Gemini Bay Transcription Pvt. Ltd. v. Integrated Sales Service Ltd. & Anr.

2021 (Case Brief)

Integrated Sales Service Ltd, and DMC Management Consultants Ltd had entered into a
Representation Agreement on 18 September 2000. It was agreed that ISS would receive a
commission for assisting DMC to sell its goods and services to prospective customers
identified by ISS. The Agreement contained an arbitration clause which provided that any
dispute between the parties would be referred to an arbitrator in Kansas City, Missouri, USA.
Disputes arose between the parties which led to ISS serving a notice of arbitration to Mr.
Arun Dev Upadhyay (the Chairman of DMC). Subsequently, a statement of claim was filed
naming Mr. Arun Dev Upadhyay, DMC Global (a company incorporated in Mauritius),
Gemini Bay Consulting Ltd and Gemini Bay Transcription Pvt. Ltd as Respondents.

ISS contended that DMC terminated contracts with two customers introduced by the former
and caused new contracts to be executed with the same customers by Gemini Bay to divert
funds from DMC and evade payment of commission to ISS.  During the same time, Mr.
Upadhyaya set up GBT to perform the assigned work for the customers, which the company
continues to do till date. The employees of DMC and DMC Global became that of GBT, and
worked in the same facilities, using the same equipment, and were managed by the same
team. As a result, it was alleged that Mr. Upadhyay used Gemini Bay and GBT as alter egos
of himself and ignored the corporate form of DMC and DMC Global to evade payment of the
commission. After an arbitral award was rendered in its favour to the tune of USD
6,948,100/-, ISS approached a Single Judge of the Bombay High Court to enforce the foreign
award. The Single Judge held that the award was enforceable only against DMC and not
against Mr. Upadhyaya, Gemini Bay and GBT as they were not signatories to the arbitration
agreement. On appeal, the Division Bench of the Bombay High Court reversed the decision
holding that none of the grounds concerning refusal of enforcement of awards as contained in
Section 48 of the Arbitration and Conciliation Act, 1996 were proven to be applicable by Mr.
Upadhyaya, Gemini Bay and GBT. Aggrieved by this judgment, Mr. Upadhyaya and GBT
approached the Supreme Court.
While dealing with the question as to whether a foreign award is enforceable against non-
signatories to the arbitration agreement, the Court made the following key observations–
Section 47 of the Act only lays down the procedural requirements for determining whether
the award in question is a foreign award or not. There is no burden of proof on the award
holder to prove that a foreign award is enforceable against a non-signatory.
A reading of Section 44 of the Act indicated six ingredients to an award being a foreign
award –
 the award must be on differences between persons arising out of legal relationships;
 the differences may be in contract or outside of contract i.e., including tort;
 the legal relationship is considered “commercial” under Indian law;
 the award must be made on or after 11 October 1960;
  The award must be a New York Convention award i.e., it should be a written
agreement to which the Convention applies; and the award must be made in a territory
which the Central Government by notification has declared to be a territory to which
the New York Convention applies.
The condition for refusing enforcement under Section 48(1)(a) of the Act was very specific
and spoke only of incapacity of the parties and invalidity of arbitration agreement under the
agreed law. An attempt to bring non-parties within the provision’s ambit would be to ‘try and
fit a square peg in a round hole’.
Enforcement of a foreign award could be refused pursuant to Section 48(1)(b) of the Act only
on grounds pertaining to notice of appointment of the arbitrator or of the arbitral proceedings,
or that a party had not been able to present its case before the tribunal. Absence of reasons in
an arbitral award did not come under the purview of Section 48(1)(b).
Section 48(1)(c) of the Act dealt with a dispute outside the scope of an arbitration agreement
between the parties and not as to whether a person who is outside the scope of the agreement
is bound by the award.
The ground of perversity did not fall within the purview of public policy after the amendment
to the Act in 2015 and hence could not be raised as a ground to refuse enforcement of a
foreign award under Section 48 of the Act.
Section 44 recognized that a tort claim could be decided by the arbitrator provided they were
disputes that arose in connection with the agreement.
It was only in exceptional circumstances that the ground involving some basic violation of
justice which shocked the conscience of the court would be entertained under Section 48(2).
Damages awarded by an arbitrator based on ‘guesstimates’ could not even remotely be said to
shock the conscience of the Court under Section 48(2). 
In addition to making these observations, the Court found that the appellants could not
establish any ground to refuse the enforcement of the award, and hence the appeals were
dismissed.