TaxTMI 
TaxTMI 
2015 (4) TMI 1167
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....Limited were the original claimants. For the sake of brevity in this order M/s.POL India Projects Limited are described as the petitioners and Aurelia Reederei Eugen Friederich GmbH Schiffahrtsgesellschaft & Company KG, is described as the respondents. 2. In so far as Arbitration Petition No.12 of 2012 is concerned, the said petition has been filed under sections 44 to 48 of the said Arbitration Act inter alia praying for a declaration that the foreign award dated 15th September, 2011 is enforceable as a decree of this court and seeks injunction restraining the respondent, its servants and/or agents and/or assigning from transferring, utilizing, operating and removing in any manner, funds lying in its bank accounts in Mumbai and elsewhere in India to the extent of USD 870,059.24 and GBP 13,400 and for other reliefs. By consent of parties, both the petitions were heard together and are being disposed of by a common order. 3. In so far as Arbitration Petition No. 76 of 2012 is concerned, Mr.Andhyarujina, learned counsel for the respondents in the said petition has raised a preliminary objection about maintainability of this petition under section 34 of the Arbitration Act. Some....
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....er :- "GA/arbitration in London as per London Arbitration Council". 7. It was the case of the respondents that the said D.B.Shipping LLC committed default in their performance of the voyage charter party resulting in the respondents suffering losses. The respondents raised various invoices against the said D.B.Shipping LLC in relation to its wrongful repudiation of the voyage charter party. However the said D.B.Shipping LLC failed and/or neglected to pay under the invoice issued by the respondents. The respondents therefore commenced arbitration proceedings against the said D.B.Shipping LLC. The respondents nominated the arbitrator in respect of the said arbitration. D.B.Shipping LLC appointed Mr.Ashwin Shankar, Advocate of this court as their arbitrator. The arbitrators appointed by the respondents and the said D.B.Shipping LLC appointed Mr.Edward Mocatta as a chairman of the arbitral tribunal. 8. The respondents simultaneously commenced the arbitration proceedings against the petitioners herein by appointing Mr.Alan Oakley as their nominee arbitrator. The petitioners appointed Mr.Ashwin Shankar, Advocate of this court as their arbitrator. The nominee arbitrators of the p....
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....08. The aforesaid view was taken in the majority award. The arbitrator nominated by the petitioners gave dissenting reasons. 11. On 15th September, 2011 the arbitral tribunal passed and published its final award inter alia holding that the petitioners were liable to pay to the respondents USD 870,059.24 together with interest at the rate of 5.5% per annum compounded at three monthly from 24th October, 2008 to the date of payment. 12. In the meanwhile, the respondents filed an application under section 9 of the Arbitration Act in this court (Arbitration Petition No.524 of 2011) for interim measures. The said arbitration petition filed by the respondents was opposed by the petitioners on various grounds including maintainability of the said petition. By an order dated 8th November, 2011 this court held that Arbitration Petition No.524 of 2011 was not maintainable as the parties by choosing English law as substantive law and curial law of the contract of guarantee had excluded Part I of the Arbitration and Conciliation Act, 1996 in view of the judgment of Supreme Court in case of Videocon Industries Ltd. vs. Union of India and another,. Relevant part of the said order is extract....
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.... to the respondents. The said letter has been treated as deed of guarantee on the part of the petitioners in favour of the respondents. Relevant portion of the said letter is extracted as under : Quote : Mumbai 19-09-08 "The owners m.v.Merc Mihintale Without prejudice Shipment of scrap Ex.Malabo - Ref CP dtd 13-09-08. This is to confirm, though D.B. Shipping LLC Dubai is the charterer of the above vessel for carriage of scrap as per terms of the referenced CP (based Gencon) POL INDIA PROJECT INDIA LIMITED - MUMBAI, joins DB SHIPPING LLC DUBAI in guaranteeing the performance of the voyage. This letter of guarantee of performance is issued without prejudice and carries with it all the rights, liabilities and exceptions of the said charter party. Yours faithfully For POL India Projects Ltd. Mumbai Sd/- Copy : D.B.SHIPPING LLC - DUBAI". unquote 19. Mr.Makhija, learned counsel appearing for the petitioners submits that the said letter of guarantee dated 19th September, 2008 did not contain any arbitration agreement between the petitioners and the respondents. In the sa....
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.... submits that since there was no arbitration agreement entered into between the parties at all, the entire arbitration proceedings which has culminated into an award is nullity and void and initio. The provisions of Part I of the Arbitration and Conciliation Act, 1996 are applicable to the international commercial arbitration held outside India which mandates that arbitration agreement must be by both parties and submits that since there was no arbitration agreement under the said Arbitration Act, no award made under Part II of the said Arbitration Act can be enforced in India. Learned counsel submits that the said letter dated 19th September, 2008 addressed by the petitioners can be considered atmost as an assurance that the said D.B.Shipping LLC would perform their part of the charter party and could never be read to mean that the petitioners were liable as party charter party or liable under guarantee. 23. Learned counsel submits that even if the petitioners had not challenged the declaratory arbitration award rendered by the arbitral tribunal which was nullity and void and initio, the petitioners are not prevented from challenging the final award under section 34 of the Arbi....
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....petitioners in this court is not maintainable. 26. On the issue as to whether the arbitration agreement existed between the parties or not and whether the doctrine of incorporation would apply to the facts of this case or not is concerned, learned counsel submits that the arbitration agreement is an independent agreement and was not incorporated in the letter of guarantee. It has to be specifically incorporated otherwise arbitration agreement would not exist and would not be binding on the parties. The petitioners had also confirmed and had guaranteed performance of the contract as contemplated by the brokers of the respondents by a letter dated 18th September, 2008. In support of the submission, the arbitration agreement in the charter party agreement between the respondents and D.B. Shipping LLC was not incorporated in the letter of guarantee, learned counsel placed reliance on the following judgments :- (a). Judgment of the Supreme Court in the case of M.R. Engineers and Contractors Private Limited vs. Som Datt Builders Limited, (2009) 7 SCC 696 and in particular paragraphs 14 to 24 and 33 to 35. (b). Judgment of the Court of Appeal in the case of Federal Bu....
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....ce on the judgment of the Supreme Court in the case of Dharma Prathishthanam vs. Madhok Construction (P) Ltd., (2005) 9 SCC 686 and it is submitted that the arbitrator appointed by the respondents itself was illegal since the alleged arbitration had referred to the London Arbitration Council. Since the London Arbitration Council was not in existence, the court only could have appointed arbitral tribunal. Merely because the petitioners had also nominated their arbitrator and had appeared under protest before the arbitral tribunal, the defect in appointment of the arbitral tribunal by parties was not cured. There was no waiver on the part of the petitioners. 30. Learned counsel for the petitioners placed reliance on the judgment of this Court in the case of Jimmy Construction Pvt. Ltd.,Nagpur vs. Union of India and others, (2008) 3 Mah.L.J.141 and in particular paragraphs 8, 9 and 11 and it is submitted that if the composition of the arbitral tribunal is improper and not in accordance with the arbitration agreement, the entire proceedings would be nullity and the award would fall under section 34(2)(ii)(b) of the Arbitration & Conciliation Act, 1996. 31. Learned counsel for the....
