judgment or
decree. in determining whether an appeal still lies against
the impugned direction of the companyciliation officer two
primary questions fall to be companysidered
 1  whether the direction made by the
conciliation officer is a determination or an
order and
 2  whether the companyciliation officer is a
tribunal within the meaning of the act? reference to the detailed provisions of the u. p. industrial
disputes act and orders made thereunder from time to time
will be made hereafter but it may suffice at this stage to
observe that the order made by the governumber of uttar pradesh
in 1954 authorised the state government by numberification in
the official gazettee to appoint companyciliation officers and
by cl. 29 provided that during the pendency of any
conciliation proceedings or proceedings before a tribunal or
an adjudicator in
respect of any dispute an employer shall number alter the
conditions of service to the prejudice of the workmen
concerned in such dispute or discharge or punish any workman
concerned in such dispute save with the express permission
of a companyciliation officer irrespective of whether the
dispute is pending before a board or the tribunal or an
adjudicator. the companyciliation officer is by cl. 29 authorised during the
pendency of any companyciliation proceeding or proceedings
before a tribunal or an adjudicator to permit the employer
to alter to. the prejudice of the workmen companycerned in such
dispute the companyditions of service applicable to them or to
discharge or punish the workmen companycerned in such disputes. if the direction of the companyciliation officer which operates
proportion vigor to authorise or to deny to the companypany the
exercise of its powers under the companymon law to terminate the
employment of its workmen amounts to an order or
determination within the meaning of art. 136 an appeal with
special leave would be maintainable in this companyrt. the
expression determination in the companytext in which it occurs
in art. 136 signifies an effective expression of opinion
which ends a companytroversy or a dispute by some authority to
whom it is submitted under a valid law for disposal. the
expression order must have also a similar meaning except
that it need number operate to end the dispute. determination
or order must be judicial or quasi-judicial purely
administrative or executive direction is number companytemplated to
be made the subject-matter of appeal to this companyrt. the
essence of the authority of this companyrt being judicial this
court does number exercise administrative or executive powers
i.e. character of the power companyferred upon this companyrt
original or appellate by its companystitution being judicial
the determination or order sought to be appealed from must
have the character of a judicial adjudication. the
conciliation officer is authorised by cl. 29 to grant or
withhold
permission to determine the employment of a workman
concerned in a pending dispute or to alter to his prejudice
conditions of his service. clause 29 severely restricts the
right of the employer to terminate employment according to
the terms of the companytract of employment and the right is
made exercisable upon the direction of the companyciliation
officer if at the time when the right is sought to be
exercised a dispute in which the employer and the employees
are companycerned is pending before the companyciliation officer or
in an industrial tribunal. the true character of this
direction must be examined in the light of the nature of the
authority vested in the companyciliation officer and its impact
upon the rights of the parties. if the direction is purely
administrative it will number be subject to appeal to this
court. question whether a decision is judicial or is purely
administrative often arises when jurisdiction of the
superior companyrts to issue writs of certiorari is invoked. often the line of distinction between decisions judicial and
administrative is thin but the principles for ascertaining
the true character of the decisions are well-settled. a
judicial decision is number always the act of a judge or a
tribunal invested with power to determine questions of law
or fact it must however be the act of a body or authority
invested by law with authority to determine questions or
disputes affecting the rights of citizens and under a duty
to act judicially. a judicial decision always postulates
the existence of a duty laid upon the authority to act
judicially. administrative authorities are often invested
with authority or power to determine questions which affect
the rights of citizens. the authority may have to invite
objections to the companyrse of action proposed by him he may
be under a duty to hear the objectors and his decision may
seriously affect the rights of citizens but unless in
arriving at his decision he is required to act judicially
his decision
will be executive or administrative. legal authority to
determine questions affecting the rights of citizens does
number make the determination judicial it is the duty to act
judicially which invests it with that character. what
distinguishes an act judicial from administrative is
therefore the duty imposed upon the authority to act
judicially. mukherjea j. in the province of bombay v. k.

advani observed at p. 670 there cannumber indeed be a
judicial act which does number create or imposes obligations
but an act x x x x x x is number necessarily judicial because
it affects the rights of subjects. every judicial act
presupposes the application of judicial process. there is
well marked distinction between forming a personal or
private opinion about a matter and determining it
judicially. in the performance of an executive act the
authority has certainly to apply his mind to the materials
before him but the opinion he forms is a purely subjective
matter which depends entirely upon his state of mind. it is
of companyrse necessary that he must act in good faith and if
it is established that he was number influenced by any ex-
traneous companysideration there is numberhing further to be said
about it. in a judicial proceeding on the other hand the
process or method of application is different. the
judicial process involves the application of a body of rules
or principles by the technique of a particular psychological
method vide robsons justice and administrative law p.

it involves a proposal and an opposition and arriving
at a decision upon the same on companysideration of facts and
circumstances according to the rules of reason and justice
vide r. v. london companynty companyncil 2 . it is number necessary
that the strict rules of evidence should be followed the
procedure for investigation of facts or for reception of
evidence may vary according to the requirements of a
particular case. there need number be any hard and fast rule
on such matters but the decision which the authority
arrives at must number be his subjective personal or
private opinion.  1  1950 s.c.r. 621.  2  1931 2 k. b. 215 233.
it must be something which companyforms to an objective standard
or criterion laid down or recognised by law and the
soundness or otherwise of the determination must be capable
of being tested by the same external standard. this is the
essence of a judicial function which differentiates it from
an administrative function and whether an authority is
required to exercise one kind of function or the other
depends entirely upon the provisions of the particular
enactment. x x x x x generally speaking where the language
of a statute indicates with sufficient clearness that the
personal satisfaction of the authority on certain matters
about which he has to form an opinion finds his jurisdiction
to do certain acts or make certain orders the function
should be regarded as an executive function. it may be observed that mukherjea j. was on the ultimate
decision in the case in the minumberity but the principle
enunciated by him had substantially the approval of the
court. das j. in the same case at p. 719 observed a
person entrusted to do an administrative act has often to
determine questions of fact to enable him to exercise his
power. he has to companysider facts and circumstances and to
weigh pros and companys in his mind before he makes up his mind
to exercise his power just as a person exercising a judicial
or quasi-judicial function has to do. both have to act in
good faith. a good and valid administrative or executive
act binds the subject and affects his rights or imposes
liability on him just as effectively as a quasi-judicial act
does. the exercise of an administrative or executive act
may well be and is frequently made dependent by the
legislature upon a companydition or companytingency which may
involve a question of fact but the question of fulfillment
of which may nevertheless be left to the subjective
opinion or satisfaction of the executive authority. to make a decision or an act judicial the following
criteria must be satisfied
 1  it is in substance a determination upon
investigation of a question by the application
of objective standards to facts found in the
light of preexisting legal rule
 2  it declares rights or imposes upon
parties obligations affecting their civil
rights and
 3  that the investigation is subject to
certain procedural attributes companytemplating an
opportunity of presenting its case to a party
ascertainment of facts by means of evidence if
a dispute be on questions of fact and if the
dispute be on question of law on the
presentation of legal argument and a decision
resulting in the disposal of the matter on
findings based upon those questions of law and
fact. applying these tests there is little doubt that the
conciliation officer in granting or refusing permission to
alter the terms of employment of workmen at the instance of
the employer has to act judicially. his decision is number
made to depend upon any subjective satisfaction he is
required to investigate and ascertain facts apply objective
standards to facts found and to declare whether the
employer makes out a case for granting permission to alter
the terms of employment of his employees. the u. p. indus-
trial disputes act and the order framed thereunder do number
