AMWAY INDIA ENTERPRISES PVT. LTD.versusRAVINDRANATH RAO SINDHIA & ANR.

50                       [2021]
              SUPREME COURT     3 S.C.R. 50
                             REPORTS                      [2021] 3 S.C.R.


A               AMWAY INDIA ENTERPRISES PVT. LTD.
                                       v.
                RAVINDRANATH RAO SINDHIA & ANR.
                        (Civil Appeal No. 810 of 2021)
B                             MARCH 04, 2021
                [R. F. NARIMAN AND B. R. GAVAI, JJ.]
            Arbitration and Conciliation Act, 1996 – s.11(6) – Appointment
     of a sole arbitrator – The respondents were appointed as the
     distributors for the appellant – Contract for distributorship was
C
     executed between the parties – Dispute arose between the parties –
     Respondents filed petition u/s. 11(6) of the 1996 Act before the High
     Court - The High Court appointed a sole arbitrator – Before the
     Supreme Court, it was contended that respondents are husband and
     wife who are both nationals of and habitually resident in United
D    States of America – It was further contended that once it is found
     that a party to an agreement is an individual who is a national of,
     or habitually resident in, any country other than India, then the
     case is governed by s.2(1)(f)(i) and the High Court has no
     jurisdiction – Held: The respondents had become distributors of
     the appellant in India as a sole proprietorship concern under the
E
     relevant forms issued by the appellant – An analysis of s.2(1)(f)
     would show that whatever be the transaction between the parties, if
     it happens to be entered into between persons, at least one of whom
     is either a foreign national, or habitually resident in, any country
     other than India; or by the Government of a foreign country, the
F    arbitration becomes an international commercial arbitration
     notwithstanding the fact that the individual, body corporate, or
     government of a foreign country referred to in s.2(1)(f) carry on
     business in India through a business office in India – Therefore,
     the High Court had no jurisdiction to appoint an arbitrator – Now,
     the respondents would have to follow the drill of s.11(6) r/w. s.11(9)
G
     of the Act.
           Allowing the appeal, the Court
           HELD: 1. A reading of the application form as filled in,
     together with the Code of Ethics, would show that a distributorship
H    may be taken up either in individual capacity, a sole proprietorship
                                      50
AMWAY INDIA ENTERPRISES PVT. LTD. v. RAVINDRANATH                      51
              RAO SINDHIA & ANR.

concern, partnership firm, or company. When it comes to a              A
husband and wife’s distributorship, they are entitled not to two,
but to a single distributorship, it being made clear under clause
3.17 of the Code of Ethics that they are to operate only as a single
entity. The form that was filled in made it clear that the
respondents applied to become a distributor as a sole
                                                                       B
proprietorship, it being made clear that the husband was the sole
proprietor/ “primary applicant”, the wife being a “co-applicant”.
[Para 11][62-D-E]
      2. The respondents have themselves applied to become
distributors of Amway products in India as a sole proprietorship
concern under the relevant forms issued by the appellant, read         C
with the Code of Ethics. [Para 15][65-E-F]
      3. The argument that there is no international flavour to
the transaction between the parties has no legs to stand on.
Indeed, an analysis of Section 2(1)(f) would show that whatever
be the transaction between the parties, if it happens to be entered    D
into between persons, at least one of whom is either a foreign
national, or habitually resident in, any country other than India;
or by a body corporate which is incorporated in any country other
than India; or by the Government of a foreign country, the
arbitration becomes an international commercial arbitration            E
notwithstanding the fact that the individual, body corporate, or
government of a foreign country referred to in Section 2(1)(f)
carry on business in India through a business office in India. This
being the case, it is clear that the Delhi High Court had no
jurisdiction to appoint an arbitrator in the facts of this case.
[Para 16][66-F-H]                                                      F

      Ashok Transport Agency v. Awadhesh Kumar, (1998) 5
      SCC 567 – relied on.
      Larsen & Toubro Ltd. – SCOMI Engineering Bhd v.
      MMRDA, (2019) 2 SCC 271 : [2018] 14 SCR 22 –                     G
      distinguished.
      TDM Infrastructure (P) Ltd. v. UE Development India
      (P) Ltd., (2008) 14 SCC 271 : [2008] 8 SCR 775 –
      referred to.
                                                                       H
52              SUPREME COURT REPORTS                         [2021] 3 S.C.R.