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....ation agreement existed between the parties merely on the basis of two letters exchanged between the parties i.e. one from the respondents asking the petitioners for guaranteeing performance of the said D.B. Shipping LLC and another letter addressed by the petitioners agreeing to be the guarantor for securing the performance on behalf of D.B. Shipping LLC. Letter dated 18th September, 2008 was not even signed by the respondents but was signed by their broker. Merely on the basis of these two letters, the arbitral tribunal could not have come to the conclusion that the arbitration agreement forming part of the charter party agreement between the respondents and D.B. Shipping LLC would stand incorporated in the letter of guarantee executed by the petitioners. 36. Learned counsel submits that the appointment of the arbitrator had to be by consent of both the parties. Unilateral appointment of the arbitrator by the respondents was nullity and was illegal. The petitioners had appointed the arbitrator under protest on the ground that the London Arbitration Council had no authority to appoint any arbitrator. 37. Learned counsel submits that since the petitioners were not party to th....
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....no question of any res-judicata applicable to these proceedings. He submits that the petitioners could wait till the final award came to be delivered by the arbitral tribunal which has now been impugned in these proceedings. 41. Learned counsel for the petitioners submits that that the letter of guarantee issued by the petitioners was improper, illegal and contrary to the provisions of the Foreign Exchange Management (Guarantees) Regulation, 2000 (FEMA) and in particular Regulations 3 and 5, which read thus : "Regulation - 3 : Prohibition Save as otherwise provided in this regulations, or with the general or special permission of the Reserve Bank, no person resident in India shall give a guarantee or surety in respect of or undertake a transaction by whatever name called, which has the effect of guaranteeing a debt, obligation or other liability owed by a person resident in India to, or incurred by, a person resident outside India. Regulation - 5 : Guarantees which may be given by persons other than an authorised dealer : A person other than an authorised dealer may give a guarantee in the following namely : a) a per....
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....ter of guarantee was contrary to law and was prohibited, the entire proceedings were without jurisdiction, reliance is placed on the judgment of the Supreme Court in the case of Mannalal Khetan & Others vs. Kedar Nath Khetan & Others(1977) 2 SCC 424, and in particular paragraphs 19 to 21. Learned counsel also placed reliance on the judgment of the Madras High Court in the case of Mrs.Shoba Viswanathan vs. D.P. Kingsley, Madras Law Journal Reports 96 and in particular paragraphs 20 to 22, 36, 37, 43 and 47 and on the judgment of the Division Bench of this Court in the case of Sakuma Exports Ltd. vs. Louis Dreyfus Commodities & Uisse S.A., (2013) 6 Bom.C.R.218. 44. The next submission of learned counsel for the petitioner is that since the respondents did not obtain any leave to enforce the arbitral tribunal as contemplated under section 66 of the English Arbitration Act, the respondents could not have filed the petition under section 48 of the Arbitration & Conciliation Act, 1996 in this Court for seeking enforcement of a foreign award. In support of this submission, learned counsel placed reliance on the judgment of the Queen's Bench Division (Commercial Court) in the case o....
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....Act 1950 and 1996 or any statutory modification or enactment thereof. Learned counsel submits that the arbitration petition filed in this court under section 34 of the Act is thus not maintainable. 48. It is submitted by the learned counsel that the parties had agreed to be bound by the standard form of agreement. Learned counsel invited my attention to the charter party agreement and in particular clause 25. Reliance is also placed on copy of the standard form of Gencon charter party which was applicable to the parties. Clause 19 of the said Gencon charter provides for the arbitration agreement. He submits that even the letter of guarantee dated 19th September, 2008 issued by the petitioners refers to Gencon i.e. General Conditions of Contract which stood incorporated in the said letter of guarantee in toto. Though an opportunity was given by the arbitral tribunal which was adjudicating the claims of the respondents against D.B.Shipping LLC to continue the said proceedings in view of the said D.B.Shipping LLC not appearing in the arbitration proceedings though served, the petitioners did not appear in those proceedings. 49. Even in the arbitration proceedings initiated by th....
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....ity and are binding on both the parties. 51. Learned counsel submits that even those awards could have been challenged only on the grounds setout in section 70 of the English Arbitration Act and not outside the purview of the said provisions. Learned counsel placed reliance on section 72 of the English Arbitration Act and submits that since the petitioners were parties to the arbitral proceedings and even if such party had not taken any part in the proceedings could still question whether there was a valid arbitration agreement or not and also about the improper constitution of the arbitral tribunal or that the matter had not been submitted in accordance with the arbitration agreement by proceeding in the court for declaration, injunction or for other appropriate relief. Such party could also challenge the award by an application under section 67 on the ground of lack of substantive jurisdiction in relation to him or by an application under section 68 on the ground of all serious irregularity having affected him. 52. Learned counsel submits that since the petitioners have not challenged the declaratory arbitration award in accordance with the provisions of English Arbitration....
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....endered by the arbitral tribunal by declaring declaratory arbitration award has become final and binding. No such issue can be agitated once again in the present petition. Principles of res judicata applies to the parties. Reliance is strongly placed on the judgment of this court in case of Perma Container (UK) Line Limited (supra) Arbitration Petition No.259 of 2013 alongwith Arbitration Petition No.406 of 2013 on this issue and judgment of this court in case of HSBC PI Holdings (Mauritius) Limited (supra) Arbitration Petition No.1062 of 2012. 57. In so far as submission of Mr.Makhija, learned counsel for the petitioners that the petition for enforcement of the foreign award is not maintainable on the ground that the respondents did not obtain any leave of the English Court under section 66 of the English Arbitration Act is concerned, learned counsel submits that the said provisions under section 66 of the English Arbitration Act does not apply and no leave of the English Court was required to be obtained by the respondents for filing application for enforcement of the foreign award in this court under section 46 of the Arbitration and Conciliation Act, 1996. Learned counsel di....
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.... was lifted and incorporated in the letter of guarantee including the arbitration agreement. Learned counsel distinguished the judgment of Supreme Court in case of M.R.Engineers and Contractors Private Limited (supra) (2009) 7 SCC 696 relied upon by the petitioners. He submits that the petitioners was fully aware and had knowledge of the arbitration clause in the standard form contract which was applicable to the charter party agreement and stood incorporated in the letter of guarantee. It is submitted that the bill of lading is a document of title. In support of this submission, learned counsel placed reliance on the judgment of Supreme Court in case of Alimenta S.A. vs. National Agricultural Co-operative Marketing Federation of India Ltd. and Another (1987) 1 SCC 615 and in particular paragraph (12) thereof. He submits that the petitioners were fully aware of the contract between the respondents and the said D.B.Shipping LLC. The petitioners had admittedly signed the said contract on behalf of the D.B.Shipping LLC which admittedly contained arbitration agreement. The said arbitration agreement stood incorporated in the letter of guarantee. 61. Learned counsel for the responden....
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....ncil". It is submitted that since there was no London agreement Council, the provisions of the English Arbitration Act would apply for appointment of arbitrator and for all other purposes. The respondents had accordingly nominated their arbitrator. The petitioners had also nominated their arbitrator. The chairman was appointed by two nominee arbitrators appointed by the parties. The composition of the arbitral tribunal was thus in accordance with the agreement arrived at between the parties and in accordance with the provisions of the English Arbitration Act. He submits that in any event, the court has to interpret the arbitration agreement in business like manner in case the clause is alleged to be vague. He submits that the arbitral tribunal had been constituted as already provided in clause 19(a) of the charter party. The findings rendered by the arbitral tribunal is final and binding. The arbitral tribunal has interpreted clause 19(a) Gencon 1994 in the declaratory arbitration award. The petitioners had not shown any proof that under the English Law, there was no such procedure for appointment of arbitrator as followed by the parties. 65. Learned counsel submits that whether....
