2020 (2) TMI 628 - SC - Indian Laws

Supreme Court Confirms Limited Grounds for Contesting Awards Under Arbitration Act; Appellants to Pay Costs.

The SC dismissed the appeals, affirming that the grounds for resisting enforcement under Section 48 of the Arbitration and Conciliation Act, 1996, are ... Arbitral Award - Validity of Final awards made by a sole arbitrator in London under the London Court of International Arbitration Rules (2014) (LCIA Rules) were held to be enforceable against the Appellants in India - HELD THAT:- We cannot help but be left with a feeling that the Appellants are indulging in a speculative litigation with the fond hope that by flinging mud on a foreign arbitral award, some of the mud so flung would stick. We have no doubt whatsoever that all the pleas taken by the Appellants are, in reality, pleas going to the unfairness of the conclusions reached by the award, which is plainly a foray into the merits of the matter, and which is plainly proscribed by Section 48 of the Arbitration Act read with the New York Convention. Given the fact that our jurisdiction under Article 136 of the Constitution is itself limited, and given the fact that this Court’s time has unnecessarily been taken by a case which has already been dealt with by four exhaustive awards on merits and also by the impugned judgment of the Bombay High Court, we dismiss these appeals with costs of INR 50 lakhs, to be paid by the Appellant to Respondent No.1 within 4 weeks from today - Appeal dismissed. Issues Involved:1. Enforceability of foreign arbitral awards.2. Jurisdiction and material breaches under the Joint Venture Agreement (JVA).3. Allegations of bias and procedural fairness in arbitration.4. Compliance with Foreign Exchange Management Act (FEMA) regulations.Detailed Analysis:Enforceability of Foreign Arbitral Awards:The Supreme Court of India emphasized that the grounds for resisting enforcement of foreign awards under Section 48 of the Arbitration and Conciliation Act, 1996 are narrow and exhaustive. The Court reiterated that enforcement can only be refused if the party resisting enforcement furnishes proof that any of the specified grounds under Section 48 are met. These grounds are to be construed narrowly to align with the pro-enforcement bias of the New York Convention.Jurisdiction and Material Breaches under the JVA:1. Incorporation of Jaguar Communication Consultancy Services Private Limited:- The tribunal did not address this counter-claim as it was raised by the Appellants at the end of the proceedings without being properly pleaded or substantiated earlier. The tribunal found no 'concealed breach' as alleged by the Appellants.2. Ouster of the Appellants:- The tribunal extensively addressed the counter-claim regarding the ouster of the Appellants, concluding that it was the Appellants who were in material breach of the JVA, not the Respondent. The tribunal found that the Respondent's actions were legitimate under the JVA.3. Registration of the Ravin Trademark:- The tribunal ruled that it did not have jurisdiction to decide on the trademark registration issue as it fell outside the scope of the JVA and was covered under separate agreements with different arbitration clauses.4. Acquisition of ACPL:- The tribunal found no credible evidence that the acquisition of ACPL by the Respondent's parent company constituted a material breach of the JVA. The tribunal noted that the Appellants were aware of the acquisition and had initially reacted positively.5. Agency Agreements and Direct Sales:- The tribunal concluded that the agency agreements and direct sales did not constitute a material breach of the JVA. The tribunal found that the sales in question involved products not manufactured by Ravin and that the Appellants' arguments were inconsistent with their earlier pleadings.Allegations of Bias and Procedural Fairness in Arbitration:1. Alleged Bias of the Tribunal:- The tribunal and the LCIA Court rejected the Appellants' allegations of bias. The tribunal noted that the Appellants did not pursue any challenge in the English courts, which had supervisory jurisdiction. The tribunal emphasized that its decisions were based on the evidence and arguments presented by both parties.2. Appointment of a Conflicted Valuer:- The tribunal found no merit in the Appellants' objection to the appointment of Deloitte as the valuer. The tribunal noted that the Appellants had previously agreed to Deloitte's appointment and that there was no conflict of interest.3. Valuation of Shares:- The tribunal upheld the valuation date of 30.09.2014, despite the delay in the valuation report, attributing the delay to the Appellants' actions. The tribunal followed the JVA's formula for valuation and rejected the Appellants' objections.Compliance with FEMA Regulations:1. Violation of FEMA and Rules:- The Court rejected the argument that the award violated FEMA regulations, stating that any breach of FEMA could be rectified post-facto with the Reserve Bank of India's permission. The Court held that such a breach does not amount to a violation of the fundamental policy of Indian law.Conclusion:The Supreme Court dismissed the appeals, emphasizing that the grounds for resisting enforcement under Section 48 are narrow and that the Appellants' objections were essentially an attempt to challenge the merits of the award. The Court awarded costs of INR 50 lakhs to be paid by the Appellants to the Respondent.