A                             Case Law Reference
     [2008] 8 SCR 775                   referred to              para 3
     [2018] 14 SCR 22                   distinguished            paras 3, 13
     (1998) 5 SCC 567                   relied on                para 15
B            CIVIL APPELLATE JURISDICTION : Civil Appeal No. 810 of
     2021.
           From the Judgment and Order dated 03.12.2020 of the High Court
     of Delhi at New Delhi in ARB.P. 448 of 2020.
           Parag Tripathi, Sr. Adv., Ms. Priya Kumar, Shailabh Tiwari, C. D.
C
     Mulherkar, Ms. Mishika Bajpai, Chanakya Dwivedi, Ms. Mohna, Advs.
     for the Appellant.
            Ms. Manmeet Arora, Ms. Samapika Biswal, Rajat Mittal, Advs.
     for the Respondents.
D            The Judgment of the Court was delivered by
             R. F. NARIMAN, J.
             1. Leave granted.
           2. This appeal arises out of a petition filed under Section 11(6) of
E    the Arbitration and Conciliation Act, 1996 [“Arbitration Act”] by the
     respondents in the Delhi High Court for appointment of a sole arbitrator.
     The brief facts of the case are noted in the impugned order dated
     03.12.2020 thus:
             “2. The facts of the case, as noted from the petition are, in the
F            year 1998, the petitioners were appointed as Distributor for
             respondent for undertaking sale, distribution and marketing of its
             products in India and were registered as Amway Business Owner
             (ABO)/ Amway Direct Seller (ADS), in the name of the sole
             proprietorship ‘Sindhia Enterprises’ with ABO No. 141935.
             According to the petitioners, they have set up a vast Line of
G            Sponsorship in the respondent Company, and nurtured and
             supported close to 1500 ADSs, who have now set up their own
             networks, and are in the category of Silver/ Gold/ Platinum/
             Sapphire/ Emerald. From 2015, the renewal process for existing
             ADSs became automatic, each year, without payment of any fee.
             The respondent issued a Code of Ethics and Rules of Conduct in
H
AMWAY INDIA ENTERPRISES PVT. LTD. v. RAVINDRANATH                          53
      RAO SINDHIA & ANR. [R. F. NARIMAN, J. ]

    2015 to govern the terms of the relationship between the               A
    respondent and the ADSs. The respondent also started promoting
    registration of Preferred Customers (PCs) directly through the
    respondent’s website, as customers of the concerned ADS.
    3. On the requirement of the respondent, necessary documents
    were executed by the petitioners including contract for                B
    distributorship, setting out the terms and conditions of the
    distributorship, and to inter alia confirm the Code of Ethics and
    Rules of Conduct, Legal Entity Authorisation Form (LEAF) etc.
    Since then, the contract of the petitioners has been renewed from
    time to time. The petitioners recorded client volume/sales from
    their ABO account. The petitioners have also received income on        C
    the sales generated by them for the months of January to March,
    2019 by the respondent. However, in April, 2019, upon logging
    into the respondent’s website, the petitioners noted that they could
    not access their ABO account, or view their LoS. They could
    only access their account as a PC. Accordingly, between April,         D
    2019 and December, 2019, the petitioners raised a query with
    their Major Accounts Manager, who informed them that their
    account had been reclassified as a ‘PC’ account, since they have
    not complied with the criteria of are corded re-sale related
    purchase in the last 12 months. The petitioners learnt that this
    was a criteria in the fresh set of Terms and Conditions issued by      E
    the respondent in December, 2016, which was mandatorily required
    to be accepted by all ADSs, by clicking on the ‘By clicking here
    you agree to abide by the new Terms & Conditions’ button,
    immediately upon logging in on the respondent’s website, to
    proceed further to their account. According to the petitioner, this    F
    requirement was never communicated to the petitioners in the
    past, nor was any notice of termination issued by the respondent.
    This criterion is also in violation of the Direct Selling Guidelines
    dated September 09, 2016.
    4. The petitioners made repeated requests to restore their ABO         G
    account. The petitioners attempted to resolve the aforesaid disputes
    and differences amicably by mutual discussions with the
    representatives of the respondent from April till December, 2019.
    However, the respondent has failed to consider the petitioners’
    request for restoration of their ADS account. On June 26, 2020,
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54      SUPREME COURT REPORTS                          [2021] 3 S.C.R.