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....s been dealt with by the Supreme Court in case of Renusagar Power Co. Ltd. vs. General Electric Company & Anr. (supra) AIR 1985 SC 1156(1)and also in case of Shri Lal Mahal Limited (supra) (2014) 2 SCC 433. Learned counsel submits that even if any such permission was required before entering into such letter of guarantee, ex-facto permission also could be obtained by the petitioners. Even if any breach of FEMA is committed of the nature alleged by the petitioners, it would not amount to breach of any fundamental policy of India. In support of this submission, learned counsel invited my attention to section 13 of FEMA which provides for imposition of penalty for violation. Learned counsel submits that the provisions of FERA considered by the Supreme Court in case of Renusagar Power Co. Ltd. vs. General Electric Company & Anr. (supra) were totally different than the provisions of the FEMA. The judgment of the Supreme Court in case of Renusagar Power Co. Ltd. vs. General Electric Company & Anr. (supra) is thus distinguishable in the facts of this case in so far as the said issue is concerned. 69. In support of the aforesaid submission, learned counsel for the respondents placed rel....
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.... on the judgment of Queen's Bench Division in case of Navrom vs. Callitsis Ship Management S.A. (1987) 2 LLR 276 at pages 277 to 279 and on the judgment of the Supreme Court in case of M.K.Abraham and Company vs. State of Kerala and another (1987) 2 LLR 276 at pages 277 to 279 and in particular paragraph (21) thereof. Relying upon the aforesaid three judgments, learned counsel submits that since clause 19(a) of the charter party agreement is superseded by clause (52), there was no agreement recorded in clause 52. In case of failure of the arbitration procedure, under section 18 of the English Arbitration Act, parties were required to approach the court for the purpose of appointment of arbitration and parties could not appoint arbitrator of their own. The entire proceedings were thus nullity. In support of this submission, learned counsel placed reliance on the commentary of Russel on arbitration. 73. In so far as judgment of this court in case of Vitol S.A.(supra) Notice No.618 of 2011 relied upon by Mr. Andhyarujina is concerned, Mr.Makhija distinguished the said judgment on the ground that the facts in that matter were totally different. He submits that the petitioners do....
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....ration agreement. Incorporation of the arbitration agreement specifically is must. REASONS AND CONCLUSIONS Whether Arbitration Petition No.76 of 2012 filed under section 34 of the Arbitration and Conciliation Act, 1996 challenging the impugned foreign award is maintainable ? 78. It is not in dispute that the respondents herein i.e. Aurelia Reederei Eugen Friederich GmbH Schiffahrtsgesellschaft & Company KG had entered into a voyage charter party dated 13th September, 2008 with D.B.Shipping LLC. The respondents is a company incorporated under the appropriate law of Germany having its office at Germany. The petitioners and the respondents had entered a contract of guarantee dated 19th September, 2008 under which the petitioners guaranteed the performance of D.B.Shipping LLC under the voyage charter party. In the Column No.25 of the charter party, clause 19(a) of the voyage charter party was referred to which provided for arbitration in London in accordance with the Arbitration Act, 1950 and 1979 and/or any statutory modification or re-inactment thereof. In the said Column No.25, respondents and the said D.B.Shipping LLC had filled up the place as "London". The Gencon charter....
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....ncil. The petitioners called upon the tribunal to determine as to which law would apply for determining the preliminary issue raised by the petitioners. The petitioners made it clear that the petitioners were not seeking to invoke any power of adjudication of the said arbitral tribunal. In the said reply, the petitioners also contended that such a guarantee would be unenforceable and contrary to law. Reliance is placed on section 3 of the Foreign Exchange Management (Guarantees) Regulations, 2000 (for short the said Regulations of 2000). The petitioners also did not admit that they were acting as guarantors of the charterers obligation. 83. On 3rd March, 2010, the majority of the arbitrators rendered a declaratory award. The arbitrator nominated by the petitioners rendered dissenting reasons. In the said declaratory arbitration award majority of the arbitrators after referring to the agreement entered into between the parties and also the charter party between the respondents and the said D.B.Shipping LLC and after considering the objections raised by the petitioners held that the words 'without prejudice' mentioned on the letter of guarantee were misplaced on the ground....
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....ntended those terms to have contractual effect to the guarantee. It is held that in the absence of any reference to the applicable law and method of dispute resolution in the guarantee, it was sufficient to show that the petitioners had intended to include the provision in the charter party for arbitration in London in accordance with English law. The arbitral tribunal has held that the provision to refer the disputes to arbitration and avail themselves of English law is a right as set out in the guarantee. 87. The arbitral tribunal also held that the defence of the petitioners that their liability was limited to that of their brokerage was misplaced. Their role as guarantor was entirely separate to that of a broker. It is held that by agreeing to become the guarantors for the charterers' performance of the charterers, the petitioners accepted different responsibilities and liabilities to those of a broker. In the said interim declaratory award, the arbitral tribunal held that the guarantee issued by the petitioners was valid. The guarantee provided for arbitration in accordance with English law. The tribunal had been properly constituted and had jurisdiction to determine al....
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.... case of the petitioners that the respondents herein had made a wrong statement before this court to the effect that the parties were governed by English law in all respect and were governed by substantive law of England and the arbitration proceedings were governed by English Law. It is also not the case of the petitioners that the judgment of Supreme Court in case of Videocon Industries Ltd. (supra) was not applicable to the facts of that case and that the petition was wrongly dismissed by this court. 90. A perusal of the averments made by the petitioners in Arbitration Petition No.76 of 2012, clearly indicates that the respondents company is incorporated under the law of Germany and having its registered office at Germany. It is also not in dispute that the declaratory arbitration award and final award rendered by the arbitral tribunal are foreign awards. The arbitration proceedings were international commercial arbitration within the meaning of section 2(1)(f) of the Arbitration and Conciliation Act, 1996. Even in the affidavit in reply filed by the petitioners in the proceedings under section 9 which were filed by the respondents, it was the case of the petitioners that the....
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....edings or the award. Types of serious irregularities are provided under subsection (2) of section 68. If the tribunal exceeds its powers otherwise than by exceeding its substantive jurisdiction, Section 68 of the English Arbitration Act can be invoked amongst other grounds. A party may loose a right to object under section 73 if the said proceedings are not filed. The court on such application has power to remit the award to the tribunal in whole or in part, for reconsideration. 94. Under section 69 of the English Arbitration Act, the party to the arbitration proceedings may also file an appeal to the court on a question of law arising out of an award made in the proceedings. In such appeal, the court has power to confirm vary, remit the award to the tribunal, in whole or in part, for reconsideration in the light of the court's determination or set aside the award in whole or in part. Under section 70 of the English Arbitration Act an application or appeal has to be filed within 28 days from the date of the award on the grounds setout therein. Section 71 provides for the effect of the order passed by the court under sections 67, 68 or 69 with respect to an award. 95. Sect....
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....Act makes it clear that the petitioners who had raised an objection about existence of arbitration agreement, composition of arbitral tribunal etc. had a right and remedy of challenging such declaratory arbitration award by filing an appropriate proceedings within the time prescribed under English Arbitration Act on the ground setout therein. Even if according to the petitioners, they were not governed by the English law and that there existed no arbitration agreement or that the composition of the arbitral tribunal was not in accordance with the agreement, once the declaratory arbitration award came to be passed by the arbitral tribunal, the same ought to have been challenged by the petitioners by exercising its remedy available under the provisions of English Arbitration Act and the petitioners not having exercised such remedy under the provisions of English Arbitration Act has lost its right to object the correctness of such declaratory arbitration award in this proceeding filed under section 34 or while raising objection to the enforcement of the foreign award under section 48 in the arbitration petition filed by the respondents. 98. Division Bench of this court in case of S....