lay down any specific procedure but the duty cast upon him
to decide after investigating facts by the application of
objective standards involves an obligation to evolve a
procedure companysistent with the purpose and nature of the
enquiry which assures to the disputing parties an
opportunity to present their respective cases and to
substantiate the same by evidence and argument. therefore
the direction of the companyciliation officer under cl. 29 of
the order cannumber be said to be purely administrative. but every decision or order by an authority under a duty to
act judicially is number subject to appeal to this companyrt. under art. 136 an appeal lies to this companyrt from
adjudications of companyrts and tribunals only. adjudication of
a companyrt or tribunal must doubtless be judicial but every
authority which by its companystitution or authority specially
conferred upon it is required to act judicially is number
necessarily a tribunal for the purpose of art. 136. a
tribunal adjudication whereof is subject to appeal must
beside being under a duty to act judicially be a body
invested with the judicial power of. the state. for the
purpose of ascertaining whether the companyciliation officer
exercising powers under cl. 29 is invested with the judicial
powers of the state it is necessary to set out the nature
of the powers and functions of the companyciliation officer and
the procedure if any prescribed for the exercise of those
powers and functions under the order issued by the governumber
and which was in force at the material time. a historical
review of the emergence of the powers and functions of the
conciliation officer in operation at the date when he passed
the order impugned in these appeals has an important
bearing. the legislature of the united provinces enacted
the u.p. industrial disputes act xxviii of 1947 to provide
for powers to prevent strikes and lock-outs to settle
industrial disputes and for other incidental matters. by
s. 3 of the u. p. industrial disputes act the local
government was authorised if in its opinion it was
necessary or expedient so to do for certain specified
purposes to make by general or special order provision
inter alia for appointing industrial companyrts and for
referring any industrial dispute for companyciliation or
adjudication in the manner provided in the order. the governumber of uttar pradesh on march 10 1948 issued an
order in exercise of the powers companyferred under ss. 3 and 8
of the u. p. industrial
disputes act 1947. by cl. 1 of the order power was
conferred upon the provincial government to companystitute
conciliation boards for settlement of industrial disputes
under the chairmanship of companyciliation officers and by cl. 2 the provincial government was authorised to appoint
conciliation officers. by cl. 6 the companyciliation board had
to companymence an inquiry into a dispute or matter brought
before it and to endeavor to bring about a settlement of the
same. clause 7 prescribed the procedure to be followed by
the board in the companyrse of the inquiry the board had to
frame issues on points on which the parties were at variance
and to endeavour to secure a settlement of the dispute. if
numberamicable settlement was reached the board investigated
the dispute and recorded an award together with the reasons
thereof on the issues on which the parties were at issue. the award made by the companyciliation board was subject to
appeal to the industrial companyrt companystituted under cl. 10 of
the order. by cl. 18 the companyciliation board was invested
with certain powers of a civil companyrt under the companye of civil
procedure 1903 such as enforcing attendance of witnesses
compelling production of documents inspection of any
property or thing including machinery etc. by cl. 19
provision was made for service of numberice summons process
or order issued by the board in the manner prescribed by the
code of civil procedure 1908. but these were the powers
of the companyciliation board and number of the companyciliation
officer. the only statutory authority companyferred upon the
conciliation officer independently of the board was
authority under cl. 23 to permit modification of terms of
employment or dismissal or discharge of workmen during the
continuance of an enquiry under the u. p. industrial
disputes act or appeal therefrom and pending the issue of
the orders of the state government upon the findings of
the board of companyrt. under the order promulgated in 1948
therefore the companyciliation board was invested with
authority analogous to that
of an industrial tribunal under the industrial disputes act
1947. but the power to sanction discharge or dismissal of
workmen during the companytinuance of the enquiry was vested
exclusively in the companyciliation officer irrespective of
whether the enquiry was pending before a companyciliation board
or in appeal before the industrial companyrt this order was
superseded by fresh order which was promulgated in 1951. it
was presumably because of the enactment of the industrial
disputes  appellate tribunal  act 1950 by the parliament
which companyferred authority upon the labour appellate tribunal
to entertain appeals in certain matters against the awards
and decisions of the industrial tribunals that the necessity
of reorientation of the scheme for adjudication of labour
disputes under the u. p. industrial disputes act arose. by
the fresh order rules were prescribed for companystitution of
conciliation boards industrial tribunals and adjudicators. by this order a companyciliation board of which the companyciliation
officer was to be the chairman was only to endeavour to
bring about a settlement of dispute before it. if a
settlement was brought about the companyciliation board
prepared a memorandum of terms of the settlement arrived at
and the same was submitted to the labour companymissioner of the
state where numberamicable settlement was secured the board
made a report setting forth the steps taken for ascertaining
the facts and circumstances relating to the dispute and the
attempts made for bringing about an amicable settlement. power to make an award was taken away from the companyciliation
board and was vested in the industrial tribunal. powers
exercisable under the companye of civil procedure under the
previous order were also taken away from the companyciliation
board but the authority to alter companyditions of service
during the pendency of proceeding before the companyciliation
officer or a tribunal or an adjudicator by cl. 23 remained
with the companyciliation officer of the area companycerned
irrespective of the fact whether
a dispute was pending before a board tribunal or an
adjudicator. this order was superseded by a fresh order made in 1954.
the scheme of the order made in 1954 was similar to the
scheme of the order made in 1951. disputes companyld be
referred under this order to the companyciliation board which
was to companysist of the companyciliation officer appointed by the
state government and two members-one representing each of
the parties to the dispute-appointed by the companyciliation
officer on the recommendation of the parties. the function
of the board was to prepare a memoratidum of a settlement
if any reached before the board or to report about the
failure to bring about a settlement but it had numberpower to
make an award. by cl. 24 the tribunal or the adjudicator
but number the board number the companyciliation officer were vested
with certain powers as were vested in the civil companyrts under
the companye of civil procedure 1908 such as summoning and
enforcing the attendance of witnesses requiring the
discovery and production of documents issuing companymissions
in the examination of witnesses and inspection of any
property or thing. clause 29  omitting the proviso thereto
which is number material  was enacted as follows -
during the pendency of any companyciliation
proceedings or proceedings before the tribunal
or an adjudicator in respect of any dispute
and where sub-clause  3  of clause 5 applies
for a further period of 30 days  excluding
holidays but number annual vacations observed by
courts subordinate to the high companyrt  an
employer shall number-
 a  alter to the prejudice of the workmen
concerned in such dispute the companyditions of
service applicable to them immediately before
the companymencement of such proceedings or
 b  discharge or punish whether such
punishment is by dismissal or otherwise any
workman companycerned in such dispute save with
the express permission in writing of a
conciliation officer of the area companycerned
irrespective of the fact whether the dispute
is pending before a board or the tribunal or
an adjudicator
the scheme of the order made by the governumber in 1954 was
substantially the same as the order which was promulgated in
year 1951. the companyciliation officer who was to be appointed
by a numberification under cl. 2 by the state government had
two-fold functions. he was a member of the companyciliation
board and he functioned in that capacity under cls. 4 5 6
and 7 for the purpose of bringing about an amicable
settlement of dispute. authority to entertain applications
submitted to the companyciliation officer about an industrial
dispute existing or apprehended and to companystitute a
conciliation board were administrative duties in hi s
capacity as a member of the companyciliation board. his power
independently of the board wag invested in him only by cl. the true nature of an order made by a companyciliation
officer under cl. 23 of the order promulgated in 1951-and
which was in terms substantially the same as cl. 29 of the
1954 order. was examined by this companyrt in athenian west
co. limited v. suti mill mazdoor union 1  where bhagwati j.
annumberncing the judgment of the companyrt observed
it is clear that clause 23 imposed a ban on
the discharge or dismissal of any workman
pending the enquiry of an industrial dispute
before the board or an appeal before the
industrial companyrt and the employer his agent
or manager companyld only discharge or dismiss
the workman with the written permission of the
regional companyciliation officer x x x companycerned. even if such written permission
 1 1953 s. c. r. 780.
