TaxTMI 
TaxTMI 
2006 (6) TMI 527
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.... Limited Company incorporated under the Companies Act. The respondent in the year 1994 entered into negotiations with a Company called "Enco Engineering Chur AG of Sagenstrasse 97, 7001 Chur, Switzerland. On 30.1.1995 the respondent entered into four related agreements with Enco for setting up ascorbic acid Acid plant in India. The four agreements are as under:- (i) Engineering Contract for Ascorbic for Acid Plant (ECAAP); (ii) Supply contract for Ascorbic Acid plant (SCAAP); (iii) Service agreement for Ascorbic Acid plant (SAAAP); and (iv) License agreement for Ascorbic acid plant (LAAAP). Under the ECAAP, Enco was obliged to provide the respondent with the technical information and basic engineering documentation for the construction, commission, operation and maintenance of the Ascorbic Acid Plant. In consideration of Enco's obligation under the Agreement, the respondent was required to pay a total fee of Swiss Francs 86,00,000/- in the manner which was provided in the Agreement. ECAAP as well as the other three agreements had an arbitration clause. In March,1995 with the consent of the respondent, Enco. assigned ECAAP to the petitioner. Because of that agreeme....
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....tion were members of the I.C.C. Arbitral Tribunal. In the said application filed under Section 9 of the Act, an order dated 13.3.2000 was passed without notice to the respondents in that petition. That order reads as under :- Heard learned Counsel for the petitioners. Issue notice to the respondents returnable after 4 weeks i.e. on 10.4.2000. Ad-interim relief in terms of prayer Clause (a) till 10th April,2000. This order was continued from time to time till the Arbitration petition No. 49 of 2000 was decided. The ICC Tribunal took the view that the interim order passed by this Court in application No. 98 of 2000 was not binding on the Arbitral Tribunal and therefore, they decided to proceed further. The petitioner submitted his written submission on interest and cost on 14.3.2001. The respondent however, notified the Tribunal that the respondent does not intend to make any submission on the issue of interest and cost. Mr. Desai the respondent's nominee on the Arbitral Tribunal indicated that he is unable to continue on the Arbitral Tribunal due to the interim order passed by this Court. The International Court of Arbitration therefore, decided to appoint Mr. Ashok Sancheti ....
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.... rely on the the judgment of the Supreme Court in the case Uttam Namdeo Mahale v. Vithal Deo and Ors. to contend that in a special Law when no period of limitation is prescribed the application of general law i.e. the Limitation Act stands excluded. The petitioner also rely on the judgment of the Supreme Court in the Case of Patel Naranbhai Marghabhai and Ors. v. Deceased Dhulabhai Galbabhai and Ors. contending that whether the Special Act provides for specific period of limitation in respect of appeals and makes only certain provisions of Limitation Act applicable to such appeals to that extent only the provisions of Limitation Act stands extended and applicability of other provisions by necessary implications stands excluded. The petitioner also rely on a judgment of the learned Single Judge in the case ONGC v. Jagson Intl. Ltd. reported at to contend that there is no period of limitation provided for filing an appeal under Section 47 of the Act. On the other hand, according to the respondent, an application under Section 47 of the Act is to be made to a Court, relying on the judgments of the Supreme Court in the cases Union of India v. Momin Construction Company reported at , Th....
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....t challenging the domestic award and it lays down a specific period of limitation for challenging the Award. Section 37 provides for an appeal against certain orders to a Court and Section 37 does not lay down any period of limitation for filing an appeal under that provision. Section 47 of the Arbitration Act provides for making an application to a Court for enforcement of a foreign Award but the provisions itself does not lay down any period for making the application. Section 50 provides for appeal against the orders passed under Section 45 and Section 48 to a Court but it does not lay down any period of limitation. Now so far as appeals provided to a Court are concerned, even assuming that the Limitation Act applies to those appeals then also because in the Schedule of the Limitation Act for the appeals to be filed under Section 37 and Section 50 of the Arbitration Act there is no period provided and as there is no residuary article in relation to appeals like Article 137 in relation to application, if in the Arbitration Act no period of limitation is provided for making an appeal, the period cannot be imported from the Limitation Act. So far as the applications to the court un....
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....e case Nityananda M. Joshi and Ors. v. Life Insurance Corporation of India and Ors. . The Supreme Court in that case was considering whether the period of limitation prescribed by Article 137 of the Limitation Act is applicable to applications made under Section 33-C(2) of the Industrial Disputes Act. The observations made by the Supreme Court in paragraph 3 of that judgment are relevant. They read as under:- 3. In our view Article 137 only contemplates applications to Courts. In the Third Division of the Schedule to the Limitation Act, 1963 all the other applications mentioned in the various articles are applications filed in a court. Further Section 4 of the Limitation Act, 1963, provides for the contingency when the prescribed period for any application expires on a holiday and the only contingency contemplated is "when the court is closed." Again under Section 5 it is only a court which is enabled to admit an application after the prescribed period has expired if the court is satisfied that the applicant had sufficient cause for not preferring the application. It seems to us that the scheme of the Indian Limitation Act is that it only deals with applications to cour....