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....ise, not-withstanding, and England shall be regarded as the place of performance. Disputes shall be settled according to the law of England wherever the domicile, residence or place of business of the parties to the contract may be or become. The seat of the Arbitration shall be England and all proceedings shall take place in England. It shall not be necessary for the award to state expressly the seat of the arbitration." The terms of the purchase contract as well as Rule 8 of the Rules of the Refined Sugar Association would make it clear that disputes shall be settled in accordance with the law of England wherever the domicile, residence or place of business of parties to the contract may be or become. Moreover, for the purposes of all proceedings in arbitration, the contract shall be deemed to have been made in England and England shall be regarded as the place of performance. The seat of the arbitration shall be England and all proceedings shall take place in England. On the basis of these provisions, it has been submitted that parties have, by the terms of their agreement, impliedly excluded the provisions of Part-I. We find merit in the submission. It is clear from th....
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....of the English Arbitration Act, 1996. It is held that the award in question thus could be challenged by the appellant only before the English Courts under Sections 67 and 68 of the English Arbitration Act, 1996 and not under section 34 of the Arbitration and Conciliation Act, 1996. The Division Bench held that the petition filed under section 34 of the Arbitration and Conciliation Act, 1996 was thus not maintainable. 101. This court in case of Perma Container (UK) Line Limited (supra) Arbitration Petition No.259 of 2013 alongwith Arbitration Petition No.406 of 2013 has held that since the seat of arbitration was in England, Arbitration Act 1996 (English Arbitration) would apply which provides for a remedy to impugn the arbitral award, unsuccessful party having failed to avail of such remedy under English Arbitration Act, the petition filed under section 34 of the Arbitration and Conciliation Act, 1996 was not maintainable and is rejected. Paragraphs 103 to 105 of the said judgment read thus :- 103. In my view the judgment of Division Bench of this Court in case of Sakuma Exports Ltd. (supra) which is rendered after considering the judgments of Supreme Court in various j....
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....se of National Thermal Power Corporation (supra), shall be squarely applicable to the facts of this case. Judgment of the Supreme Court in case of Bharat Aluminium (supra), has been interpreted by the Division Bench of this court in case of Konkola Copper Mines (PLC) (supra) in which it is held by the Division Bench of this court that the entire judgment of the Supreme Court in case of Bharat Aluminium(supra), would not apply with prospective effect. It is held that in so far as applicability of the law of governing based on arbitration is concerned, the seat of the arbitration agreement would determine the governing law of arbitration agreement. In this case also the express choice of the parties was that seat of the arbitration would be at Singapore and thus in my view, the seat of the arbitration would govern by law of agreement i.e. law of Singapore and not Indian law in this case. I am respectfully bound by the judgment of the Supreme Court in case of Sumitomo Heavy Industries Ltd. (supra), in case of National Thermal Power Corporation (supra) and judgment of the Division Bench of this court in case of Konkola Copper Mines (PLC) (supra) which in my view squarely apply to the f....
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....resent petition filed under section 9 of the Arbitration and Conciliation Act, 1996 is an application for enforcement of the jurisdictional award, interim award or is simplicitor for interim measures against the respondents independently. Submission of the respondents is that if as per law of India, if final relief cannot be enforced in India in view of the subject matter of the difference being not capable of settlement by arbitration under the law of India or if enforcement of the award would be contrary to public policy of India, interim measures in that situation can not be granted by this court under section 9 of the Act. 105. In my view, the law of arbitration agreement, which in this case, is law of England, would apply to the application for impugning the foreign arbitral award. The Arbitration Act 1996 (English Arbitration) would apply also since the seat of arbitration was in England at Wales and Northern Ireland which provides for a remedy to impugn an arbitral award, which the respondent has failed to avail of. This petition is thus not maintainable in this Court and deserves to be rejected. 102. This court in case of HSBC PI Holdings (Mauritius) Limited (su....
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....ation Act, 1996 is an application for enforcement of the jurisdictional award, interim award or is simplicitor for interim measures against the respondents independently. Submission of the respondents is that if as per law of India, if final relief cannot be enforced in India in view of the subject matter of the difference being not capable of settlement by arbitration under the law of India or if enforcement of the award would be contrary to public policy of India, interim measures in that situation cannot be granted by this court under section 9 of the Act. 77. It is not in dispute that under law of Singapore, arbitral tribunal has jurisdiction to decide the allegations of fraud, forgery and fabrication in arbitration proceedings. In my view, Dr. Tulzapurkar, learned senior counsel for the petitioner is right in his submission that the subject matter of difference in the arbitration proceedings before the arbitral tribunal was claim for damages made by the petitioner which was capable of settlement by arbitration even under law of India. The learned senior counsel is right in his submission that the subject matter of the difference if not capable by settlement of arbitra....
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....the issues. 80. Having taken a view that law of Singapore would apply to the parties in this proceedings and under laws of Singapore, respondents would have remedy of challenge the interim awards before the appropriate court at Singapore and the respondents not having challenged the said jurisdictional award and interim award, in my view the said jurisdictional award and interim award made by the arbitral tribunal between the same parties arising out the same agreement in the arbitration proceedings have become final and conclusive on the issue of jurisdiction and the respondents are barred by the principles of estoppel in re-agitating the same issue in this proceedings. The principles of law laid down by the Supreme Court and this court in various judgments referred to aforesaid by the petitioner are squarely applicable to the facts of this case and are binding on this court. In my view there is no merit in the submission of Mr.Rohatgi, learned senior counsel that the issue raised by the respondents was a pure question of law and the doctrine of the estoppel could never apply to such question of law or to a jurisdictional question. In my view the principles of issue estop....
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....their arbitrator. Respondent did not appoint any arbitrator. Petitioner filed an application under Section 11 of the Arbitration Act before the Supreme Court. In those proceedings, it was contended by the respondent that Section 11(6), (8) and (12) of the Arbitration Act would not be applicable as the arbitration agreement provided that arbitration was to be conducted in Tokyo (Japan) and was governed by law of arbitration applicable in Japan, particularly Code of Civil Procedure of Japan, 1890. by an order dated 24th July 2002, the Supreme Court held that the proposed arbitration was to be governed by Japanese law and the place of arbitration was also Tokyo and thus Indian Courts did not have jurisdiction to pass any orders for appointment of arbitrators. By letter dated 14th August 2002, petitioner informed the respondent that they would apply to Japanese Court for nomination of an arbitrator on behalf of the respondent. Since respondent did not appoint any arbitrator, petitioner applied to the Tokyo District court for nomination of an arbitrator as per the terms of agency agreement and provisions of Code of Civil Procedure of Japan 1890 regarding arbitration proceedings. The res....
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....sive judgement of a Court of Justice. Section 801. * (1) Application to set aside an award may be made in any of the following cases: 1. Where the arbitration was one which ought not to have been allowed; 2. Where the award orders a party to do an act which is prohibited by law; 3. Where in the arbitration procedure the parties were not lawfully represented; 4. Where the parties were not heard in the arbitration procedure; 5. Where the award does not show the ground on which the decision was made; 6. Where for any of the reasons specified in 4, 5, 6, 7 and 8 of Section 338(1) of the Code of Civil Procedure a motion for a new trial is to be allowed. * (2) Where otherwise agreed between the parties, an award cannot be set aside for the reasons specified in 4 and 5 in the preceding Sub-Section. Section 802. * (1) Execution by virtue of an award can be carried out only if it is pronounced to be allowed by an execution judgment. * (2) No such execution-judgment as is referred to in the preceding Sub-Section shall be given, if there exists any ground upon which application for sett....
