Court Upholds Foreign Arbitration Award, Rejects Unitech's Objections

The court rejected Unitech's objections under Section 48 of the Arbitration and Conciliation Act, finding that enforcement of the foreign award was justified. Unitech had proper notice and opportunity to present its case, the award fell within the scope of submission to arbitration, and did not contravene India's public policy. The court directed further consideration of the matter on 20.04.2017.

---

---

Issues Involved:
1. Whether enforcement of the foreign award should be refused under Section 48(1)(b), 48(1)(c), and 48(2)(b) of the Arbitration and Conciliation Act, 1996.
2. Whether the award exceeds the scope of submission to arbitration.
3. Whether Unitech had proper notice and opportunity to present its case.
4. Whether the enforcement of the award is contrary to the public policy of India, particularly in relation to the Foreign Exchange Management Act, 1999 (FEMA).

Issue-wise Detailed Analysis:

1. Refusal of Enforcement under Section 48(1)(b), 48(1)(c), and 48(2)(b):
The court examined whether the enforcement of the foreign award should be refused under these sections. Section 48 of the Act is a statutory expression of Article V of the New York Convention, allowing courts to refuse enforcement of a foreign award on specified grounds. The court found that the grounds for refusal encompass a wide spectrum of acts and factors, and while it may be imperative to refuse enforcement in some cases, in others, it may be unjust to do so. The court emphasized that even if grounds under Section 48 are established, the court has discretion to enforce the award if there are good reasons founded on settled principles of law.

2. Scope of Submission to Arbitration:
Unitech contended that the award included decisions on matters beyond the scope of submission to arbitration. The court found that the issue of whether Burley and Unitech had breached their obligations under the Keepwell Agreement, and whether Unitech was obliged to make payment equivalent to the put option price, was squarely the subject matter of arbitration. The arbitral tribunal had jurisdiction to decide these issues, and Unitech's contention that the award was beyond the scope of reference was unmerited.

3. Notice and Opportunity to Present Case:
Unitech argued that it did not have proper notice or opportunity to present its case. The court found that Unitech had proper notice of the appointment of the arbitral tribunal and the arbitral proceedings. Cruz City had duly notified Unitech of its demand for payment of the consideration for the subject shares of Kerrush. The court concluded that Unitech had contested the demand and had an opportunity to present its case. The contention that Unitech had no opportunity to meet the relief awarded or that the award was beyond the reference was found to be an afterthought.

4. Public Policy and FEMA:
Unitech contended that the enforcement of the award would be contrary to the public policy of India as it contravenes the provisions of FEMA. The court held that a violation of any provision of FEMA does not ipso jure offend the public policy of India. The term "public policy" in the context of enforcement of a foreign award must be construed narrowly, and enforcement would be refused only if it is contrary to the fundamental policy of Indian law, the interests of India, or justice or morality. The court found that the Keepwell Agreement and the SHA did not provide an assured return in violation of FEMA, and even if they did, Unitech could not escape its liability to Cruz City. The court emphasized that Unitech had made unambiguous representations regarding compliance with applicable laws and could not now contend otherwise.

Conclusion:
The objections raised by Unitech under Section 48 of the Act against the enforcement of the award were rejected. The court found that Unitech had proper notice and opportunity to present its case, the award was within the scope of submission to arbitration, and enforcement of the award did not violate the public policy of India. The court directed that the matter be listed for further consideration on 20.04.2017.

---