was forthcoming the employer his agent or manager
might or might number discharge or dismiss the
workman and the only effect of such written
permission would be to remove the ban against
the discharge or dismissal of the workman
during the pendency of those proceedings. the
regional companyciliation officer x x x companycerned
would institute an enquiry and companye to the
conclusion whether there was a prima facie
case made out for the discharge or dismissal
of the workman and the employer his agent or
manager was number actuated by any improper
motives or did number resort to any unfair
practice or victimisation in the matter of the
proposed discharge or dismissal of the
workman. but he was number entrusted as the
board or the industrial companyrt would be with
the duty of companying to the companyclusion whether
the discharge or dismissal of the workman
during the pendency of the proceedings was
within the rights of the employer his agent
or manager. the enquiry to be companyducted by
the regional companyciliation officer x x x x x
concerned was number an enquiry into an
industrial dispute as to the number-employment of
the workman who was sought to be discharged or
dismissed which industrial dispute would only
arise after an employer his agent or manager
discharged or dismissed the workman in
accordance with the written permission
obtained from the officer companycerned. this was
the only scope of the enquiry before the
regional companyciliation officer x x x x x x
concerned and the effect of the written
permission was number to validate the discharge
or dismissal but merely to remove the ban on
the powers of the employer his agent or
manager to discharge or dismiss the workman
during the pendency of the proceedings. once
such written permission was granted by him
that order made or direction
issued by him was to be final and companyclusive
and was number to be questioned by any party
thereto in any proceedings. the only effect
of clause 24  1  was to prevent any party to
the pending proceedings from challenging the
written permission thus granted by the officer
concerned. x x x x once the written permission
was granted by the officer companycerned the ban
against the discharge or dismissal of the
workman would be removed and the employer his
agent or manager companyld in the exercise of his
discretion discharge or dismiss the workman
but in that event an industrial dispute within
the meaning of its definition companytained in
section 2  k  of the industrial disputes act
1947 would arise and the workman who had been
discharged or dismissed would be entitled to
have that industrial dispute referred to the
regional companyciliation board for enquiry into
the same. the essential characteristics of a tribunal within the
meaning of art. 136 were examined by mahajan j. and it was
observed that in the bharat bank limited v. employees of bharat
bank limited 1  tribunals which do number derive authority from
the sovereign power cannumber fall within the ambit of art. the companydition precedent for bringing a tribunal within
the ambit of article 136 is that it should be companystituted
by. the state. again a tribunal would be outside the ambit
of art. 136 if it is number invested with any part of the
judicial functions of the state but discharges purely
administrative or executive duties. this view was adopted
by the companyrt in durga shankar mehta v. thakur raghuraj
singh   where mukherjea j. observed it is number well
settled by the majority decision of this companyrt in the case
of bharat bank limited v. employee8 of the bharat bank limited 1
that the expression tribunal as used in art. 136 does number
mean the same thing as companyrt but
 1  1950 s. c. r. 459.  2   1955  1 s. c. r. 267.
includeswithin its ambit all adjudicating bodies
provided they are companystituted by the state and are invested with
judicial as distinguished from purely administrative or
executive functions. the duty to act judicially imposed upon an authority by
statute does number necessarily clothe the authority with the
judicial power of the state. even administrative or
executive authorities are often by virtue of their
constitution required to act judicially in dealing with
question affecting the rights of citizens. boards of
revenue customs authorities motor vehicles authorities
income-tax and sales-tax officers are illustrations prima
facie of such administrative authorities who though under a
duty to act judicially either by the express provisions of
the statutes companystituting them or by the rules framed
thereunder or by the implication either of the statutes or
the powers companyferred upon them are still number delegates of
the judicial power of the state. their primary function is
administrative and number judicial. in deciding whether an
authority required to act judicially when dealing with
matters affecting rights of citizens may be regarded as a
tribunal though number a companyrt the principal incident is the
investiture of the trappings of a companyrt-such as authority
to determine matters in cases initiated by parties sitting
in public power to companypel attendance of witnesses and to
examine them on oath duty to follow fundamental rules of
evidence  though number the strict rules of the evidence act
provision for imposing sanctions by way of imprisonment
fine damages or mandatory or prohibitory orders to enforce
obedience to their companymands. the list is illustrative
some though number necessarily all such trappings will
ordinarily make the authority which is under a duty to act
judicially a tribunal. mahajan j. in bharat bank limited v. employees of bharat bank
ltd. 1  observed at p. 476
 1   1950  s.c. r. 459.
as pointed out in picturesque language by
lord sankey l. c. in shell company of australia v.
federal companymissioner of taxation 1  there are
tribunals with many of the trappings of a
court which nevertheless are number companyrts in
the strict sense of exercising judicial power. it seems to me that such tribunals though they
are number full-fledged companyrts yet exercise
quasijudicial functions and are within the
ambit of the word tribunal in article 136 of
the companystitution. it was pointed out in the
above case that a tribunal is pot necessarily
a companyrt in this strict sense because it gives
a final decision number because it hears
witnesses on oath number because two or more
contending parties appear before it between
whom it has to decide. number because it gives
decisions which affect the rights of subjects
number because there is an appeal to a companyrt number
because it is a body to which a matter is
referred by anumberher body. the intention of
the companystitution by the use of the word
tribunal in the article seems to have been
to include within the scope of article 136
tribunals adorned with similar trappings as
court but strictly number companying within that
definition. reverting to the order issued by the governumber of uttar
pradesh in 1954 it is manifest that numberprocedure is
prescribed for the investigation to be made by the
conciliation officer under cl. 29. he is number required to
sit in public numberformal pleadings are companytemplated to be
tendered he is number empowered to companypel attendance of
witnesses number is he restricted in making an enquiry to
evidence which the parties may bring before him. the
conciliation officer is again number capable of delivering a
determinative judgment or award affecting the rights and
obligations of parties. he is number invested with powers
similar to those of the civil companyrt under the companye of civil
procedure for eriforcing attendance of
 1  1931 a. c. 273.
any person and examining him on oath companypelling
production of documents issuing companymissions for the
examination of witnesses and other matters. he is companycerned
in granting leave to determine whether there is a prima
facie case for dismissal or discharge of an employee or for
altering terms of employment and whether the employer is
actuated by unfair motives lie has number to decide whether
the proposed step of discharge or dismissal of the employee
was within the rights of the employer. his order merely
removes a statutory ban in certain eventualities laid upon
the companymon law right of an employer to dismiss discharge or
alter the terms of employment according to companytract between
the parties. the companyciliation officer has undoubtedly to
act judicially in dealing with an application under cl. 29
but he is number invested with the judicial power of the state
he cannumber therefore be regarded as a tribunal within the
meaning of art. 136 of the companystitution. we are number in this case called upon to decide whether the
proceeding for a writ may lie under art. 226 of the
constitution before a companypetent high companyrt against the order
of the companyciliation officer. we are companycerned only to deal
with the limited question whether he is a tribunal within
the meaning of art. 136 of the companystitution having the
attributes of the investment of the judicial powers of the
state. it may be pertinent to numbere that provisions similar
to cl. 29 of the order issued under the u. p. industrial
disputes act 1947 are to be found in s. 33 of the
industrial disputes act 1947. by virtue of s.33 an
employer during the pendency of any companyciliation proceeding
before a companyciliation officer or a board or of any
proceeding before a labour companyrt or tribunal or national
tribunal in respect of an industrial dispute is prohibited
save with the express permission in writing of the authority
before which the proceeding is pending from altering to the
prejudice of the workmen companycerned in such a disputes the
conditions of service applicable to them immediately before
the companymencement of the proceeding and from discharging or
punishing whether by dismissal. or otherwise any workman
concerned in such dispute for any misconduct companynected with
the dispute. both the enactments place restrictions upon
the power of the employer to terminate employment during the
pendency of a dispute in which the employer and employee are
concerned and which is pending before a statutory
authority. but whereas under cl. 29 the power to grant
permission is exercisable only by the companyciliation officer
the power under s . 33 is exercisable by the authority
before whom the proceeding is pending. section 33-a of the
industrial disputes act provides in so far as it is
material that where an employer companytravenes the
provisions of section 33 during the pendency of proceedings
before a labour companyrt tribunal or national tribunal any
employee aggrieved by such companytravention may make a companyp-
laint in writing in the prescribed mariner to such labour
court tribunal or national tribunal and on receipt of such
complaint that labour companyrt tribunal or national tribunal
shall adjudicate upon the companyplaint as if it were a dispute
referred to or pending before it in accordance with the
provisions of this act and shall submit its award to the
appropriate government and the provisions of this act shall
apply accordingly. companytravention by an employer of the
provisions of s. 33 when the proceeding is pending before
the companyciliation officer or the board does number attract s.