A    the petitioners referred the matter for redressal and review to
     Mr. Jon Sherk, Vice President and Deputy General Counsel of
     Amway Global in January, 2020. The petitioners were
     communicated about the rejection of their request for restoration
     of their ADS account on June 26, 2020. According to the petitioners,
     the respondent has now, with effect from July, 2020 notified a
B
     new Code of Ethics & Rules of Conduct wherein the respondent
     has now been given benefit of a 2 year period for establishing
     sales, in accordance with the DSG, and carved a provision for
     restoration of the ADS account. Accordingly, the petitioners caused
     issuance of notice invoking arbitration dated July 28, 2020 to the
C    respondent invoking the arbitration clause, Clause 12 of the Terms
     and Conditions enclosed with the Amway Direct Seller Application
     Form (Form-SA-88-ID), which is reproduced as under:
        “12. Dispute Settlement. The parties shall endeavour to
        settle any dispute or difference arising out of or in
D       connection with the Direct Seller Contract through mutual
        discussions within 30 days of such dispute arising. The
        Direct Seller agrees that in the event it is not satisfied by
        any decision of Amway, or in the event that any issue raised
        by the Direct Seller has remained unresolved for a period
        of more than two months, and / or during the subsistence
E       of this agreement or upon or after its termination, any issue
        or dispute that the Direct Seller may have regarding the
        interpretation or operation of the clauses of this
        arrangement or any issues arising there from shall be
        referred to Grievance Redressal Committee set up by the
F       company. Any dispute, difference or claim remaining
        unresolved post reference to the Grievance Redressal
        committee discussions shall be submitted to binding
        arbitration under the provisions of the Indian Arbitration
        and Conciliation Act, 1996. The venue of such arbitration
        shall be at New Delhi and the award of the Arbitrator shall
G       be final and binding on all Parties. Subject to the above,
        courts at New Delhi shall alone have jurisdiction in relation
        to the Direct Seller Contract and matters connected here
        to.”
     5. The respondent replied vide letter dated August 20, 2020 wherein
H    the respondent communicated that the name of the Arbitrator as
AMWAY INDIA ENTERPRISES PVT. LTD. v. RAVINDRANATH                              55
      RAO SINDHIA & ANR. [R. F. NARIMAN, J. ]

      recommended by the petitioners was not acceptable by it and              A
      sought time to respond with the name of another Arbitrator.
      However, the respondent has till the filing of the petition failed to
      issue any follow up reply further to its reply dated August 20,
      2020 even after expiry of 30 days’ time.”
       3. The main plea taken by the learned counsel appearing on behalf       B
of the appellant, Amway India Enterprises Pvt. Ltd., in the Delhi High
Court was that a petition before the High Court is not maintainable as
the dispute relates to an international commercial arbitration, being
covered by Section 2(1)(f)(i) of the Arbitration Act inasmuch as the
respondents are husband and wife who are both nationals of and habitually
resident in the United States of America. This plea was turned down by         C
the impugned judgment stating:
      “23. Even the judgment of the Supreme Court in the case of TDM
      Infrastructure (P) Ltd. v. UE Development India (P) Ltd.,
      (2008) 14 SCC 271 is not applicable in the facts of this case,
      which have been noted above. Rather, the learned counsel for the         D
      petitioners is justified in relying upon the judgment in the case of
      Larsen & Toubro Ltd. – SCOMI Engineering Bhd v. MMRDA,
      (2019) 2 SCC 271, wherein the Supreme Court was concerned
      with a consortium consisting of an Indian company and a foreign
      company and the Court took note of the fact that the office of an        E
      unincorporated entity, i.e. the consortium, being in Mumbai, as
      one of the factors for arriving at the conclusion that the arbitration
      proceedings would not be international commercial arbitration.
      No doubt a sole proprietorship has no separate legal identity but in
      the case in hand, two individuals, husband and wife, by joining
      together as a proprietorship have taken a single Distributorship.        F
      The Code of Ethics and Rules of Conduct issued by the respondent
      under Clause 3.17.1 contemplates and recognises that a husband
      and wife shall operate their Distributorship as single entity. The
      proprietorship is an association or body of individuals with central
      management in India.                                                     G
      24. The plea of Ms. Kumar that the petitioners being individuals
      and habitual residents of USA, the case shall be covered by Section
      2 (1) (f) (i) of the Act of 1996 is not appealing in view of my
      conclusion in the above paragraph.”
                                                                               H
56             SUPREME COURT REPORTS                            [2021] 3 S.C.R.


