TaxTMI 
TaxTMI 
2004 (7) TMI 372
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....could not get those released by opening Letter of Credit thereby petitioner suffered loss and damages. Petitioner invoked the arbitration clause and ultimately obtained an award from London. On the other hand, the company filed a suit in the Court involving the petitioner. 4.1 The petitioner filed the instant winding up proceeding as according to them, there is just debt due and payable as per the award which the company failed to pay despite statutory notice of demand. The company filed affidavit questioning the maintainability of the winding up proceeding. Principal Controversy : 5. I heard the parties. To my understanding this winding up petition is principally to enforce the foreign award. Now question is whether it is permissible or not under the present laws of the land. Basic Concept of a Winding up Proceeding Brought by Creditors : 6. Under section 433 a creditor can bring an action under sub-section (e) provided he has just debt payable by the company and the company failed and neglected to pay and/or secured such claim despite statutory notice of demand. Hence, if an action is brought by a creditor for winding up of a company on account of non-payment of debt and def....
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.... in a foreign award could apply to Court for having a rule of Court on the said award as also for its enforcement. Section 7 prescribed conditions for enforcement of the foreign award. Law at Present : 8. In 1996 the Arbitration and Conciliation Act, 1996 came into force by which the domestic award as well as foreign award were brought under one Act by repealing the 1940 Act as well as 1961 Act. This Act was brought in because of the international convention. This Act was a product of unicitral model laws on International Commercial Arbitration in 1985. This 1996 Act came into force to comprehensively cover international commercial arbitration and conciliation as also domestic arbitration and conciliation. In case of domestic award one stage of proceeding suggested in the earlier Act has been done away with. Domestic award under this Act need not have any judgment pronounced by any Court of law on the same. It can be straight away put to execution provided the time for setting aside the said award has expired or the application having been made has been refused. Under the old law under sections 30 and 33 the award could be challenged. The grounds of challenge in the present law h....
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....r section 48 the person against whom the award has been made can appear before the Court and request the Court to refuse enforcement of the said award. The Court held that the person against whom the foreign award has been made is not required to challenge the same because it cannot be executed against him in India unless the Court finds that it is enforceable. In the said case the person against whom the award had been made challenged the award by making an application. The learned judge further held that the said application was premature and was not maintainable in view of the fact that there was no application made by the awardee for enforcement of the award. However, the Apex Court judgment in the case of Fuerest Day Lawson Ltd. ( supra) was not considered. Unreported decision in the case of Sea Stream Navigation Ltd. v. LMJ International Ltd. M.H.S. Ansari, J. of this Court relied on the Apex Court decision in the case of Fuerest Day Lawson Ltd. (supra) and came to a finding that the award was enforceable in India and then proceeded to execute it in the same proceeding. Cases cited : 10. The parties cited the following decisions on the issue of enforceability of the foreig....
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.... enforcing the foreign award under the Act of 1961 the scope of enquiry before the Court was limited to grounds mentioned in section 7 of the said Act, 1961 and does not enable a party to the said proceeding to impeach the award on merits. The Apex Court here also considered the issue of "public policy" while enforcing the foreign award under the said Act. 16. Mangistanmunaiga Oil Production Association's case (supra ) : The District Court of United States rejected the contention of the respondents that the charge of corruption by the Arbitral Tribunal was waived by the opposing party which they could take before the Arbitral Tribunal. 17. SWIL Ltd.'s case (supra) : Pinaki Chandra Ghosh, J. admitted the winding up petition brought by a creditor on the basis of a foreign award which was passed abroad and decree and/or judgment in terms of the said award was passed by the High Court of Justice in England. His Lordship held that the decree passed by the English Court was a judgment on merits and was conclusive against the company. 18. Fewrest Day Lawson Ltd.'s case (supra) : Here the Apex Court considered the foreign award and held that enforcement of a foreign award and its execut....
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....son Ltd. (supra), this Court held that in one single proceeding the enforceability of the award can be decided and once being satisfied about the enforceability. His Lordship proceeded to execute the same. It is significant to mention that the genesis of the case before His Lordship was a winding up petition which was initially moved before me. When identical point was taken the petitioning creditor withdrew the petition and approached His Lordship for enforcing the foreign award. His Lordship also decided the question of public policy raised by the respondents in the said proceeding. 24. Marina World Shipping Corpn. Ltd.'s case (supra ) : In this case, the learned judge of the Delhi High Court refused to entertain the winding up petition on the basis of foreign award and according to His Lordship it would not be proper for the winding up Court to entertain a winding up petition on the basis of a foreign award without having the remedy exhausted under sections 44 to 48 of the Act of 1993. Enforcement Award in a Winding up Proceeding : 25. This Court in the case of Dalhousie Jute Co. Ltd.'s case (supra) held that an unfilled award is a good piece of evidence of debt due and can b....
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.... is also settled law that winding up proceeding is an equitable mode of execution, if that is so why the winding up proceeding cannot be used for enforcement of the foreign award and Court should allow the same in its discretion. Under the old law domestic awards were allowed to be made subject-matter of the winding up proceeding. Under the old law the procedure was completely different. I refrain from discussing any further on this issue. I am only concerned with the foreign award and its enforceability under the present law. If under the present law I allow the winding up proceeding to be proceeded with on the basis of a foreign award. I would have to in fact examine the said award under sections 44 to 49 of the said Act, 1996. In effect, I would have to transpose myself in an Arbitration Court under Chapter II of the said Act, 1996 and proceed to enforce the said award and then execute it. 27.2 The concept of winding up as initially held by this Court as well as by Apex Court was that it was not to be used as a handle to recover a money claim against a corporate entity. However, the idea was changed in the case of Harinagar Sugar Mills Co. Ltd. ( supra) where the Apex Court hel....