2025 (4) TMI 1749 - HC - Indian Laws

Foreign arbitral award recognition and execution in one petition, plus respondent deletion order-appeal held maintainable u/s50(1)(b).

An appeal under s.50(1)(b) of the Arbitration and Conciliation Act, 1996 lies from an order refusing recognition/enforcement of a foreign award under ... Maintainability of appeal under Section 50(1)(b) of the Arbitration and Conciliation Act, 1996 - Enforceability of Foreign Awards passed in favour of the appellant - Arbitration Petition as filed was barred by time limitation or not - HELD THAT:- Under Section 50(1)(b) of the Act of 1996, an appeal lies from an order refusing to enforce a foreign award under Section 48. The enforcement of a foreign award would also take within its compass the execution of such foreign award. The consequence of the recognition and enforcement of a foreign award is its execution. The legal position now stands settled that an award holder can seek recognition and execution of a foreign award in a common Arbitration Petition. The appellant had sought dual reliefs in the Arbitration Petition filed by it. The impugned order passed by the learned Judge declines the enforcement and execution of the Foreign Awards that was sought against all the respondents. Thus, if the recognition, enforcement and execution of a foreign award is permissible in a common arbitration petition as held by the learned Single Judge in paragraphs 51 and 52 of the impugned judgment, which finding is not assailed by the 2nd to 4th respondents, the mere fact that the said respondents had filed Chamber Summons seeking deletion of their names, which relief came to be granted, would not render the appeal filed under Section 50(1)(b) of the Act of 1996 as not maintainable. If the contention raised by the 2nd to 4th respondents that said part of the judgment making the Chamber Summons absolute ought to be separately challenged by the appellant in separate proceedings is accepted, the same would result in an odd situation. It is a fact that by a composite judgment rendered while deciding the Arbitration Petition and the Chamber Summons, the enforcement and execution of the Foreign Awards has been refused. Whilst that part of the judgment which declines recognition and enforcement of the foreign award can be appealed as against the 1st respondent by filing an appeal under Section 50(1)(b) of the Act of 1996, the consideration in that very judgment to the extent it allows the Chamber Summons resulting in deletion of the name of the other respondents from the array of the parties would have to be challenged in different proceedings. The reasons for arriving at the conclusion that the enforcement and execution of the Foreign Awards ought to be refused against all respondents, being common and intertwined, this would result in a likelihood of diverse orders being passed in such distinct proceedings besides also resulting in their multiplicity. Thus even on this count, the contention of the 2nd to 4th respondents cannot be accepted. The objection raised by the 2nd to 4th respondents to the maintainability of the Commercial Arbitration Appeal filed for challenging the judgment dated 24/10/2024 refusing to recognise, enforce and execute the Foreign Awards is turned down. It is held that the present appeal as filed under Section 50(1)(b) of the Act of 1996 is maintainable against all the respondents. The Commercial Arbitration Appeal is admitted against all the respondents. It is clarified that while considering the issue of maintainability, the Court has not gone into any of the aspects on merits. 1. ISSUES PRESENTED AND CONSIDERED (i) Whether an appeal under Section 50(1)(b) of the Arbitration and Conciliation Act, 1996 is maintainable against respondents who were impleaded in a composite petition seeking recognition, enforcement and execution of foreign awards, but were not parties/signatories to the arbitration agreement and whose deletion from the proceedings was ordered. (ii) Whether refusal to recognise/enforce a foreign award in a composite proceeding that also seeks execution renders the entire order (including consequential directions such as allowing deletion applications) appealable under Section 50(1)(b), so as to avoid multiplicity of proceedings. 2. ISSUE-WISE DETAILED ANALYSIS Issue (i): Maintainability of a Section 50(1)(b) appeal against impleaded non-signatory respondents whose deletion was ordered Legal framework (as discussed by the Court): The Court examined Section 50(1)(b), which permits an appeal from an order refusing to enforce a foreign award under Section 48. The Court also proceeded on the accepted position (recorded in the impugned decision and not disputed for this purpose) that a foreign award-holder may seek recognition/enforcement and execution in a common petition under Sections 47 to 49. Interpretation and reasoning: The Court treated 'enforcement' of a foreign award as encompassing its execution, because execution is the consequence of recognition and enforcement in the statutory scheme considered by the Court. Since the underlying petition contained composite prayers seeking recognition, enforcement, and execution against all respondents, and the impugned judgment refused enforcement and execution against all respondents, the appellant's grievance fell within Section 50(1)(b) as to all respondents who were parties to that petition. The mere fact that some respondents had obtained orders deleting their names (on the basis of not being signatories and allegedly being proceeded against only for execution) did not, by itself, defeat maintainability of the statutory appeal, because the refusal to enforce/executed the foreign awards operated against the appellant's composite reliefs as framed. Conclusion: The appeal under Section 50(1)(b) was held maintainable against all respondents to the composite enforcement petition, including those who were not parties to the arbitration agreement and whose deletion had been directed. Issue (ii): Whether the entire composite order becomes appealable under Section 50(1)(b), and whether separate proceedings are required to challenge deletion orders Legal framework (as discussed by the Court): The Court proceeded on the settled position that recognition/enforcement and execution of a foreign award may be sought in common proceedings, and considered Section 50(1)(b) as the appellate provision where enforcement is refused. Interpretation and reasoning: The Court held that when a composite petition seeking recognition, enforcement, and execution is dismissed on merits, enforcement and consequential execution stand refused. In that situation, the order 'in its entirety' becomes appealable under Section 50(1)(b), because the operative refusal is refusal to enforce the foreign award (and thus refusal of consequential execution). The Court characterised the orders allowing deletion applications as consequential/fall-out of the refusal to enforce and execute, and not determinative of appellate maintainability. It further reasoned that accepting the objection (that deletion must be separately challenged) would create an 'odd situation' where parts of a composite judgment-based on common and intertwined reasons-would be litigated in different proceedings, risking multiplicity and potentially diverse outcomes. On this reasoning, the Court declined to require separate proceedings to challenge the deletion aspect for the purpose of maintainability. Conclusion: Refusal to recognise/enforce (and consequentially execute) foreign awards in a composite petition triggers appellate jurisdiction under Section 50(1)(b) as to the entire order, and the maintainability of such appeal is not defeated by the inclusion of consequential directions allowing deletion of some respondents. Final determination material to decision: The objection to maintainability was rejected, and the appeal was admitted as maintainable against all respondents. Merits of limitation, enforceability, and factual allegations concerning diversion of assets/fraud were expressly not decided at this stage and were kept open.