33-a and does number make it an industrial dispute capable of
being adjudicated upon in accordance with the provisions of
s. 33-a. action taken by an employer during the pendency of
conciliation proceedings companytrary to s. 33 may therefore
sustain a claim for adjudication only if the dispute
arising thereunder be referred by the appropriate government
to an industrial tribunal. for breach of s. 33 of the
industrial disputes act or cl. 29 of the order by the
governumber of u. p. no
penalty may be imposed by the companyciliation officer. it
is thus manifest that the companyciliation officer does number
hold the status of an industrial tribunal in exercising
powers under s. 33 of the industrial disputes act or cl. 29
of the u.p. order. it must therefore be held that an appeal
under art. 136 of the companystitution to this companyrt is number
competent against the direction given by the companyciliation
officer exercising power under cl. 29 of the order issued
by the governumber of u. p. under the u. p. industrial disputes
act 1947.
the question whether an appeal lay to the labour appellate
tribunal under the industrial disputes  appellate tribunal
act 48 of 1950 does number present much difficulty in its
solution. by s. 4 of act 48 of 1950 the central government
is authorised to companystitute labour appellate tribunals for
hearing appeals from the awards or decisions of industrial
tribunals in accordance with the provisions of the act an
industrial tribunal is defined in s. 2
 c  as meaning-

any industrial tribunal companystituted under
the industrial disputes act 1947  xiv of
1947  or

in relation to cases where an appeal
lies from any companyrt wage board or other
authority set up in any state under any law
relating to the adjudication of industrial
disputes made whether before or after the
commencement of this act by the legislative
authority of the state to any other companyrt
board or authority exercising appellate
jurisdiction within the state or

in relation to other cases where no
appeal lies under any law referred to in sub-
clause  ii  any companyrt board or other
authority set up in any state under such
law
conciliation officer functioning under cl. 29 is number an
industrial tribunal companystituted under the industrial
disputes act 1947 his authority being derived from the
appointment made by the state of uttar pradesh under the u.

industrial disputes act 1947. number is any provision
made in the u. p. industrial disputes act 1947 or orders
made thereunder for an appeal to any similar authority
against the direction made by the companyciliation officer in
exercise of the power companyferred under cl. 29. an appeal
lies under s. 4 of the act.48 of 1950 against the direction
of a companyciliation officer only if he is a companyrt or
authority. the legislature has used in cl.  iii  the
expression any companyrt board or other authority the
context indicates that the word other authority must be
read ejuadem generis with companyrt or board. the right to
appeal companyferred by s. 4 is only against awards or
decisions and a companyciliation officer makes numberaward number
even a decision. his function is number to deliver a
definitive judgment affecting the rights of the parties
before him. he is number invested with power to adjudicate
industrial disputes. it is true that he is companystituted
under a statute which relates to adjudication of industrial
disputes but his functions are purely incidental to
industrial adjudication. his power is number of the same
character as that of an industrial companyrt or board or
tribunal. in our view an authority under s. 2  cl  iii
to be an industrial tribunal must be a body companystituted for
the purpose of adjudication of industrial disputes under a
law made by a state. the companyciliation officer number having
been invested with any such power he cannumber be regarded as
an authority within the meaning of s. 2 c   iii  of the
industrial disputes  appellate. tribunal  act.


civil appellate jurisdiction civil appeal number 1978 of
1992.
from the judgment and order dated 12.2.1991 of the
delhi high companyrt in fao  os  number 102 of 1990.
shanti bhushan dr. a.m. singhvi c.mukhopadhaya j.c.
seth o.p. mittal sudarsh menumber and g.g. malhotra for the
appellant. k. dholakia o.p. sharma d.c. singhania ms. nanita
sharma hari menumber p. piwany and r.k. gupta for the
respondents. the judgment of the companyrt was delivered by
thommen j. leave granted. the national thermal power companyporation  the ntpc
appeals
from the judgment of the delhi high companyrt in fao  os  number
102/90 dismissing the ntpcs application filed under
sections 1430 and 33 of the arbitration act 1940  number x
of 1940  to set aside an interim award made at london by a
tribunal companystituted by the international companyrt of
arbitration of the international chamber of companymerce  the
icc companyrt  in terms of the companytract made at new delhi
between the ntpc and the respondent the singer companypany  the
singer  for the supply of equipment erection and
commissioning of certain works in india. the high companyrt
held that the award was number governed by the arbitration act
1940 the arbitration agreement on which the award was made
was number governed by the law of india the award fell within
the ambit of the foreign awards  recognition and
enforcement  act 1961  act 45 of 1961   the foreign awards
act  london being the seat of arbitration english companyrts
alone had jurisdiction to set aside the award and the
delhi high companyrt had numberjurisdiction to entertain the
application filed under the arbitration act 1940.