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....efore the Supreme Court for execution of that order after lapse of a period of 12 years. The High Court relying on the judgment of the Bombay High Court in Babaji Khanduji v. Kushaba Ramaji 1906(8) Bombay Law Reporter 218, ruled that there is no period of limitation prescribed and therefore, because the execution of the order has been taken up after 12 years the execution is not barred by the Law of Limitation. The Supreme Court by its judgment in the case Uttam Namdeo Mahale v. Vithal Deo and Ors. has confirmed the order passed by the High Court. The observations that the Supreme Court has made in paragraph 4 of the Judgment, in my opinion, are to be read in the context in which they are made. They have been made in relation to the provisions of Section 21 of the Mamlatdar's Court Actwhich does not contemplate a party making any application for execution of order made in his favour. The provision casts duty on the Mamlatdar to execute the order. The observations of the Supreme Court in paragraph 4 of the Judgment in "Uttam Namdeo Mahale" case have also to be read in the context of the judgment of the Division Bench of this Court which was followed by the learned Sing....
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....w of limitation provided in the Limitation Act (Act 2 of 1963) stands excluded. The Division Bench, therefore, has rightly held that no limitation has been prescribed and it can be executed at any time, especially when the law of limitation for the purpose of this appeal is not there. Where there is statutory rule operating in the field, the implied power of exercise of the right within reasonable limitation does not arise. The cited decisions deal with that area and bear no relevance to the facts. The observations of the Supreme Court that in the absence of any specific limitation provided under the Mamlatdars' Courts Act the provisions of the Limitation Act stands excluded, have to be read in the light of the judgment of the Division Bench referred to above which was followed by the learned Single Judge whose order has been confirmed by the Supreme Court in its judgment in "Uttam Namdeo Mahale" case. So far as the judgment of the learned Single Judge in the case Oil and Natural Gas Corporation Ltd. v. Jagson Intl. Ltd. is concerned, in that case the Court was considering the question whether the period of limitation provided by Section 34 of the Act for making an a....
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....e question arises what is the period of Limitation laid down by the Limitation Act for making such an application Perusal of the provisions of Section 2(j) of the Limitation Act shows that the period of limitation means period of limitation prescribed for any suit, appeal or application by the Schedule. Therefore, to find out what is the period of limitation provided for making an application under Section 47 of the Act one has to refer to the Schedule of the Limitation Act. Perusal of that Schedule shows that so far as applications are concerned, the period of limitation is laid down by the third division. Perusal of Part-I of the third division of the Schedule of the Limitation Act shows that though there is period of Limitation laid down for making application under the Arbitration Act,1940, there is no period of limitation laid down for making an application either under Section 47 of the Arbitration Act 1996 or for making any application under any other provisions of the Arbitration Act 1996. Part II of the Third Division of the Schedule is a residuary provision which lays downs the period of limitation for making any application, for which no period of limitation is provided ....
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....ase of Western Shipbreaking Corporation v. Clare Haven Ltd., reported in 1997(3) Volume 38 Gujarat Law Reporter, 1984. The Petitioner referred to the meaning given to the term "enforcement" in various dictionaries and submitted that when Section 47 of the Act speaks of enforcement, what it really contemplated is execution under Order 21 of the CPC. It is submitted that a foreign award and a decree of a Indian Civil Court is executable under the same provisions and if satisfaction about enforcibility of the Court can be achieved in the same proceedings, why there should be any discrimination and why a separate procedure should be adopted in relation to the foreign award. It is submitted that in its judgment in the case of Furest Day Lawson Ltd., the Supreme Court was considering the judgment of the Delhi High Court, wherein the Delhi High Court had held that until the court records its satisfaction about enforcibility of the foreign award, there is no decree which can be executed, no execution lies for enforcement of foreign award, until the court first records its satisfaction in relation to the foreign award. It is submitted that in its judgment in the case of Furest Da....
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....g State will not impose a substantially more onerous condition for enforcement of a foreign award, than that is imposed on the recognition or enforcement of domestic arbitral Awards. If the period of limitation for enforcement of foreign award is restricted to 3 years the same would make it more onerous than the period of 12 years provided for enforcing a domestic award. In reply, on behalf of the Respondent it is submitted that a foreign award becomes binding under Section 46 of the Act when it becomes enforceable. It is submitted that Section 47 of the Act contemplates an application for enforcement and provides for the parties seeking to enforce the award to perform certain acts. Section 48 provides for enforcement being refused by the court either at the request of the parties against whom it is invoked on the grounds set out in Sub-section 1 and 2 and if the court finds that the subject matter is not capable of being settled by arbitration under the law of India or the enforcement of the award would be contrary to the public policy of India. It is only after the court is satisfied that the foreign award is enforceable under Section 49, that it is binding on the parties and is....