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....respondents pursuant to the order passed by the Supreme Court of India, it is clear that the respondents had opposed the appointment of arbitrator on various grounds including the ground that the agency agreement including arbitration agreement became void. It was also pleaded by the respondents that there was change of method of transportation in the year 1981 and since then the respondents were supposed to do agency business of transportation by containers pursuant to oral agreement or exchange of letters between the parties. The respondents had pleaded oral agreement for such alleged changes in the nature of work carried out by the respondents. The respondents had also pleaded duress on the part of the petitioner. By the said order dated 9th February, 2005 the Tokyo District Court held that there was no evidence that the parties rescinded or concluded a new agreement which differed from the agency agreement. The parties had agreed at the time of concluding addendum that all terms and conditions of the agency agreement remained unchanged in almost all the addendum and thus arbitration agreement remained in force upto the date of passing the said order. It is held by the Tokyo Dis....
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....ase of Jindal Drugs Limited (supra) relied upon by Mr.Kamat, learned counsel for the respondents is concerned, it is held by this court that a comparison of provision of section 48 and section 34 of the Arbitration and Conciliation Act shows that the grounds on which a domestic award can be challenged as also the grounds on which a party can resist enforcement of a foreign award are identical. It is held that when enforcement of award is sought against the petitioner,it can resist the enforcement of the award on the same grounds on which it could have challenged the award under section 34 of the Act. Supreme Court in its recent judgment in case of Shri Lal Mahal Ltd. vs. Progetto Grano S.P.A. JT 2003 (11) SC 84 has held that enforcement of foreign award would be refused under section 48 (2) (b) only if such enforcement would be contrary to (I) fundamental policy of Indian law or (II) the interests of India or (III) justice or morality. It is held that the wider meaning given to the expression 'public policy of India' occurring in section 34 (2) (b) (II) in case of Saw Pipes decided by the Supreme Court is not applicable where objection is raised to the enforcement of the fo....
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....c policy of India if it is covered by one of the three categories enumerated in Renusagar Power Co. Limited v. General Electric Co. MANU/SC/0195/1994 : 1994 Supp (1) SCC 644. Although the same expression 'public policy of India' is used both in Section 34(2)(b)(ii) and Section 48(2)(b) and the concept of 'public policy in India' is same in nature in both the Sections but, in our view, its application differs in degree insofar as these two Sections are concerned. The application of 'public policy of India' doctrine for the purposes of Section 48(2)(b) is more limited than the application of the same expression in respect of the domestic arbitral award. 26. We are not persuaded to accept the submission of Mr. Rohinton F. Nariman that the expression "public policy of India" in Section 48(2) (b) is an expression of wider import than the "public policy" in Section of the Foreign Awards Act. We have no hesitation in holding that Renusagar Power Co. Limited v. General Electric Co. MANU/SC/0195/1994 : 1994 Supp (1) SCC 644 must apply for the purposes of Section 48(2)(b) of the 1996 Act. Insofar as the proceeding for setting aside an award Under Section 34 i....
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....n the judgment of this court in case of Jindal Drugs Limited (supra) would be totally misplaced being contrary to the principles laid down by this court are overruled by the Supreme Court on that issue. 105. The appeal as well as Special Leave Petition arising out of the said judgment dated 28th January, 2014 in case of Mitsui OSK Lines Ltd.(Japan) (supra) Arbitration Petition No.842 of 2009 are dismissed. 106. In my view, the award rendered by the arbitral tribunal was a foreign award rendered in international commercial arbitration. The parties were governed by the laws of England. The jurisdictional seat of arbitration was at London. The parties were thus governed by the provisions of Arbitration Act, 1996 (English Arbitration). The said Arbitration Act specifically provides for remedy of challenge under sections 67 and 68 which remedy has to be exercised within the time prescribed under the said Act. The petitioners admittedly not having challenged the said declaratory arbitration award and also the final award, both the awards have become final. In my view, the petitioners are estopped from challenging the said award. Since Part I of the Arbitration and Conciliation Act,....
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....court dismissed the said arbitration petition filed under section 9 by applying the principles laid down by the Supreme Court in case of Videocon Industries Ltd. (supra). The petitioners having accepted the said order passed by this court, in my view cannot be allowed to now urge that since the respondents had filed the said petition filed under section 9 in this court, consequently arbitration petition filed by the petitioners under section 34 of the Arbitration and Conciliation Act for impugning the foreign award also would be maintainable in this court and that Part I of the Arbitration and Conciliation Act, 1996 would be applicable. 110. A perusal of the order passed by this court in the arbitration petition filed by the respondents under section 9 concludes the issue that the parties were governed by the English law for all the purposes. In my view, the said order passed by this court thus assist the respondents and not the petitioners. The petitioners thus could not have filed the petition under section 34 of the Arbitration and Conciliation Act, 1996 on the premise that the petition under section 9 was filed by the respondents in this court under Part I of the Arbitration....
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....ntire Gencon which admittedly included arbitration agreement. The entire terms and conditions of the charter party agreement which incorporated the Gencon stood incorporated in the letter of guarantee including the arbitration agreement. 113. Supreme Court in case of Alimenta S.A. (supra) (1987) 1 SCC 615 has noticed that there has been a long continued practice in England that the arbitration clause is not incorporated into the bill of lading by general words unless it is explicitly done in clear words either in the bill of lading or in the charter party. Supreme Court held that the parties were aware of the arbitration clause of an earlier contract, the subject matter of which is different from the contract which is being entered into by them, but incorporate the terms of the earlier contract by reference by using general words and thus there would be no bar to such incorporation merely because the subject matter of the two contracts were different, unless, however, the incorporation of the arbitration clause would be insensible or unintelligible. In my view, judgment of Supreme Court in case of Alimenta S.A. (supra) would apply to the facts of this case. 114. In this case ....
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...., such reference constitutes an arbitration agreement, if the contract is in writing and the reference is such as to make that arbitration clause a part of the contract. The case squarely falls under Section 7(5) of the Act and there is an arbitration agreement between the parties as per clause 15 of FAI Terms. 117. Learned Single Judge of this court in case of United Shippers Limited (supra) Arbitration Application No.50 of 2007 has considered a similar situation and has held that the provisions of the MOU did not restrict the incorporation of only a part of the second contract. It incorporated the whole. The learned Single Judge has also in the said judgment adverted to the judgment of the Supreme Court in case of M.R.Engineers and Contractors Private Limited (supra) (2009) 7 SCC 696 relied upon by the petitioners and has held that there was incorporation of the entire contract including arbitration clause. 118. In so far as judgment of Supreme Court in case of M.R.Engineers and Contractors Private Limited (supra) relied upon by the learned counsel for the petitioners is concerned, in my view the judgment of Supreme Court is clearly distinguishable in the facts of this case....
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....titioners have lost their right to challenge those findings. Petitioners cannot be allowed to challenge those findings under section 34 or under section 48. 122. In so far as judgment of this court in case of Oil and Natural Gas Corporation Ltd. (supra) 2004(6) Bom.C.R.100 is concerned, this court has considered section 16 of the Arbitration and Conciliation Act, 1996 and has held that even if the party has participated in the appointment of the arbitral tribunal, he can raise an objection about the constitution of arbitral tribunal under section 16(2) of the Act. The said judgment of this court does not apply to the facts of this case at all since the parties were governed by the English Arbitration Act. In my view, the reliance placed on the judgment of this court in case of Oil and Natural Gas Corporation Ltd. (supra) is thus totally misplaced. 123. In so far as judgment of this court in case of Jimmy Construction Pvt. Ltd.,Nagpur (supra) (2008) 3 Mah.L.J.141 relied upon by the petitioners is concerned, a perusal of the said judgment indicates that the appointment of the arbitrator by the Union of India was illegal and contrary to the terms of the contract. The petitioner ....