A           4. It was held that since the central management and control of
     this association or body of individuals is exercised only in India under
     Section 2(1)(f)(iii), the dispute is not an international commercial
     arbitration, as a result of which the High Court has jurisdiction under
     Section 11(6) to appoint an arbitrator. Justice Brijesh Sethi, a retired
     Judge of the Delhi High Court was, therefore, appointed as sole arbitrator.
B
            5. Shri Parag Tripathi, learned Senior Advocate appearing on behalf
     of the appellant, has argued that his predecessor’s plea in the High Court
     was incorrectly turned down in that this case is really governed by Section
     2(1)(f)(i) and not by Section 2(1)(f)(iii). Once it is found that a party to
     an arbitration agreement is an individual who is a national of, or habitually
C    resident in, any country other than India, it is not necessary to go to any
     other sub-clauses of Section 2(1)(f), and as it is clear that the respondents,
     who applied to the High Court under Section 11(6), are individuals who
     are nationals of and habitually resident in the USA, would fall under
     Section 2(1)(f)(i), the High Court would have no jurisdiction, such petition
D    having to be filed only under Section 11(6) read with Section 11(9) to the
     Supreme Court.
            6. Ms. Manmeet Arora, learned counsel appearing on behalf of
     the respondents, has supported the judgment under appeal, and has
     referred to various documents which, according to her, make it clear
E    that the respondents, husband and wife, would have to be pigeonholed
     under “association or body of individuals” under Section 2(1)(f)(iii) and
     not under Section 2(1)(f)(i).
            7. The question lies in a very narrow compass. As rightly
     contended by Ms. Arora, the documentary evidence in this case would
F    be decisive of whether the requirements of sub-clause (i) to Section
     2(1)(f) have been met, in which case it is unnecessary to go to sub-
     clause (iii), as under Section 2(1)(f), “at least one of the parties” must
     fall under sub-clauses (i) to (iv) of Section 2(1)(f).
            8. In a document entitled “Code of Ethics of Amway Direct
G    Sellers”, under “Rules of Conduct”, it is stipulated as follows:
            “2.1.17 Legal Entity Authorisation Form” (LEAF) means the
            document that must, in addition to the Direct Seller Contract, be
            completed by a Direct Seller required to or electing to operate an
            Amway Business in the name of an applicable legal entity.”
H           xxx xxx xxx
AMWAY INDIA ENTERPRISES PVT. LTD. v. RAVINDRANATH                          57
      RAO SINDHIA & ANR. [R. F. NARIMAN, J. ]

    “3.1 Application and Starter Guide: In order to be considered          A
    for an Amway distributorship, an individual(s) must, in his/her/
    their own name(s) or on behalf of a legal entity, submit a signed,
    completed Direct Seller Application(in Form SA-88-ID), together
    with all required supporting documentation.
    A distributorship may be taken up in individual capacity or as a       B
    sole proprietorship concern, partnership firm or company. Amway
    reserves the right to require that Applicants having Non-Resident
    Indian (NRI), Person of Indian Origin (PIO) or Overseas Citizen
    of India (OCI) status operate distributorships via certain types of
    legal entities.”
                                                                           C
    xxx xxx xxx
    “3.14 Legal Entity Distributorships: A Direct Seller may own
    and operate his or her Distributorship as a sole proprietary concern
    or registered partnership firm or limited liability company (LLC),
    provided it complies with certain requirements and conditions. …”      D
    xxx xxx xxx
    “3.14.5 The sole business of the legal entity must be the operation
    of an Amway Distributorship. No other business may be conducted
    by such an entity.”
                                                                           E
    xxx xxx xxx
    “3.17 Husband and Wife Distributorships: If both husband
    and wife wish to become Direct Sellers, they must be sponsored
    together for a single Distributorship. Husbands and wives may
    not be sponsored in different Lines of Sponsorship. Husbands
                                                                           F
    and wives may not sponsor each other. If one spouseis already a
    Direct Seller, the other spouse,upon electing to become a Direct
    Seller,must join the same Distributorship as his orher spouse.
    3.17.1 A husband and wife shall operate their Distributorship as
    a single entity. Therefore, each is held accountable for the actions
    of the other so far as the Rules of Conduct are concerned              G
    regardless of whether a husband or wife is active in the
    distributorship or not.”
    xxx xxx xxx

                                                                           H
58      SUPREME COURT REPORTS                            [2021] 3 S.C.R.


