Question

The Supreme Court in ................................... held that irrespective of where the 'central management and control is exercised' by a company, companies incorporated in India, cannot choose foreign law as the governing law of their arbitration.

• A. TDM Infrastructure (P) Ltd. v. UE Development India (P) Ltd.
• B. Comed Chemicals Ltd. v. C.N. Ramchand
• C. Shreejee Traco (I) Pvt. Ltd. v. Paperline International Inc
• D. Bhatia International v. Bulk Trading

Hint:

A key principle in Indian arbitration law is that two Indian parties cannot have a foreign-seated arbitration. This is based on the idea that they cannot contract out of the substantive law of India. Remember the \textit{TDM Infrastructure} case for this principle.

Answer 1

The Correct Option is A

The distinguishing detail in the question is the phrase central management and control, which the Court says is irrelevant to nationality for this purpose. Let us find which case makes exactly that point.

1. TDM Infrastructure (P) Ltd. v. UE Development India (P) Ltd.: This case expressly holds that a company's nationality is fixed by its place of incorporation, and that the central management and control test, which is relevant for tax residency questions, has no bearing on determining nationality under the Arbitration Act. This is precisely the point in the question.
2. Comed Chemicals Ltd. v. C.N. Ramchand: Concerns arbitrator appointment procedure, not the nationality test.
3. Shreejee Traco (I) Pvt. Ltd. v. Paperline International Inc: Concerns applicability where a foreign venue is chosen, not the incorporation-versus-management test.
4. Bhatia International v. Bulk Trading: Concerns the territorial reach of Part I of the Act to foreign-seated arbitrations, a related but separate question from company nationality by incorporation.

Since the point about rejecting the central management and control test is made specifically in the first case, the correct answer is TDM Infrastructure (P) Ltd. v. UE Development India (P) Ltd.

Answer 2

Another way to confirm this is to consider the practical consequence of the ruling, namely that two Indian companies cannot escape the mandatory provisions of Indian arbitration law by dressing up their arbitration as governed by a foreign legal system.

1. TDM Infrastructure (P) Ltd. v. UE Development India (P) Ltd.: The consequence drawn here is that since both parties are Indian by incorporation, Part I of the Act applies compulsorily to their arbitration and cannot be displaced by choosing foreign law, which is exactly the outcome described in the question.
2. Comed Chemicals Ltd. v. C.N. Ramchand: The consequence there concerns the mechanics of appointing an arbitrator, unrelated to displacing governing law.
3. Shreejee Traco (I) Pvt. Ltd. v. Paperline International Inc: The consequence there concerns whether Indian courts retain jurisdiction when a foreign venue is agreed, a related but different consequence from the incorporation-based nationality rule.
4. Bhatia International v. Bulk Trading: The consequence there is broader, about Part I applying to foreign-seated arbitrations generally, not specifically about two Indian companies being barred from choosing foreign law.

Since the specific consequence, Indian companies being barred from opting for foreign governing law, flows from the first case, the correct answer is TDM Infrastructure (P) Ltd. v. UE Development India (P) Ltd.