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....Day Lawson and held that the Supreme Court has not bypassed the provisions of Order 21 of the C.P.C. and has also held that it is only after the courts hold that the award is enforceable under Section 49, that it can be executed under Order 21. It is submitted that this Court has interpreted two judgments to mean that though one application can be made for recognition and execution, the question of execution arises only after the Award is recognised as a valid and enforceable Award. The Respondent relies on the rules framed by this Court under the Arbitration Act and submits that the rules contemplates separate applications, one under Section 47, which can be filed under Rule 803 (C)(c) and other for execution under Rule 803(H),(I) and (J). It is submitted that Article 136 of the Limitation Act must be read as a whole. The third column postulates that the 12 years period only commences when (a) the decree or order becomes enforceable, or (b) where the decree or any subsequent order directs any payment of money or delivery of any property to be made at a certain date or at recurring periods when default takes places. Under the scheme of the 1996 Act, a foreign award is only deemed ....
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....strued as including references to relying on an award. Reading of Section 46 of the Act quoted above shows that a foreign award is not considered to be binding in India on the parties to that award immediately after that award is made. But the award is considered to be binding on the parties only when it is found to be enforceable under Chapter-1 Part-II of the Act. Once it becomes binding, it can be relied on by the parties by way of defence, set off or otherwise in any legal proceedings in India. The provisions make it clear that a foreign award which is yet to be found to be enforceable by the competent court cannot be relied on for any purpose in India. It is also not considered to be binding on the parties to the award in India, till the competent court finds it to be enforceable. Finding of the court that the foreign award is enforceable is necessary not only for the purpose of executing that award as a decree, but it is necessary also for relying on that award for any purpose in India. Thus, the term enforcement of a foreign award does not mean merely execution of that award as a decree, but it also includes using that award as a defence in legal proceedings for claiming s....
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....f the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or (e) the award has not yet become binding award on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made. 2. Enforcement of an arbitral award may also Enforcement of an arbitral award may also Enforcement of an arbitral award may also be refused if the Court finds that- (a) the subject-matter of the difference subject-matter of the difference subject-matter of the difference is is not capable of settlement by arbitration under the law of India; or (b) the enforcement of the award would be contrary to the public policy of India. Perusal of the above quoted provisions shows that under Sub-section 1, the court can refuse to enforce the award only after the Respondent in those proceedings satisfies the court that the award is not enforceable for the reasons enumerated in Sub-section 1 of Section 48. In other words, Sub-section 1 of Section 48 casts the burden of proof ....
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....- (When) the decree or other becomes enforceable or where the decree or any subsequent order directs any payment of money or the delivery of any property to be made at a certain date or at recurring periods, when default in making the payment or delivery in respect of which execution is sought, takes place; Provided that an application for the enforcement or execution of a decree granting a perpetual injunction shall not be subject to any period of limitation. Perusal of the above quoted Article 136 makes it clear that in order to attract the application of this Article, the decree or order of which the execution is sought must be a decree or order of any civil court. It is contended on behalf of the Petitioner relying on the judgment of the Supreme Court in the case of Fuerst Day Lawson v. Jindal Exports , and Thyseen Stahlunion v. Steel Authority of India , that a foreign award is stamped as a decree. Reading of the judgments of the Supreme Court in the case of Thyseen as also in the case of Fuerst Day Lawson shows that though the Supreme Court says that a foreign award is stamped as a decree, it nowhere says that a foreign award, moment it is pronounced by the arbitrator is sta....
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....Foreign Awards Act and the new Act there is not much difference for the enforcement of the foreign award. Under the Foreign Awards Act when the court is satisfied that the foreign award is enforceable under that Act the Court shall order the award to be filed and shall proceed to pronounce the judgment accordingly and upon the judgment so pronounced a decree shall follow. Sections 7 and 8 of the Foreign Awards Act respectively prescribe the conditions for enforcement of a foreign award and the evidence to be produced by the party applying for its enforcement. The definition of foreign award is the same in both the enactments. Section 48 and 47 of the new Act correspond to Sections 7 and 8 respectively of the Foreign Awards Act. While Section 49 of the new Act states that where the Court is satisfied that the foreign award is enforceable under this Chapter (Chapter I, Part II, relating to New York Convention Awards) the award is deemed to be a decree of that court. The only difference, therefore, appears to be that while under the Foreign Awards Act a decree follows, under the new Act the foreign award is already stamped as a decree. Thus, if the provisions of the Foreign Awards Act....