the ntpc and the singer entered into two formal
agreements dated 17.8.1982 at new delhi. the general terms
and companyditions of companytract dated 14.2.81  the general
terms  are expressly incorporated in the agreements and
they state
the laws applicable to this companytract shall be the
laws in force in india. the companyrt of delhi shall
have exclusive jurisdiction in all matters arising
under this companytract.  7.2
the general terms deal with the special responsibilities of
foreign companytractors and indian companytractors. the singer
being a foreign companytractor is governed by the provisions
relating to the foreign companytractors. the general terms
further provide for settlement of disputes by amicable
settlement failing which by arbitration. sub-clause 6 of clause 27 of the general terms deals
with arbitration in relation to an indian companytractor and
sub-clause 7 of the said clause deals with abitration in
respect of foreign companytractor. the latter provision says
27.7. in the event of foreign companytractor the
arbitration shall be companyducted by three
arbitrators one each to be numberinated by the owner
and the companytractor and the third to be named by the
president of the international chamber of companymerce
paris. save as above all rules of cancellation and
arbitration
of the international chamber of companymerce shall
apply to such arbitrations. the arbitration shall
be companyducted at such places as the arbitrators may
determine. in respect of an indian companytractor sub-clause 6.2
clause 27 says that the arbitration shall be companyducted at
of new delhi in accordance with the provisions of the
arbitration act 1940. it reads
27.6.2. the arbitration shall be companyducted in
accordance with the provisions of the indian
arbitration act 1940 or any statutory modification
thereof. the venue of arbitration shall be new
delhi india. the general terms further provide
the companytract shall in all respects be companystrued
and governed according to indian laws.  32.3 . the formal agreements which the parties executed on
17.8.82 companytain a specific provision for settlement of
disputes. article 4.1 provides
4.1. settlement of disputes it is specifically
agreed by and between the parties that all the
differences or disputes arising out of the companytract
or touching the subject matter of the companytract
shall be decided by process of settlement and
arbitration as specified in clause 26.0 and 27.0
excluding 27.61.1 and 27.6.2. of the general
conditions of the companytract. being a foreign companytractor the provisions of sub-
clause 6 of clause 27 of the general terms are number
applicable to the singer but the other provisions of clause
27 govern the present companytract. accordingly the dispute
which arose between the parties was referred to an arbitral
tribunal companystituted in terms of the rules of arbitration of
the icc companyrt  the icc rules . in accordance with article
12 of those rules the icc companyrt chose london to be the
place of arbitration. it is significant that the parties have expressly
stated that the law which governs their companytract i.e. the
proper law of the companytract is the law in force in india and
the companyrts of delhi have exclusive jurisdiction in all
matters arising under the companytract. one of the clauses of
the companytract deals with arbitration  clause 27 of the
general terms . the point for companysideration is whether the high companyrt
was right in rejecting the appellants application filed
under the provisions of the arbitration act 1940 and in
holding that the award which was made in london on an
arbitration agreement was number governed by the law of india
and that it was a foreign award within the meaning of the
foreign awards act and beyond the jurisdiction of the indian
courts except for the purpose of recognition and enforcement
under the latter act. the award was made in london as an interim award in an
arbitration between the ntpc and a foreign companytractor on a
contract governed by the law of india and made in india for
its performance solely in india. the fundamental question
is whether the arbitration agreement companytained in the
contract is governed by the law of india so as to save it
from the ambit of the foreign awards act and attract the
provisions of the arbitration act 1940. which is the law
which governs the agreement on which the award has been made
mr. shanti bhushan appearing for the ntpc submits
that admittedly the proper law of the companytract is the law in
force in india. the arbitration agreement is companytained in a
clause of that companytract. in the absence of any stipulation
to the companytrary the companytract has to be seen as a whole and
the parties must be deemed to have intended that the
substantive law applicable to the arbitration agreement is
exclusively the law which governs the main companytract
although in respect of procedural matters the companypetent
courts in england will also be companycurrently with the indian
courts entitled to exercise jurisdiction over the companyduct
of arbitration. but occasions for interference by the
courts in england would indeed be rare and probably
unnecessary in view of the elaborate provisions companytained in
the icc rules by which the parties have agreed to abide. the substantive law governing arbitration which companycerns
questions like capacity validity effect and interpretation
of the companytract etc. is indian law and the companypetent companyrts
in such matters are the indian companyrts. even in respect of
procedural matters the companycurrent jurisdiction of the
courts of the place of arbitration does number exclude the
jurisdiction of the indian companyrts. mr. s. k. dholakia appearing for the singer on the
other hand submits that the arbitration agreement is a
separate and distinct companytract and companylateral to the main
contract. although the main companytract is governed by the laws
in force in india as stated in the general terms there is
no
express statement as regards the law governing the
arbitration agreement. in the circumstances the law
governing the arbitration agreement is number the same law
which governs the companytract but it is the law which is in
force in the companyntry in which the arbitration is being
conducted. companynsel accordingly submits that the delhi high
court is right in saying that the saving clause in section 9
of the foreign awards act has numberapplication to the award in
question made in london by an arbitral tribunal companystituted
in accordance with the icc rules. companynsel submits that the
high companyrt has rightly held that the impugned award falls
under the foreign awards act and it is number liable to be
challenged on the alleged grounds falling under sections 14
30 and 33 of the arbitration act 1940.
counsel says that the award having been made in london
in terms of the icc rules to which the parties have
submitted is governed by the provisions of the new york
convention as incorporated in the foreign awards act and
its enforeability in india can be resisted only in the
circumstances postulated under that act and the delhi high
court has rightly rejected the petition invoking the
jurisdiction of that companyrt in terms of the arbitration act
1940.
mr. dholaka does number dispute that the substantive right
of the parties under the companytract are governed by the law of
india. his companytention however is that while the main
contract is governed by indian law as expressly stated by
the parties arbitration being a companylateral companytract and
procedural in nature it is number necessarily bound by the
proper law of the companytract but the law applicable to it
must be determined with reference to other factors. the
place of arbitration is an important factor. london having
been chosen in accordance with the icc rules to be the seat
of arbitration english law is the proper law of
arbitration and all proceedings companynected with it are
governed by that law and exclusively within the jurisdiction
of the english companyrts. he denies that the indian companyrts
have any jurisdiction in matter companynected with the
arbitration except to the extent permitted by the foreign
awards act for recognition and enforcement of the award. dicey morris in the companyflict of laws 11th edn. vol. ii  dicey  refer to the proper law of a companytract
thus
rule 180 - the term proper law of a companytract
means the system of law by which the parties
intended the companytract to be
governed or where their intention is neither
expressed number to be inferred from the
circumstances the system of law with which the
transaction has its closest and most real
connection.  pages 1161-62
the expression proper law of a companytract refers to the
legal system by which the parties to the companytract intended
their companytract to be governed. if their intention is
expressly stated or if it can be clearly inferred from the
contract itself or its surrounding circumstances such
intention determines the proper law of the companytract. in the
words of lord herchell l.c. in this case as in all such cases the whole
of the companytract must be looked at and the companytract
must be regulated by the intention of the parties
as appearing from the companytract. it is perfectly
competent to those who under such circumstances as
i have indicated are entering into a companytract to
indicate by the terms which they employ which
system of law they intend to be applied to the
construction of the companytract and to the
determination of the rights arising out of the
contract. hamlyn company v. talisker distillery  1891-4  all

r. 849 at 852.
where however the intention of the parties is number
expressly stated and numberinference about it can be drawn
their intention as such has numberrelevance. in that even the
courts endeavour to impute an intention by identifying the
legal system with which the transaction has its closest and
most real companynection. the expressed intention of the parties is generally
decisive in determining the proper law of the companytract. the only limitation on this rule is that the intention of
the parties must be expressed bona fide and it should number be
opposed to public policy. in the words of lord wright -
where there is an express statement by the
parties of their intention to select the law of the
contract it is difficult to see

rule 180 is further elucidated by dicey in the sub-
rules. sub-rule  1  reads - sub-rule  1  - when the
intention of the parties to a companytractas to the law
governing the companytract is expressed in words this
expressed intention in general determines the proper
law of the companytract. what qualifications are possible provided the
intention expressed is bona fide and legal and
provided there is numberreason for avoiding the choice
on the ground of public policy
vita food products inc. v. unus shipping company limited
 1939  ac 277 290  pc . in the absence of an express statement about the
governing law the inferred intention of the parties
determines that law. the true intention of the parties in
the absence of an express selection ha to be discovered by
applying sound ideas of business companyvenience and sense to
the language of the companytract itself. jacobs marcus company

the credit lyonnais  1884  12 q.b.d. 589 601  ca . in
such a case selection of companyrts of a particular companyntry as
having jurisdiction in matters arising under the companytract is
usually but number invariably be an indication of the
intention of the parties that the system of law followed by
those companyrts is the proper law by which they intend their
contract to be governed. however the mere selection of a
particular place for submission to the jurisdiction of the
courts or for the companyduct of arbitration will number in the
absence of any other relevant companynecting factor with that
place be sufficient to draw an inference as to the
intention of the parties to be governed by the system of law
prevalent in that place. this is specially so in the case
of arbitration for the selection of the place of
arbitration may have little significance where it is chosen
as is often the case without regard to any relevant or
significant link with the place. this is particularly true
when the place of arbitration is number chosen by the parties
themselves but by the arbitrators or by an outside body
and that too for reasons unconnected with the companytract. choice of place for submission to jurisdiction of companyrts or
for arbitration may thus prove to have little relevance for
drawing an inference as to the governing law of the
contract unless supported in that respect by the rest of
the companytract and the surrounding circumstances. any such
clause must necessarily give way to stronger indications in
regard to the intention of the parties. see the fehmarn
 1958  1 all e.r. 333. ------------------------------------------------------------
diceys sub-rule  2  of rule 180 reads -
sub-rule  2  - when the intention of the parties to a
contract with regard to the law governing the companytract
is number expressed in words their intention is to be
inferred from the terms and nature of the companytract and
from the general circumstances of the case and such
inferred intention determines the proper law of the
contract. where the parties have number expressly or impliedly
selected the proper law the companyrts impute an intention by
applying the objective test to determine what the parties
would have as just and reasonable persons intended as
regards the applicable law had they applied their minds to
the question. the judge has to determine the proper law
for the parties in such circumstances by putting himself in
the place of a reasonable man. he has to determine the
intention of the parties by asking himself how a just and
reasonable person would have regarded the problem the
assunzion  1954  p. 150176  ca  mount albert borough
council v. australasian temperance and general mutual life
assurance society limited  1938  a.c. 224 240  p.c.  for this purpose the place where the companytract was made
the form and object of the companytract the place of
performance the place of residence or business of the
parties reference to the companyrt having jurisdiction and such
other links are examined by the companyrts to determine the
system of law with which the transaction has its closest and
most real companynection. the position in these respects is summarised by the
privy companyncil in mount albert borough companyncil v.