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....l is concerned, in my view there is no merit in the submission of the learned counsel. The arbitration agreement stood incorporated in the letter of guarantee and thus the petitioners were party to the arbitration agreement. Reliance placed on the judgment of the Supreme Court in case of Sukalu Ram Gond (supra) (1994) 5 SCC 570 is totally misplaced. 127. In so far as submission of the learned counsel for the petitioners that even under section 44 of the Arbitration and Conciliation Act, 1996 arbitration agreement has to be in writing and since there was no arbitration agreement in writing, even the court could not have referred the parties to arbitration is concerned, in my view there is no merit in this submission of the learned counsel. In the charter party agreement, there was a reference to arbitration agreement to be read with a rider to the said charter party agreement. The said document was in writing. Reliance placed on section 44 is misplaced. Reliance placed on the judgment of the Supreme Court in case of Shin-Etsu Chemical Co.Ltd.(supra) AIR 2005 SC 3766 is thus misplaced. 128. In so far as submission of the learned counsel for the petitioners that since the petiti....
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....ld not have been appointed by the parties but could be only appointed by the appropriate court in London. The arbitration clause in the charter party agreement was not substituted or deleted by the rider. Only the additional information is provided by the said rider. The petitioners had raised this issue before the arbitral tribunal and the same has been negatived in the declaratory arbitration award which award has become final and binding. No such issue thus can be raised by the petitioners at this stage under section 34 or under section 48. Be that as it may, even if there was no London Arbitration Council, the other part of the arbitration agreement being clear and could be operated. 131. In my view the words 'London Arbitration Council' inserted in the rider would not make an arbitration clause otiose or non existent. If any part of the arbitration agreement is vague or does not give any sensible meaning, the court has to interpret such clause in a business like manner and in such a way that the parties are encouraged to refer their disputes to arbitration. Court has to consider the intention of parties. In my view thus there is no substance in the submission of the....
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....antee. The Supreme Court in that situation held that the second guarantor was not a party to the loan agreement containing arbitration clause between the lender and borrower and could not be subjected to the arbitration award. However, in this case the petitioners have not only executed the letter of guarantee but the charter party agreement between the respondents and the said D.B.Shipping LLC stood incorporated including arbitration agreement in the letter of guarantee. Judgment of Supreme Court in case of S.N.Prasad (supra) thus does not assist the petitioners. 135. In so far as judgment relied upon by the petitioners in case of Federal Bulk Carriers Inc (supra) (1989) 1 Lloyd's Law Reports, 103 judgment in case of Skips A/S Nordheim and others (supra) (1983) 2 Lloyd's Law Reports, 592, judgment in case of Siboti K/S (supra) (2003) 2 LLR 364 and judgment in case of T.W.Thomas & Co. Limited (supra) (1912) Appeal cases page 1 are concerned, since the entire contract entered into between the respondents and D.B.Shipping LLC including arbitration agreement stood incorporated in the letter of guarantee, the judgment relied upon by the petitioners in the aforesaid four case....
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..... (Nigeria) (supra) (2011) 2 Lloyd's Law Reports, 531, judgment in case of West Tankers INC vs.Allianz Spa and another (supra) (2011) 2 Lloyd's Law Reports 117 and judgment in case of West Tankers INC vs.Allianz Spa and another (The "Front Comor") (2012) 1 LLR 398 . 138. A perusal of section 66(4) read with sections 100 and 104 of the English Arbitration Act, clearly indicates that the provisions prior to section 104 would not affect any right to rely upon or enforce at New York Convention Law or common law under section 66. In my view if the respondents would have applied for enforcement of the declaratory arbitration award or final award in England under the provisions of English Arbitration Act, the respondents would have required leave of the appropriate court under section 66. For the purpose of enforcement of such award in India under section 46, no such leave of the foreign court was required. In my view Mr. Andhyarujina, learned counsel for the respondents has rightly placed reliance on the judgment of the Supreme Court in case of Fuerst Day Lawson Ltd.(supra) (2001) 6 SCC 356 and in particular paragraph (31) thereof in support of his submission that a separate p....
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.... purposes of revenue or that the contract shall not be entered into so as to be valid at law. A distinction is sometimes made between contracts entered into with the object of committing an illegal act and contracts expressly or impliedly prohibited by statute. The distinction is that in the former class one has only to look and see what acts the statute prohibits; it does not matter whether or not it prohibits a contract: if a contract is made to do a prohibited act, that contract will be unenforceable. In the latter class, one has to consider not what act the statute prohibits, but what contracts it prohibits. One is not concerned at all with the intent of the parties, if the parties enter into a prohibited contract, that contract is unenforceable. (See St. John Shipping Corporation v. Joseph Rank.) (See also Halsbury's Laws of England, 3rd Edn., Vol. 8, p. 141.) 20. It is well established that a contract which involves in its fulfilment the doing of an act prohibited by statute is void. The legal maxim A pactis privatorum publico juri non derogatur means that private agreements cannot alter the general law. Where a contract, express or implied, is expressly or by implic....
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.... proceeds. Unless and until the said form is filled up, and permission is granted, no sale of a property by a foreigner can be recognised. Even if as between two contracting parties the title may pass, while exercising the discretion under Sec. 20 of the Specific Relief Act, court will have to consider whether it should be a party to a transaction for which permission is not obtained from the Reserve Bank of India. 36. If a specific performance decree is passed that will amount to allowing the parties to bypass the provisions of FERA. The question whether permission has to be granted or not is matter which has to be decided only by the Reserve Bank of India, and the Court cannot supervise the exercise of such statutory powers by the Reserve Bank of India. When a transaction is permitted only after obtaining permission from a Statutory authority over whom the Court has no control, the relief of specific performance will not be usually granted. It is not enforcing a contract alone. It has to take into consideration the rights of the Reserve Bank of India and also the national interest. 37. The learned counsel for the defendant also brought to our notice a decision o....
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....not obtained before execution of letter of guarantee by the petitioners the petitioners themselves are responsible for the same. Learned counsel submits that in any event such permission can be obtained post facto. Learned counsel placed reliance on section 13 of the Foreign Exchange Management Act, 1999 which provides for payment of penalty in case of contravention of any of the provisions of the Act and submits that since there is provision of payment of penalty, the transaction entered into without permission of the authority even if required does not become void. Section 13 of the Foreign Exchange Management Act, 1999 read thus :- 13. Penalties.-(1) If any person contravenes any provision of this Act, or contravenes any rule, regulation, notification, direction or order issued in exercise of the powers under this Act, or contravenes any condition subject to which an authorization s issued by the Reserve Bank, he shall, upon adjudication, be liable to a penalty up to thrice the sum involved in such contravention where such amount is quantifiable, or up to two lakh rupees where the amount is not quantifiable, and where such contravention is a continuing one, further pena....
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....cting the law on the subject has chosen to do away with such a provision. We are of the view that the same shows a legislative intent to not void the transaction even if in violation of the said Act. Thus we are of the opinion that the plea of the appellant Company in this regard is without any force. 12. The pleadings of the appellant Company are conspicuously silent as to why Mr. Ravi Chilukuri who has a substantial stake in the appellant Company and who from the documents filed by the respondent is the face/promoter of the appellant Company and/or of the Group of Companies to which the appellant Company belongs signed the Guarantee Declaration, Promissory Notes and as to how the Resolution aforesaid of the Board of Directors of the appellant Company landed with the respondent. Similarly though it is contended that comfort letter aforesaid issued by the Bankers of the appellant Company does not refer to the transaction in question but there is no explanation as to for which transaction it was obtained from the bank. The appellant obviously had a stake in the Stock Purchase and Sale Agreement (supra), for the appellant Company to stand guarantee for the same. The world is....