A    “4.13 Franchises and Territories: No Direct Seller shall
     represent to anyone that there are exclusive franchises or territories
     available under the Amway Sales and Marketing Plan.
     No Direct Seller shall represent that he or she, or anyone else has
     the authority to grant, sell, assign, or transfer such franchises or
B    to assign or designate territories. No Direct Seller or Sponsor
     may state or imply that he or she has a given territory, nor that
     any other Direct Seller is operating outside his territory.
     Amway Direct Sellers have no territorial limits. They can operate
     anywhere withinIndia.”
C    xxx xxx xxx
     “4.16 Exporting Amway Products: Amway Direct Sellers must
     sell Amway products and/or sponsor prospective Amway Direct
     Sellers within India only.No Direct Seller may export, or knowingly
     sell to others who exports, Amway Products from India, or from
D    any other country inwhich Amway has established operations,into
     any country regardless of whether or not Amway is doing business
     in that country.
     For important legal reasons, including tradenames and trademark
     protections; local lawson product registration, packaging, labelling
E    ingredient content and formulation, product liability; customs and
     tax laws; and literaturecontent or language requirements.
     Amwaymust limit the resale of Amway Products by Direct Sellers
     to only other Direct Sellers orretail customers located within
     country in which the Direct Seller legitimately buys the Amway
F    Products and is authorised to do business. The term “products”
     includes, without limitation, all literature, sales aids, and any other
     items obtained by a Direct Seller from Amway or from his sponsor
     or Platinum.
     4.16.1 Exporting Rule: Personal Use
G    Globally, Amway’s Rules and Commercial Principles include
     prohibitions on exporting and importing Amway products from
     one market to another.Amway Direct Sellers may, however,
     takeAmway products across borders for personal use, with the
     following limitations:
H
AMWAY INDIA ENTERPRISES PVT. LTD. v. RAVINDRANATH                            59
      RAO SINDHIA & ANR. [R. F. NARIMAN, J. ]

      •      The Amway Direct Seller is visiting another country and         A
             personally places theproduct order in that country.
      •      The Amway Direct Seller physically picksup/receives the
             products in one country and personally carries the products
             to another country. There may be no couriers,shipping
             companies, or freight forwardes involved.                       B
      •      If the Amway Direct Seller has a Multiple Business in the
             country visited, the order cannot be placed as a customer
             order foran overseas customer.
      •      The products are for the Amway Direct Sellers personal
             use only.                                                       C

      •      The products may not be resold, distributed, or given away
             under any circumstances.
      •      The products ordered must not be available in the Amway
             Direct Seller’s homemarket.                                     D
      •      Durables (e.g. water treatment systems,air treatment
             systems) may not be carriedfrom one market to another
             under any circumstances.
      •      The Amway Direct Seller order must not be for more than
             a reasonable amount of product: under 300 USD annually.         E
      •      The personal use exclusion may not beused as a business-
             building strategy.”
       9. In what is referred to as the “Legal Entity Authorisation Form”,
what was filled up was “Legal Entity Authorisation Form: Sole
Proprietor”. The said form which was filled in by the respondents reads      F
as follows:
          “LEGAL ENTITY AUTHORISATION FORM:
                    SOLE PROPRIETORSHIP
      Where an Amway Independent Business (“Amway Business”)                 G
      will be operated in India via a SoleProprietorship (the “Entity”)
      held by a Resident Indian, Non-Resident Indian (“NRI”), Person
      ofIndian Origin (“PIO”) or Overseas Citizen of India (“OCI”),
      the Sole Proprietorship must, throughthe sole proprietor (the “Sole
      Proprietor”), complete this Legal Entity Authorisation Form for
                                                                             H
60      SUPREME COURT REPORTS                         [2021] 3 S.C.R.


