2001 (5) TMI 881 - SC - Companies Law

Enforcing pre-22 Aug 1996 foreign arbitral awards: 1961 Act applies, suit required; execution petition set aside, remanded.

The dominant issue was whether a foreign arbitral award made before 22-8-1996 could be enforced under the Arbitration and Conciliation Act, 1996, or only ... Wrongly mentioned the date of commencement as 25-1-1996 instead of 22-8-1996 of the Arbitration and Conciliation Act, 1996 - principle of judgment ‘per incuriam’ - Whether the award would be governed by the Act for its enforcement or whether the provisions of the Foreign Awards Act, 1961 would apply ? Held that:- In the instant case, both events are before 22-8-1996. As such the Foreign Awards (Recognition & Enforcement) Act, 1961 (‘the Act’) will apply in which case enforcement could only be through a suit; the execution petition was rightly rejected. Article 367(2) of the Constitution or section 30 of the General Clauses Act have nothing to do with the question as to the date on which the Act comes into force; they could not alter this date to 25-1-1996 from 22-8-1996; the entire enforcement proceedings would be governed by the 1961 Act; hence, the execution petition could not have been directed to be converted into an application under section 46 or 47 of the Act for various reasons. A foreign Award passed on 13-8-1996 could be enforced with the same vigour under the Ordinance as it could be under the Act. May be that is a reason why this point was not raised by the respondent before the High Court. It is noticed in the that all provisions of the Ordinance as well as the Act are same; therefore, use of the word ‘the Ordinance’ shall also mean the Act and vice versa. The said judgment of the Gujarat High Court is affirmed by this Court in Thyssen Stahlunion GMBH’s case [1999 (10) TMI 636 - SUPREME COURT]. The Thyssen Stahlunion GMBH’s case (supra) has not failed to notice either a statutory provision in substance and effect or a binding precedent running counter to the reasoning and the result reached. The Arbitration and Conciliation Ordinance, 1996 was originally promulgated by the President on 16-1-1996 and was made effective from 25-1-1996. The second Ordinance came in its place on 26-3-1996 which was again replaced by the third Ordinance on 26-6-1996. These Ordinances were issued, necessitated by the circumstances for continuing the operation of the new law. The New Act No. 26 of 1996 received the President’s assent on 16-8-1996 and was published in the Gazette of India (Extra.) Part II Section I dated 19-8-1996. From the plain and literal reading of the said provision and the Gazette Notification, it is clear that the Act came into force on 22-8-1996. Thus the Act was brought into force with effect from 22-8-1996 vide Notification No. G.S.R. 375(E) dated 22-8-1996 published in the Gazette of India and that the Act being a continuation of the Ordnance is deemed to have been effective from 25-1-1996 when the first Ordinance came into force. Section 47 states as to what evidence the party applying for the enforcement of a foreign award should produce before the court. Section 48 states as to the conditions for enforcement of foreign awards. As per section 49, if the Court is satisfied that a foreign award is enforceable under this Chapter, the award shall be deemed to be a decree of that court and that court has to proceed further to execute the foreign award as a decree of that court. If the argument advanced on behalf of the respondent is accepted, the very purpose of the Act in regard to speedy and effective execution of foreign award will be defeated. Thus, none of the contentions urged on behalf of the respondent merit acceptance so as to uphold the impugned judgment and order. We have no hesitation or impediment in concluding that the impugned judgment and order cannot be sustained. Appeal allowed by way of remand. Issues Involved:1. Date of the commencement of the Arbitration and Conciliation Act, 1996.2. Applicability of the Act to the enforcement of foreign awards.3. Whether the judgment in Thyssen Stahlunion GMBH was 'per incuriam'.4. Whether separate proceedings are required for enforcement and execution of foreign awards.Detailed Analysis:1. Date of the commencement of the Arbitration and Conciliation Act, 1996:The principal legal issue was determining the exact date when the Arbitration and Conciliation Act, 1996 ('the Act') came into force. The appellant argued that the Act commenced on 25-1-1996, while the respondent contended it was 22-8-1996. The Court noted that the Act was a continuation of the Ordinance effective from 25-1-1996, and thus, for practical and legal purposes, the Act was deemed effective from 25-1-1996 despite the official commencement date being 22-8-1996.2. Applicability of the Act to the enforcement of foreign awards:The Court examined whether the foreign award dated 13-8-1996 could be enforced under the Act. It was held that a foreign award given after the commencement of the Act could only be enforced under the new Act, even if the arbitration proceedings had commenced before the enforcement of the Act. This was in line with the precedent set in Thyssen Stahlunion GMBH v. Steel Authority of India Ltd., where it was determined that the new Act applies to foreign awards passed after its commencement.3. Whether the judgment in Thyssen Stahlunion GMBH was 'per incuriam':The respondent argued that the Thyssen judgment was 'per incuriam' as it incorrectly stated the commencement date of the Act as 25-1-1996 instead of 22-8-1996. The Court rejected this argument, emphasizing that the Thyssen judgment correctly interpreted the continuous effect of the Ordinance and the Act. The Court reiterated that unless there is a glaring omission or oversight of a statutory provision or binding precedent, the principle of 'per incuriam' does not apply.4. Whether separate proceedings are required for enforcement and execution of foreign awards:The respondent contended that separate proceedings were necessary for determining the enforceability of a foreign award and its execution. The Court disagreed, stating that the Act aimed to minimize supervisory roles of courts and expedite the arbitration process. Sections 46 to 49 of the Act were designed to ensure that a foreign award, once deemed enforceable, is treated as a decree of the court, thus eliminating the need for separate proceedings. This interpretation aligns with the objective of providing speedy and effective resolution of disputes.Conclusion:The Supreme Court set aside the impugned judgment and remitted the case to a learned Single Judge of the High Court for further proceedings in line with the observations made. The Court upheld that the foreign award dated 13-8-1996 should be enforced under the Arbitration and Conciliation Act, 1996, and confirmed that the Act was effectively in force from 25-1-1996 due to the continuity of the Ordinance. The appeal was allowed, and the enforcement of the foreign award was directed to proceed without the need for separate proceedings for its execution.