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....ontemplated by Section 9 of FERA is not a prior permission. Therefore, even ex-post-facto permission can also be obtained. In any event, it is submitted that because the award is made in an arbitration which was under ECAAP, which has not received the permission of RBI, the award cannot be faulted. At the most, at the time of execution if the petitioner has not obtained permission of RBI by then the respondent may be able to resist payment without the petitioner obtaining the permission of the Reserve Bank of India. In my opinion, the objection raised on behalf of the respondent is entirely covered by the judgment of the Supreme Court in the case of Renusagar, against the respondent. The observations of the Supreme Court from paragraphs 81 to 83 of that judgment are relevant. They read as under:- 81. As regards the second submission of Shri Venugopal that the enforcement of the Arbitral Award would constitute violation to Section 9(1) of FERA which imposes prohibition to make any payment to or for the credit of any person resident outside India except in accordance with any general or special exemption from the provisions of this sub-section which may be granted conditiona....
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....racts by setting up the shield of illegality. An implied term is engrafted upon the contract of parties by the second part of sub-section (2) and by sub-section (3) the responsibility of obtaining the permission of the Reserve Bank before enforcing judgment, decree or order of Court, is transferred to the decree-holder. The section is perfectly plain, though perhaps it might have been worded better for which a 'model existed in England (p.1031) (of SCR): (at p.1290 of A.I.R.)." 83. To the same effect is the law laid down by the House of Lords in England in (Contract and Trading Co.Ltd. v. Barbey), 1960 A.C. 244 wherein the following observations from the judgment of Somerwell LJ. in (Cummings v. London Bullion Company Ltd.), 1952 (1) K.B. 327, have been quoted with approval: "The person entitled to the payment issues a writ. The fact that permission has not been obtained is not a defence to the action. On the one hand, the plaintiff can obtain judgment, the money due under the judgment being subject to Part II of the Act and the Rules to which I have referred. The defendant assuming that he is admitting liability, apart from the provisions of the Act, can make....
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....acto permission could have been granted by the RBI. Relying upon the case of LIC of India Vs. Escorts Ltd. (1986) 1 SCC 264 Section 29 (1) of FERA came to be interpreted. It was held that a permission under FERA may be sought at any time, even subsequent to the acts sought to be restricted. It was held that the commission of the acts envisaged under Section 16 do not contemplate offences under those sub clauses. The offence would be completed, if the acts were done without the permission of the RBI and unless there was a positive decision on the part of the RBI to grant or refuse the permission the offence was not complete. Consequently the offence under Section 8 of FEMA r/w the notification dated 3rd May, 2000 of the RBI would go the same way. 43. Mr. Chinoy has relied upon the judgment in the case of Director of Enforcement Vs. MCTM Corporation Pvt. Ltd. & Ors.(1996) 2 Supreme Court Cases 471 to show that the same analogy was applied under Section 10 of the FERA, 1947 which was analogous to Section 16 of the FERA, 1973 so that the person, who had the right to receive FE could not refrain from doing or taking any action which would have effect of delayi....
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....earing for the respondents submits that the scope of objection under section 48 of the Arbitration and Conciliation Act, 1996 is extremely limited. None of the grounds setout in section 48 are satisfied by the petitioners in this case. Learned counsel submits that enforcement of a foreign award can be refused only if it is contrary to the fundamental policy of Indian law, interests of India or justice or morality and not on any other ground. Reliance is placed on the judgment of Supreme Court in case of Shri Lal Mahal Limited (supra) (2014) 2 SCC 433 and in particular paragraphs 22, 23 to 28, 45 to 47 which read thus :- 22. It is not necessary to narrate in detail the facts in Renusagar. Suffice it to say that Arbitral Tribunal, GAFTA in Paris passed an award in favour of General Electric Company (GEC) against Renusagar. GEC sought to enforce the award passed in its favour by filing an arbitration petition under Section 5 of the Foreign Awards Act in the Bombay High Court. Renusagar contested the proceedings for enforcement of the award filed by GEC in the Bombay High Court on diverse grounds. Inter alia, one of the objections raised by Renusagar was that the enforcement o....
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....ention that under Article I(e) of the Geneva Convention Act, 1927, it is permissible to raise objection to the enforcement of arbitral award on the ground that the recognition or enforcement of the award is contrary to the public policy or to the principles of the law of the country in which it is sought to be relied upon. To the same effect is the provision in Section 7(1) of the Arbitration (Protocol and Convention) Act, 1937 which requires that the enforcement of the foreign award must not be contrary to the public policy or the law of India. Since the expression 'public policy' covers the field not covered by the words 'and the law of India' which follow the said expression, contravention of law alone will not attract the bar of public policy and something more than contravention of law is required. 66. ... This would mean that 'public policy' in Section 7(1)(b)(ii) has been used in a narrower sense and in order to attract the bar of public policy the enforcement of the award must invoke something more than the violation of the law of India. Since the Foreign Awards Act is concerned with recognition and enforcement of foreign awards which are governed by the principles....
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....he Report, it can be safely observed that while accepting the narrow meaning given to the expression "public policy" in Renusagar in the matters of enforcement of foreign award, there was departure from the said meaning for the purposes of the jurisdiction of the Court in setting aside the award under Section 34. 27. In our view, what has been stated by this Court in Renusagar with reference to Section 7(1)(b)(ii) of the Foreign Awards Act must apply equally to the ambit and scope of Section 48(2)(b) of the 1996 Act. In Renusagar it has been expressly exposited that the expression "public policy" in Section 7(1)(b)(ii) of the Foreign Awards Act refers to the public policy of India. The expression "public policy" used in Section 7(1)(b)(ii) was held to mean "public policy of India". A distinction in the rule of public policy between a matter governed by the domestic law and a matter involving conflict of laws has been noticed in Renusagar. For all this there is no reason why Renusagar should not apply as regards the scope of inquiry under Section 48(2)(b). Following Renusagar, we think that for the purposes of Section 48(2)(b), the expression "public policy of India" must b....
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.... some error has been committed. Under Section 48(2)(b) the enforcement of a foreign award can be refused only if such enforcement is found to be contrary to: (1) fundamental policy of Indian law; or (2) the interests of India; or (3) justice or morality. The objections raised by the appellant do not fall in any of these categories and, therefore, the foreign awards cannot be held to be contrary to public policy of India as contemplated under Section 48(2)(b). 147. Learned counsel also placed reliance on the judgment of Delhi High Court in case of Penn Racquet Sports (supra) ILR (2011) Delhi 181 and in particular paragraph (44) which read thus :- 44. As held by the Supreme Court, the recognition and enforcement of a foreign award cannot be denied merely because the award is in contravention of the law of India. The award should be contrary to the fundamental policy of Indian law, for the Courts in India to deny recognition and enforcement of a foreign award. The other grounds recognized by the Supreme Court to refuse recognition and enforcement of a foreign award are that the award is contrary to the interests of India, or justice or morality. Merely because a monetary a....