A    Amway Business Owners (the “Entity Agreement”) and submit
     it to Amway India EnterprisesPvt. Ltd. (“AIE”). The Sole
     Proprietor must agree to remain and ensure that the Entity remains
     infull compliance with the Rules of Conduct for Amway Business
     Owners. This Entity Agreement shall become effective if and
     when AlE signs the completed form. This Entity Agreement in
B    corporated into and forms an integral part of the Amway
     Distributor Agreement, which includesany and all documents
     incorporated therein (the “ABO Contract”). In the event of any
     conflict,the terms and conditions of this Entity Agreement shall
     prevail.
C    xxx xxx xxx




D




E




F




G




H
AMWAY INDIA ENTERPRISES PVT. LTD. v. RAVINDRANATH                           61
      RAO SINDHIA & ANR. [R. F. NARIMAN, J. ]

      “5. The Sole Proprietor agrees that :                                 A

      A. The sole purpose of the Entity is to own and operate the Amway
      Business identified above, unless AIE expressly allows the Entity
      to own and operate more than one Amway business. Neither the
      Entity nor the Sole Proprietor will own or operate any other          B
      business or business interest.

      xxx xxx xxx

      C. Any NRI, PIO or OCl investment in the Entity, if and as            C
      applicable, has been made on a non-repatriatable basis in
      accordance with applicable foreign exchange laws of India.

      xxx xxx xxx

      G. The Entity shall, in accordance with the laws of India and for     D
      all matters connected to the Amway Business, exclusively use a
      duly authorised Indian rupee bank account which, if applicable,
      operates on a non-repatriatable basis.

      H. The Sole Proprietor shall be responsible for his or her, and the   E
      Entity’s, compliance with the Amway Rules of Conduct and the
      applicable laws with respect to the operation of the Amway
      Business by the Entity, including foreign exchange laws. Any
      violation of the aforesaid entitles AIE to terminate the ABO
      Contract and the Entity Agreement.                                    F

      xxx xxx xxx”

      10. Under “authorised signature”, the entity’s name was filled in
as Sindhia Enterprises and the proprietor was filled in as Ravindranath     G
Rao Sindhia (respondent no. 1 herein). This was done pursuant to an
application again filed in a printed form, given by the appellant to the
respondents, which reads as follows:

                                                                            H
62             SUPREME COURT REPORTS                            [2021] 3 S.C.R.


A




B




C



            11. A reading of the application form as filled in, together with the
     Code of Ethics, would show that a distributorship may be taken up either
D    in individual capacity, a sole proprietorship concern, partnership firm, or
     company. When it comes to a husband and wife’s distributorship, they
     are entitled not to two, but to a single distributorship, it being made clear
     under clause 3.17 of the Code of Ethics that they are to operate only as
     a single entity. The form that was filled in made it clear that the
     respondents applied to become a distributor as a sole proprietorship, it
E
     being made clear that the husband, Ravindranath Rao Sindhia, was the
     sole proprietor / “primary applicant”, the wife, Indumathi Sindhia, being
     a “co-applicant”.
            12. However, Ms. Arora argued, from a reading of the Code of
     Ethics and correspondence between the parties, that there was no
F
     international flavour whatsoever to the transaction as the business that
     is to be conducted can be conducted only in India, an exception being
     made only for personal use under clause 4.16.1. Most importantly, the
     address of the so-called sole proprietorship in all the correspondence
     between the parties was the address of the Bangalore office of the sole
G    proprietorship.
           13. Ms. Arora also strongly relied upon the judgment of this Court
     in Larsen & Toubro Ltd.–SCOMI Engineering Bhd v. MMRDA,
     (2019) 2 SCC 271. This Court was concerned with an agreement
     between the MMRDA, an Indian company, and a consortium of Larsen
H    and Toubro, an Indian company together with Scomi Engineering Bhd, a
AMWAY INDIA ENTERPRISES PVT. LTD. v. RAVINDRANATH                              63
      RAO SINDHIA & ANR. [R. F. NARIMAN, J. ]