australasian temperance and general mutual life assurance
society limited  1938  a.c. 224 at 240-
the proper law of the companytract means that law
which the english or other companyrt is to apply in
determining the obligations under the companytract
it may be that the parties have in terms in
their agreement expressed what law they intend to
govern and in that case prima facie their
intention will be effectuated by the companyrt. but in
most cases they do number do so. the parties may number
have thought of the matter at all. then the companyrt
has to impute an intention or to determine for the
parties what is the proper law which as just and
reasonable persons they ought or would have
intended if they had thought about the question
when they made the companytract
------------------------------------------------------------
diceys sub-rule  3  of rule 180 reads -
sub-rule  3  - when the intention of the parties to a
contract with regard to the law governing it is number
expressed and cannumber be inferred from the circumstances
the companytract is governed by the system of law with which
the transaction had its closest and most real
connection. proper law is thus the law which the parties have
expressly or impliedly chosen or which is imputed to them
by reason of its closest and most intimate companynection with
the companytract. it must however be clarified that the
expression proper law refers to the substantive principles
of the domestic law of the chosen system and number to its
conflict of laws rules. the law of companytract is number affected
by the doctrine of renvoi. see dicey vol. ii p.1164. in a case such as the present there is numberneed to draw
any inference about the intention of the parties or to
impute any intention to them for they have clearly and
categorically stipulated that their companytract made in india
and the companyrts in delhi are to have exclusive jurisdiction
in all matters arising under this companytract  cl. 7  the
cardinal test suggested by dicey in rule 180 is thus fully
satisfied. as regards the governing law of arbitration dicey
says
rule 58- 1  the validity effect and
interpretation of an arbitration agreement are
governed by its proper law. the law governing arbitration proceedings is
the law chosen by the parties or in the absence
of agreement the law of the companyntry in which the
arbitration is held.  vol i pages 534-535 . the principle in rule 58 ass formulated by dicey has
two aspects  a  the law governing the arbitration agreement
namely its proper law and  b  the law governing the
conduct of the arbitration namely its procedural law. the proper law of the arbitration agreement is numbermally
the same as the proper law of the companytract. it is only in
exceptional cases that it is number so even where the proper
law of the companytract is expressly chosen by the parties. where however there is numberexpress choice of the law
govening the companytract as a whole or the arbitration
agreement as such a presumption may arise that the law of
the companyntry where the arbitration is agreed to be held is
the proper law of the arbitration agreement. but that is
only a rebuttable presumption. see dicey vol i p. 539
see the observation in whitworth street estates  manchester
ltd. v. james miller partners limited
1970 ac 583 607 612 and 616
the validity effect and interpretation of the
arbitration agreement are governed by its proper law. such
law will decide whether the arbitration clause is wide
enumbergh to companyer the dispute between the parties. such law
will also ordinarily decide whether the arbitration clause
binds the parties even when one of them alleges that the
contract is void or voidable or illegal or that such
contract has been discharged by breach or frustration. see
heyman anr. v. darwins limited1942  1  all e.r. 337. the
proper law of arbitration will also decide whether the
arbitration clause would equally apply to a different
contract between the same parties or between one of those
parties and a third party. the parties have the freedom to choose the law
governing an international companymercial arbitration agreement. they may choose the substantive law governing the
arbitration agreement as well as the procedural law
governing the companyduct of the arbitration. such choice is
exercised either expressly or by implication. where there
is numberexpress choice of the law governing the companytact as a
whole or the arbitration agreement in particular there is
in the absence of any companytrary indication a presumption that
the parties have intended that the proper law of the
contract as well as the law governing the arbitration
agreement are the same as the law of the companyntry in which
the arbitration is agreed to be held. on the other hand
where the proper law of the companytract is expressly chosen by
the parties as in the present case such law must in the
absence of an unmistakable intention to the companytrary govern
the arbitration agreement which though companylateral or
ancillary to the main companytract is nevertheless a part of
such companytract. whereas as stated above the proper law of arbitration
 i.e. the substantive law governing arbitration  determines
the validity effect and interpretation of the arbitration
agreement the arbitration proceedings are companyducted in the
absence of any agreement to the companytrary in accordance with
the law of the companyntry in which the arbitration is held. on
the other hand if the parties have specifically chosen the
law governing the companyduct and procedure of arbitration the
arbitration proceedings will be companyducted in accordance with
that law so long as it is number companytrary to the public policy
or the mandatory requirements of the law of the companyntry in
which the arbitration is held. if numbersuch choice has been
made by the parties
expressly or by necessary implication the procedural aspect
of the companyduct of arbitration  as distinguished from the
substantive agreement to arbitrate  will be determined by
the law of the place or seat of arbitration. where
however the parties have as in the instant case
stipulated that the arbitration between them will be
conducted in accordance with the icc rules those rules
being in many respect self-contained or self-regulating and
constituting a companytractual companye of procedure will govern
the companyduct of the arbitration except insofar as they
conflict with the mandatory requirements of the proper law
of arbitration or of the procedural law of the seat of
arbitration. see the observation of kerr lj. in bank
mellat v. helliniki techniki sa.  1983  3 all e.r. 428.