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....this issue read thus :- 2. The petition for winding up of Videocon was instituted by the Bank, which is a bank incorporated under the Laws of Italy. It is the case of the Bank that in the month of October 2006 Videocon approached the Bank for financial assistance to the tune Euros 35 Millions for its first generation step down subsidiary viz. VDC Technologies S.P.A. (the Subsidiary). As a condition to secure the financial assistance, Videocon offered and ultimately issued a guarantee letter styled as 'Patronage Letter' on 5 June 2007 in favour of the Bank. Under loan agreement dated 6 June 2007, the Bank advanced financial assistance to the tune of Euros 35 Million to the Subsidiary, in which the terms and conditions for such advance, came to be set out. Clause 7.1 of the loan agreement, inter alia required the Subsidiary to maintain sufficient balance in its current account to repay the loan installments. There was a breach of this provision and consequent default in payment of the very first loan installment. The Bank, therefore, took up the issue of default with the Subsidiary. 11(c). Videocon also has the defence that the Patronage Letter was issued in....
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....diary with registered office in Italy which is a person resident outside India. Learned counsel for Videocon vehemently submitted that since no special permission of the Reserve Bank is on record and no general permission was granted at the time of issuance of the letter of guarantee in 2007, it may be held that the Patronage letter was null and void ab initio. 30. It is not possible to accept the above contention for several reasons. In the first place the words "or with the general or special permission of Reserve Bank" cannot be construed as prior permission of the Reserve Bank. Where the Regulations contemplate that prior permission or prior approval of the Reserve Bank is required to be obtained, it is so specified. For instance, Regulation 3.A imposes restriction of obtaining overseas guarantee in the following terms: "3.A No corporate registered under the Companies Act, 1956 (1 of 1956) shall avail domestic rupee denominated structured obligations by obtaining credit enhancement in the form of guarantee by international Banks, international financial institutions or joint venture partners, except with the prior approval of the Reserve Bank." [Emphasis suppl....
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....e into force from 27 May 2011 and therefore long after issuance of the Patronage letter, it is necessary to see how Reserve Bank itself looked at such a situation in the year 2007. Question Nos. 34 and 35 and the answers given to the respective questions by the Reserve Bank in the Appendix II of the Foreign Exchange Management Manual 2007 Edition contain "Frequently Asked Questions", which inter alia, read as under: Q. 34 Can an Indian Party have a JV/WOS through a Special Purpose Vehicle (SPV) under the Automatic Route? A. Yes. Direct investment through the medium of a SPV is permitted under the Automatic Route. Q. 35 Can an Indian Party directly fund such stepsubsidiaries? A. Where the JV/WOS has been established through a SPV all funding to the operating subsidiary should be routed through the SPV only. However, in the case of guarantees to be given to the step down subsidiary these can be given directly by the Indian Party provided such exposures are within the permissible financial commitment of the Indian Party. [Emphasis supplied] 33. Answer to Q. 35 leaves no manner of doubt that it was permissible for Videocon to give Guarantees....
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....iew that in matters of commercial transactions involving crores of amount where the company facing winding up proceedings had stood a guarantor, if any such defence were to be accepted, we would be giving a wrong signal and dissuading foreign commercial entities from relying on the guarantees given by Indian Companies and which would ultimately undermine the role of India the world of trade and commerce. We could not agree less. We, therefore, do not find any merit in submissions of Dr. Tulzapurkar that the order of admission of the winding up petition was erroneous on any such count. 150. A perusal of the record clearly indicates that the petitioner had not only in execution of letter of guarantee in favour of the respondent so as to secure the performance of the said D.B.Shipping LLC but had also participated in the execution of the charter party agreement between the respondent and the said D.B.Shipping LLC. Even in the correspondence entered into with the respondent prior to the date of the execution of such charter party agreement, some of which were signed by the petitioner on behalf of the said D.B.Shipping LLC, there was a reference to such letter of guarantee to be give....
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....rantees given by Indian Companies and which would ultimately undermine the role of India, the world of trade and commerce. This court also considered the conduct of the appellant by holding that the defence now raised by the appellant that the said patronage letter was issued in contravention of provisions of FEMA or in breach of any other requirements was only after receiving statutory notice i.e. after almost four years of issuance of the patronage letter. It is held that even if the appellant therein had committed any wrong in issuing the patronage letter without obtaining permission of the Reserve Bank, as per the settled legal position, it was not open to a party to take advantage of its own wrong. In my view, the judgment of the Division Bench in case of Videocon Industries Ltd.(supra) squarely applies to the facts of this case. Division Bench has already interpreted the regulation of Foreign Exchange Management (Guarantees) Regulation, 2000 and has also considered the conduct of the appellant who had not raised any such objections for several years and has held that no such prior permission of the Reserve Bank was required for issuing such letter of guarantee. In this case a....
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....Ltd. (supra) must apply for the purpose of section 48(2) (b) of the Arbitration and Conciliation Act, 1996. It is held that although the same expression 'public policy of India' is used both in Section 34(2)(b)(ii) and Section 48(2)(b) and the concept of 'public policy in India' is same in nature in both the Sections but, its application differs in degree insofar as these two Sections are concerned. The application of 'public policy of India' doctrine for the purposes of Section 48(2)(b) is more limited than the application of the same expression in respect of the domestic arbitral award. Supreme Court has held that section 48 of the Arbitration and Conciliation Act, 1996 does not give an opportunity to have a "second look" at the foreign award in the award enforcement stage. It is held that under section under Section 48(2)(b) the enforcement of a foreign award can be refused only if such enforcement is found to be contrary to: (1) fundamental policy of Indian law; or (2) the interests of India; or (3) justice or morality. In my view the principles laid down by the Supreme Court in case of Shri Lal Mahal Limited (supra) (2014) 2 SCC 433 squarely applies to ....
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....lation of the provisions of the said regulation, in my view would not be contrary to the fundamental policy of Indian law as interpreted by the Supreme Court in case of Renusagar Power Co. Ltd. (supra). 159. Delhi High court in case of SRM Exploration Pvt.Ltd. (supra) (2012) 4 Company Law Journal 178 (Delhi) has dealt with the provisions of FEMA, 1999 including section 3 and has held that there was no provision voiding the transaction in contravention thereof. Delhi High Court has also referred to Section 47 of FERA 1973 which prohibited from entering into contract agreement directing or indirectly for operation of the said Act or any provisions thereof. It is held by Delhi High Court that the legislature while reenacting the law on the subject has chosen to do away with such a provision which shows a legislative intent to not void the transaction even if in violation of the said Act. I am in respectful agreement with the view expressed by Delhi High Court in case of SRM Exploration Pvt.Ltd. (supra). Delhi High Court in the said judgment has held that the world is a shrinking place today and commercial transactions spanning across borders abound. The court was of the opinion tha....
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....r se may not be illegal. But its enforcement requires compliance of statutory conditions, failure of which will amount to statutory violation. In my view this judgment of the Supreme Court does not assist the petitioner since no prior consent of the Reserve Bank or any other authority is required for issuance of the nature of the guarantee executed by the petitioner. 162. Delhi High Court in case of Penn Racquet Sports (supra) ILR (2011) Delhi 181, after adverting to the judgment of Supreme Court in case of Fuerst Day Lawson Ltd.(supra) (2001) 6 SCC 356 held that narrow meaning must be given under Section 48 in proceedings for enforcement of a foreign award and affirmed the principle that only when the nation's "most basic notions of morality and justice" are violated, would the public policy doctrine be applied to refuse enforcement. Delhi High Court has followed the said judgment of the Supreme Court in case of Fuerst Day Lawson Ltd. (supra) and has held that the award should be contrary to the fundamental policy of Indian law, for the courts in India to deny recognition and enforcement of a foreign award. 163. In my view since no prior permission of the Reserve Bank or....