Malaysian company. The argument that was pressed in the appeal before          A
this Court was that since a Malaysian company was involved, it would
be a body corporate which is incorporated in a country other than India,
which would attract the provisions of Section 2(1)(f)(ii) of the Arbitration
Act. This Court repelled the aforesaid argument, stating:
      “9. Under the general conditions of contract, the “contractor”, in       B
      Clause 1.1.2.3 is defined as meaning an individual, firm, company,
      corporation, joint venture or Consortium, whether incorporated
      or not. “Bidder” is also defined under Clause 1.1.2.10 as meaning
      an individual, firm, company, corporation, joint venture or
      Consortium which could submit a bid. What is important to notice
      is that the contract was signed by the employer viz. MMRDA and           C
      by the contractor under the head sub-clauses (A) and (B) in which
      L&T India signed as ‘A’ and Scomi Engineering Bhd has signed
      as ‘B’. When we come to the consortium agreement that is entered
      into between the Indian company and the Malaysian company as
      aforestated, we find in the definition clause that “Consortium”          D
      shall mean L&T and Scomi Engineering Bhd, acting in
      collaboration, for the purpose of this agreement and shall be called
      “the L&T-SEB” Consortium “unincorporated”. The contract is
      defined in Sub-Clause 6 as meaning, “the contract to be entered
      by the Consortium with the employer for the execution of the
      Project”. Under Sub-Clause 7, “the lead Member of the                    E
      Consortium” or “Consortium Leader” shall mean L&T, that is,
      the Indian Company. Under Sub-Clause 8, the “Supervisory Board”
      (hereinafter referred to as “the SB”) shall mean a Board
      constituted under Clause 11 of the GCC. When we come to Clause
      11.2, it is clear that the Members of this Supervisory Board will        F
      consist of four members, two appointed by each Member. One of
      the Members nominated by the Consortium leader and agreed to
      by all members shall then act as the Chairman of the Supervisory
      Board, which is, by Clause 11.5, to decide on various matters
      relating to the execution of the contract. Clause 21.1(g) provides
      that the Consortium leader shall lead all arbitration proceedings.       G

      xxx xxx xxx
      11. It is important, at this juncture, to refer to an order made by
      the High Court of Bombay dated 20-10-2016 [L&T
      Ltd. v. MMRDA, 2016 SCC OnLine Bom 13348] which, as has                  H
64      SUPREME COURT REPORTS                            [2021] 3 S.C.R.


A    been stated earlier, arises between the self-same parties, under
     the same contract. An interim award made by the arbitrators qua
     different claims arising under the same contract had made it clear
     that the claim could be filed only in the name of the Consortium
     and not separately, as was contended by Shri Jain’s client. The
     preliminary issue framed on this count was “whether the claimants
B
     are entitled to file this claim as Claimant 1 and Claimant 2 or only
     as the Consortium of L&T and Scomi Engineering Bhd?” The
     High Court of Bombay agreed with the interim award of the
     arbitrators, and held as follows: (L&T Ltd. case [L&T
     Ltd. v. MMRDA, 2016 SCC OnLine Bom 13348] , SCC OnLine
C    Bom para 10)
     “10. Considering the terms and conditions of the contract as well
     as the decision cited by Mr. Ankhad, in my opinion, in the facts
     and circumstances of the present case, it is not open for the
     petitioners to rely upon their independent identities while dealing
D    with the respondent and that they will have to deal with the
     respondent as a Consortium only. Therefore, there is no infirmity
     in the impugned order. For the same reason the present petition
     as filed would also not been maintainable. Hence, the same is
     dismissed.”
E    12. Shri Gopal Jain did not dispute the fact that this judgment was
     final inter-partes as no appeal has been preferred. Therefore, to
     stress the fact that it pertains only to “this claim” and would
     therefore, not apply to a different set of claims under the arbitration
     clause is not an argument that appeals to us.

F    13. It is clear, as has been held by the judgment [L&T Ltd v.
     MMRDA, 2016 SCC OnLine Bom 13348] of the High Court of
     Bombay, and which is binding inter-partes, that it is not open for
     the petitioner to rely upon their status as independent entities while
     dealing with the respondent and they will have to deal with the
     respondent as a Consortium only.
G
     14. This being the case, it is clear that the unincorporated
     “association” referred to in Section 2(1)(f)(iii) would be attracted
     on the facts of this case and not Section 2(1)(f)(ii) as the Malaysian
     body cannot be referred to as an independent entity following the

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AMWAY INDIA ENTERPRISES PVT. LTD. v. RAVINDRANATH                            65
      RAO SINDHIA & ANR. [R. F. NARIMAN, J. ]