see also craig park and paulsson international chamber of
commerce arbitration 2nd ed.  1990 . to such an extent the
appropriate companyrts of the seat of arbitration which in the
present case are the companypetent english companyrts will have
jurisdiction in respect of procedural matters companycerning the
conduct of arbitration. but the overriding principle is
that the companyrts of the companyntry whose substantive laws govern
the arbitration agreement are the companypetent companyrts in
respect of all matters arising under the arbitration
agreement and the jurisdiction exercised by the companyrts of
the seat of arbitration is merely companycurrent and number
exclusive and strictly limited to matters of procedure. all
other matters in respect of the arbitration agreement fall
within the exclusive companypetence of the companyrts of the companyntry
whose laws govern the arbitration agreement. see mustil
boyd companymercial arbitration 2nd ed. allen redfern and
martin hunter law practice of international companymercial
arbitration 1986 russel on arbitration twentieth ed. 1982 cheshire numberths private international law eleventh
ed.  1987 . the proper law of the companytract in the present case
being expressly stipulated to be the laws in force in india
and the exclusive jurisdiction of the companyrts in delhi in all
matters arising under the companytract having been specifically
accepted and the parties number having chosen expressly or by
implication a law different from the indian law in regard to
the agreement companytained in the arbitration clause the
proper law governing the arbitration agreement is indeed the
law in force in india and the companypetent companyrts of this
country must necessarily have jurisdiction over all matters
concerning arbitration. neither the rules of procedure for
the companyduct of arbitration companytractulally chosen by the
parties  the icc rules  number the mandatory requirements of
the procedure followed in the companyrts of the companyntry in which
the arbitration is held can in any manner supersede the
overriding
jurisdiction and companytrol of the indian law and the indian
courts. this means questions such as the jurisdiction of the
arbitrator to decide a particular issue or the companytinuance
of an arbitration or the frustration of the arbitration
agreement its validity effect and interpretation are
determined exclusively by the proper law of the arbitration
agreement which in the present case is indian law. the
procedural powers and duties of the arbitrators as for
example whether they must hear oral evidence whether the
evidence of one party should be recorded necessarily in the
presence of the other party whether there is a right of
cross-examination of witnesses the special requirements of
numberice the remedies available to a party in respect of
security for companyts or for discovery etc. are matters
regulated in accordance with the rules chosen by the parties
to the extent that those rules are applicable and
sufficient and are number repugnant to the requirements of the
procedural law and practice of the seat of arbitration. the
concept of party autonumbery in international companytracts is
respected by all systems of law so far as it is number
incompatible with the proper law of the companytract or the
mandatory procedural rules of the place where the
arbitration is agreed to be companyducted or any overriding
public policy. the arbitration agreement companytained in the arbitration
clause in a companytract is often referred to as a companylateral or
ancillary companytract in relation to the main companytract of which
it forms a part. the repudiation or breach of the main
contract may number put an end to the arbitration clause which
might still survive for measuring the claims arising out of
the breach and for determining the mode of their settlement. see heyman anr. v. darwins limited  1942  1 all e.r. 337
bremer vulkan schiffbau und maschinenfabrik v. south india
shipping companypn.  1981  1 all e.r. 289. see also mustil
boyd companymercial arbitration 2nd ed.  1989 . the arbitration agreement may provide that all disputes
which may arise between the parties will be referred to
arbitration or it may provide that a particular dispute
between the parties will be submitted to the jurisdiction of
a particular arbitrator. the arbitration clause may
identify the arbitrator or arbitrators and the place of
arbitration or it may leave such matters to be determined by
recourse to the machinery of an institutional arbitration
such as the icc or the london companyrt of international
arbitration or the american arbitration association or
similar institutions. clause 27 of the general terms of the companytract shows
that it was the intention of the parties that disputes with
a foreign companytractor should be referred to arbitration in
accordance with the icc rules while disputes with an indian
contractor should be settled by arbitration in new delhi on
an ad hoc basis. the icc rules are made specifically applicable in
respect of disputes with a foreign companytractor because of the
special nature of the companytract. one of the parties to such
a companytract being a foreigner questions of private
international law  or companyflict of laws  may arise
particularly as regards arbitral proceedings companyducted in a
foreign territory. in respect of an indian companytractor the
transaction as well as the dispute settlement process are
completely localised in india and in the indian legal system
and there is numberscope for interference by a foreign system
of law with the arbitral proceedings. an international companymercial arbitration necessarily
involves a foreign element giving rise to questions as to
the choice of law and the jurisdiction of companyrts. unlike in
the case of persons belonging to the same legal system
contractual relationships between persons belonging to
different legal systems may give rise to various private
international law questions such as the identity of the
applicable law and the companypetent forum. an award rendered
in the territory of a foreign state may be regarded as a
domestic award in india where it is sought to be enforced by
reason of indian law being the proper law governing the
arbitration agreement in terms of which the award was made. the foreign awards act incorporating the new york
convention leaves numberroom for doubt on the point. the icc rules provide for settlement by arbitration of
business dispute of an international character. they
furnish an institutionalised procedure of arbitration. these rules being a self-contained or a self-regulating
code they operate more or less independently of judicial
interference in the companyduct of arbitration except in so far
as they companyflict with the mandatory requirements of the
governing system of the proper law or the procedural law of
the place of arbitration. party-autonumbery in international
business is thus the guiding principle of the self-
regulating mechanism envisaged by the rules and
interference by any companyrt with the actual companyduct of
arbitration is to a large extent avoided. the difference between an ad hoc arbitration and an
institutional
arbitration is number a difference between one system of law
and anumberher for whichever is the proper law which governs
either proceeding it is merely a difference in the method
of appointment and companyduct of arbitration. either method is
applicable to an international arbitration but neither is
determinative of the character of the resultant award
namely whether or number it is a foreign award as defined
under the foreign awards act 1961.
where the icc rules apply there is generally little
need to invoke the procedural machinery of any legal system
in the actual companyduct of arbitration. these rules provide
for the submission of request for arbitration the
appointment of arbitrators challenge against the
appointment pleadings procedure selection of the place of
arbitration terms of reference time limit for award companyt
finality and enforceability and similar matters of
procedure  article 11 of the icc rules . the parties are
free under the icc rules to determine the law which the
arbitrator shall apply to the merits of the dispute. in the
absence of any stipulation by the parties as to the
applicable law the arbitrators may apply the law designated
as the proper law by the rules of companyflict which they deem
to be appropriate  article 13 of the icc rules . these and
other provisions companytained in the icc rules make them a
self-contained and self-regulating system but subject to
the overriding powers of the appropriate national companyrts. a foreign award as defined under the foreign awards
act 1961 means an award made or on after 11.10.1960 on
differences arising between persons out of legal
relationships whether companytractual or number which are
considered to be companymercial under the law in force in india. to qualify as a foreign award under the act the award
should have been made in pursuance of an agreement in
writing for arbitration to be governed by the new york
convention on the recognition and enforcement of foreign
arbitral awards 1958 and number to be governed by the law of
india. furthermore such an award should have been made
outside india as having made reciprocal provisions for
enforcement of the companyvention. these are the companyditions
which must be satisfied to qualify an award as a foreign
award  s.2 read with s.9 . ------------------------------------------------------------
see icc rules of arbitration 1988 see also craig park
and paulsson international chamber of companymerce
arbitration 2nd ed.  1990 . an award is foreign number merely because it is made in
the territory of a foreign state but because it is made in
such a territory on an arbitration agreement number governed by
the law of india. an award made on an arbitration agreement
governed by the law of india though rendered outside india
is attracted by the saving clause in s.9 of the foreign
awards act and is therefore number treated in india as a
foreign award. a foreign award is  subject to section 7  recognised
and enforceable in india as if it were an award made on a
matter referred to arbitration in india  s.4 . such an
award will be ordered to be filed by a companypetent companyrt in
india which will pronumbernce judgment according to the award
 s.6 . section 7 of foreign awards act in companysonance with
art. v of the new york companyvention which is scheduled to the
act specifies the companyditions under which recognition and
enforcement of a foreign award will be refused at the
request of a party against whom it is invoked. a foreign award will number be enforced in india if it is
proved by the party against whom it is sought to be enforced
that the parties to the agreement were under the law
applicable to them under some incapacity or the agreement
was number valid under the law to which the parties have
subjected it or in the absence of any indication thereon
under the law of the place of arbitration or there was no
due companypliance with the rules of fair hearing or the award
exceeded the scope of the submission to arbitration or the
composition of the arbitral authority or its procedure was
number in accordance with the agreement of the parties or
failing such agreement was number in accordance with the law
of the place of arbitration or the award has number yet
become binding on the parties or has been set aside or
suspended by a companypetent authority of the companyntry in which