      judgment [L&T Ltd. v. MMRDA, 2016 SCC OnLine Bom 13348]                A
      of the High Court of Bombay.
      xxx xxx xxx
      18. This being the case, coupled with the fact, as correctly argued
      by Shri Divan, that the Indian company is the lead partner, and
      that the Supervisory Board constituted under the consortium            B
      agreement makes it clear that the lead partner really has the
      determining voice in that it appoints the Chairman of the said Board
      (undoubtedly, with the consent of other members); and the fact
      that the Consortium’s office is in Wadala, Mumbai as also that the
      lead member shall lead the arbitration proceedings, would all point    C
      to the fact that the central management and control of this
      Consortium appears to be exercised in India and not in any foreign
      nation.”
       14. This case is distinguishable on facts, inasmuch as a final
judgment between the parties made it clear that it would not be open for     D
the consortium to rely upon their status as independent entities while
dealing with MMRDA. This being the case, the consortium was held to
be an association of persons falling under Section 2(1)(f)(iii), and that
since the lead member is to lead arbitral proceedings, the central
management and control of the consortium being exercised by Larsen
and Toubro in India, it was held that Section 2(1)(f)(iii) would not be      E
attracted on the facts of that case.
       15. By way of contrast, we have seen how the respondents have
themselves applied to become distributors of Amway products in India
as a sole proprietorship concern under the relevant forms issued by the
appellant, read with the Code of Ethics referred to hereinabove. In Ashok    F
Transport Agency v. Awadhesh Kumar, (1998) 5 SCC 567, this Court
has clearly held that a sole proprietary concern is equated with the
proprietor of the business as follows:
      “6. A partnership firm differs from a proprietary concern owned
      by an individual. A partnership is governed by the provisions of       G
      the Indian Partnership Act, 1932. Though a partnership is not a
      juristic person but Order XXX Rule 1 CPC enables the partners
      of a partnership firm to sue or to be sued in the name of the firm.
      A proprietary concern is only the business name in which the
      proprietor of the business carries on the business. A suit by or
                                                                             H
66            SUPREME COURT REPORTS                            [2021] 3 S.C.R.


A          against a proprietary concern is by or against the proprietor of the
           business. In the event of the death of the proprietor of a proprietary
           concern, it is the legal representatives of the proprietor who alone
           can sue or be sued in respect of the dealings of the proprietary
           business. The provisions of Rule 10 of Order XXX which make
           applicable the provisions of Order XXX to a proprietary concern,
B
           enable the proprietor of a proprietary business to be sued in the
           business names of his proprietary concern. The real party who is
           being sued is the proprietor of the said business. The said provision
           does not have the effect of converting the proprietary business
           into a partnership firm. The provisions of Rule 4 of Order XXX
C          have no application to such a suit as by virtue of Order XXX Rule
           10 the other provisions of Order XXX are applicable to a suit
           against the proprietor of proprietary business “insofar as the nature
           of such case permits”. This means that only those provisions of
           Order XXX can be made applicable to proprietary concern which
           can be so made applicable keeping in view the nature of the case.
D
           7. In the present case A.C. Basu, Proprietor of Ashok Transport
           Agency, had died before the date of the institution of the suit and
           on the date of the institution of the suit, the proprietary concern
           was not in existence. Only the legal representatives of A.C. Basu
           could be sued with regard to any cause of action arising against
E          A.C. Basu in connection with the proprietary business. We find it
           difficult to understand how the provisions of Rule 4 Order XXX
           CPC, could be extended to such a case.”
            16. In this view of the matter, the argument that there is no
     international flavour to the transaction between the parties has no legs
F    to stand on. Indeed, an analysis of Section 2(1)(f) would show that
     whatever be the transaction between the parties, if it happens to be
     entered into between persons, at least one of whom is either a foreign
     national, or habitually resident in, any country other than India; or by a
     body corporate which is incorporated in any country other than India; or
G    by the Government of a foreign country, the arbitration becomes an
     international commercial arbitration notwithstanding the fact that the
     individual, body corporate, or government of a foreign country referred
     to in Section 2(1)(f) carry on business in India through a business office
     in India. This being the case, it is clear that the Delhi High Court had no
     jurisdiction to appoint an arbitrator in the facts of this case.
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AMWAY INDIA ENTERPRISES PVT. LTD. v. RAVINDRANATH                            67
      RAO SINDHIA & ANR. [R. F. NARIMAN, J. ]

       17. Ms. Arora made an impassioned plea to this Court to use its       A
power under Article 142 of the Constitution to straightaway appoint an
arbitrator, now that the matter is before this Court. We are afraid we
cannot countenance such a suggestion as the respondents would have
to now follow the drill of Section 11(6) read with Section 11(9) of the
Arbitration Act.
                                                                             B
         18. The appeal is allowed, and the judgment under appeal is set
aside.

Ankit Gyan                                                 Appeal allowed.

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