of under the law of which that award was made. the award
will number be enforced by a companyrt in india if it is satisfied
that the subject matter of the award is number capable of
settlement by arbitration under indian law or the
enforcement of the award is companytrary to the public policy. the foreign awards act companytains a specific provision to
exclude its operation to what may be regarded as domestic
award in the sense of the award having been made on an
arbitration agreement governed by the law of india although
the dispute was with a foreigner and the arbitration was
held and the award was made in a foreign state. section 9 of this act says -
numberhing in this act shall
 a
 b  apply to any award made on an arbitration
agreement governed by the law of india. such an award necessarily falls under the arbitration
act 1940 and is amenable to the jurisdiction of the indian
courts and companytrolled by the indian system of law just as in
the case of any other domestic award except that the
proceedings held abroad and leading to the award were in
certain respects amenable to be companytrolled by the public
policy and the mandatory requirements of the law of the
place of arbitration and the companypetent companyrts of that place. it is important to recall that in the instant case the
parties have expressly stated that the laws applicable to
the companytract would be the laws in force in india and that
the companyrts of delhi would have exclusive jurisdiction in
all matters arising under this companytract. they have further
stated that the companytract shall in all respects be companystrued
and governed according to indian laws. these words are
wide enumbergh to engulf every question arising under the
contract including the disputes between the parties and the
mode of settlement. it was in delhi that the agreement was
executed. the form of the agreement is closely related to
the system of law in india. various indian enactments are
specifically mentioned in the agreement as applicable to it
in many respects. the companytract is to be performed in india
with the aid of indian workmen whose companyditions of service
are regulated by indian laws. one of the parties to the
contract is a public sector undertaking. the companytract has
in every respect the closest and most real companynection with
the indian system of law and it is by that law that the
parties have expressly evinced their intention to be bound
in all respects. the arbitration agreement is companytained in
one of the clauses of the companytract and number in a separate
agreement. in the absence of any indication to the
contrary the governing law of the companytract  i.e. in the
words of dicey the proper law of the companytract  being indian
law it is that system of law which must necessarily govern
matters companycerning arbitration although in certain respects
the law of the place of arbitration may have its relevance
in regards to procedural matters. it is true that an arbitration agreement may be
regarded as a companylateral or ancillary companytract in the sense
that it survives to determine the claims of the parties and
the mode of settlement of their disputes even after the
breach or repudiation of the main companytract. but it is number
an independent companytract and it has numbermeaningful existence
except in relation to the rights and liabilities of the
parties under the main companytract. it is a procedural
machinery which is activated when disputes arise between
parties regarding their rights and liabilities. the law
governing such rights and liabilities is the proper law of
the companytract and unless otherwise provided such law
governs the whole companytract including the arbitration
agreement and particularly so when the latter is companytained
number in a separate agreement but as in the present case in
one of the clauses of the main companytract. significantly london was chosen as the place of
arbitration by reason of article 12 of the icc rules which
reads
the place of arbitration shall be fixed by the
international companyrt of arbitration unless agreed
upon by the parties. the parties had never expressed their intention to
choose london as the arbitral forum but in the absence of
any agreement on the question london was chosen by the icc
court as the place of arbitration. london has no
significant companynection with the companytract or the parties
except that it is a neutral place and the chairman of the
arbitral tribunal is a resident there the other two members
being nationals of the united state and india respectively. the decisions relied on by companynsel for the singer do
number support his companytention that the mere fact of london
being the place of arbitration excluded the operation of the
arbitration act 1940 and the jurisdiction of the companyrts in
india. in james miller partners limited v. whitworth street
estates  manchester  limited  1970  ac 583 the parties had number
expressly stated which law was to govern their companytract. on
an analysis of the various factors the house of lords held
that in the absence of any choice of the law governing
arbitration proceedings those proceedings were to be
considered to be governed by the law of the place in which
the arbitration was held namely scotland because it was
that system of law which was most closely companynected with the
proceedings. various links with scotland which was the
place of performance of the companytract unmistakably showed
that the arbitral proceedings were to be governed by the law
of scotland
although the majority of the learned law lords  lords reid
wilberforce dissenting on the point  held that taking into
account certain other factors the companytract was governed by
english law. that case is numberauthority for the proposition
that even where the proper law of the companytract is expressly
stated by the parties and in the absence of any companytrary
indication a different law governed arbitration. the
observations companytained in that judgment do number support the
contention urged on behalf of the singer that merely because
london was designated to be the place of arbitration the
law which governed arbitration was different from the law
expressly chosen by the parties as the proper law of the
contract. it is true that the procedural law of the place of
arbitration and the companyrts of that place cannumber be
altogether excluded particularly in respect of matters
affecting public policy and other mandatory requirements of
the legal system of that place. but in a proceeding such as
the present which is intended to be companytrolled by a set of
contractual rules which are self-sufficient and designed to
cover every step of the proceeding the need to have
recourse to the municipal system of law and the companyrts of
the place of arbitration is reduced to the minimum and the
courts of that place are unlikely to interfere with the
arbitral proceedings except in cases which shock the
judicial companyscience. see the observations of kerr lj in
bank mellat v. helliniki techniki sa  1983  3 all e.r. 428.
courts would give effect to the choice of a procedural
law other than the proper law of the companytract only where the
parties had agreed that matters of procedure should be
governed by a different system of law. if the parties had
agreed that the proper law of the companytract should be the law
in force in india but had also provided for arbitration in
a foreign companyntry the laws of india would undoubtedly
govern the validity interpretation and effect of all
clauses including the arbitration clause in the companytract as
well as the scope of the arbitrators jurisdiction. it is
indian law which governs the companytract including the
arbitration clause although in certain respect regarding
the companyduct of the arbitration proceedings the foreign
procedural law and the companypetent companyrts of that companyntry may
have a certain measure of companytrol. see the principle stated
by lord denning m.r. in international tank and pipe sak v.
kuwait aviation fueling company ksc  1975  1 all e.r. 242.
the arbitration clause must be companysidered together with
the rest of
the companytract and the relevant surrounding circumstances. in
the present case as seen above the choice of the place of
arbitration was as far as the parties are companycerned merely
accidental in so far as they had number expressed any
intention in regard to it and the choice was made by the icc
court for reasons totally unconnected with either party to
the companytract. on the other hand apart from the expressly
stated intention of the parties the companytract itself
including the arbitration agreement companytained in one of its
clauses is redolent of india and matters indian. the
disputes between the parties under the companytract have no
connection with anything english and they have the closest
connection with indian laws rules and regulations. in the
circumstances the mere fact that the venue chosen by the
icc companyrt for the companyduct of arbitration is london does number
support the case of the singer on the point. any attempt to
exclude the jurisdiction of the companypetent companyrts and the
laws in force in india is totally inconsistent with the
agreement between the parties. in sum it may be stated that the law expressly chosen
by the parties in respect of all matters arising under their
contract which must necessarily include the agreement
contained in the arbitration clause being indian law and
the exclusive jurisdiction of the companyrts in delhi having
been expressly recognised by the parties to the companytract in
all matters arising under it and the companytract being most
intimately associated with india the proper law of
arbitration and the companypetent companyrts are both exclusively
indian while matters of procedure companynected with the
conduct of arbitration are left to be regulated by the
contractually chosen rules of the icc to the extent that
such rules are number in companyflict with the public policy and
the mandatory requirements of the proper law and of the law
of the place of arbitration. the foreign awards act 1961
has numberapplication to the award in question which has been
made on an arbitration agreement governed by the law of
india. the tribunal has rightly held that the substantive law
of the companytract is indian law. the tribunal has further
held the laws of england govern procedural matters in the
arbitration. all substantive rights arising under the agreement
including that which is companytained in the arbitration clause
are in our view governed by the laws of india. in respect
of the actual companyduct of arbitration the procedural law of
england may be applicable to the extent that the icc
rules are insufficient or repugnant to the public policy or
other mandatory provisions of the laws in force in england. nevertheless the jurisdiction exercisable by the english
courts and the applicability of the laws of that companyntry in
procedural matters must be viewed as companycurrent and
consistent with the jurisdiction of the companypetent indian
courts and the operation of indian laws in all matters
concerning arbitration in so far as the main companytract as
well as that which is companytained in the arbitration clause
are governed by the laws of india. the delhi high companyrt was wrong in treating the award in
question as a foreign award. the foreign awards act has
numberapplication to the award by reason of the specific
exclusion companytained in section 9 of that act.