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....aking further effective steps for the execution of the award has to proceed in accordance with Sections 47 to 49. In one proceeding there may be different stages. In the first stage the court may have to decide about the enforceability of the award having regard to the requirement of the said provisions. Once the court decides that the foreign award is enforceable, it can proceed to take further effective steps for execution of the same. The submission that the execution petition could not be permitted to convert as an application under Section 47 is technical and is of no consequence in the view we have taken. In the case before the Supreme Court an application for execution of the foreign award was made and that application for execution was held not to be maintainable by the High Court because according to the High Court first the person in whose favour the Award is made had to apply for recognition of the Award and then only an application for execution of the Award could be made. From the observations of the Supreme Court quoted above, it is clear that it is not necessary for the person who has foreign Award in his favour to apply for recognition of the Award by the Court s....
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....er the repealed Foreign Awards Act, the Court is not required to pronounce judgment in terms of the Award so that judgment operates as a decree. Now under the Act on the Court being satisfied that the Award is enforceable the Award itself operates as a decree. But it is clear from the provisions of Section 49 of the Act which are quoted above, the Award operates as a decree only on the Court recording its satisfaction that it is enforceable and it is only at that point of time that the Award becomes a decree of that Court which has recorded its satisfaction that it is enforceable. As observed above Article 136 of the Schedule of the Limitation Act becomes applicable for execution of any decree or order of any Civil Court. Till the Court records satisfaction contemplated by Section 49 of the Arbitration Act the foreign Award is not deemed to be a decree of that court. Therefore, when an application is filed before the Court, before the Court has recorded its satisfaction that the foreign Award is enforceable, it will not to be an application for execution of any decree or order of any Civil Court. It will be an application for execution of an Award which is capable of being converte....
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.... foreign Award is already stamped as the decree. This according to learned Counsel would be the distinguishing factor to hold that the Court while considering enforcement of Foreign Award is considering the decree itself. In my opinion, the judgment in Thyssen GMBH (supra) cannot be so read considering the express language of Section 49 of the Act of 1996. The Foreign Award continues to remain an award in the country. It is deemed to be a decree only when the Court to which the application is made for enforcement of the foreign award is satisfied that the Foreign Award is enforceable. To my mind therefore, objection under Section 22 of the SIC(SP) Act,1985 must be rejected. The same learned Single Judge has considered the judgment of the Supreme Court in the Case Fuerst Day Lawson Ltd. v. Jindal Exports Ltd. in the case of Force Shipping Ltd. v. Ashapura Minechem Limited 2003 Vol.105(3) Bom.L.R. 948. The observations made by the learned Single Judge in paragraphs 5 and 6 are relevant. They read as under:- 5. In the light of that, petition made absolute. The learned Counsel for the petitioner had also drawn my attention to the judgment of the Apex Court in the case of Furest Day ....
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....To conclude, therefore, in my therefore, opinion if a person in whose favour the Foreign Award is made desires to make an application for execution of that Award when the Court is yet to record its satisfaction that the Award is enforceable, the period of limitation for making such an application would be governed by Article 137 of the Schedule of the Limitation Act. According to Article 137 the period of limitation is three years from the date when the right to apply accrues. In the present case, right to apply for execution/enforcement of the foreign award would accrue to the petitioner when the final award was made on 22.10.2001. The final award was received by the petitioner on 6.11.2001. On receiving the Award the petitioner became entitled to seek enforcement of that Award. Therefore, the period of limitation will start running from the date on which the right to apply accrues. The right to apply accrued on 6.11.2001. Therefore, the period of limitation started running from 7.11.2001 and the period of three years would be over on 7.11.2004. The present petition has been lodged in the Court on 10.2.2005. Thus there is a dalay of three months and about 2 days in filing the appl....
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....ent. Therefore, unless the petitioner was under a bonafide belief that it cannot make an application for enforcement of the Award it would not have withheld making an application for enforcement. On behalf of the respondent it is submitted that though the petitioner claims that it was under the belief that as the petition filed by the respondent was pending and then appeal was pending therefore, he could not make an application. The petitioner has given explanation which is incapable of acceptance about change of the lawyer by the petitioner and that on receiving fresh advice from that lawyer application was filed. It is submitted in the affidavit filed in support of the notice of motion a statement is made that the petitioner changed the Lawyer on or about 25-1-2005. However, the affidavit in support of the motion itself is sworn on 25-1-2005. It was submitted that a false reason has been given and the true facts have been suppressed by the petitioner for seeking condonation of delay. After going through the affidavit filed in support of notice of motion, I find that there is definitely a mistake committed by the petitioner in stating as to when they received advice that they can ....
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....g of Article145 of the Portuguese Code, which could be said to have prevented the party from filing the appeal within limitation prescribed by the Portuguese Code. IN the application made for condonation of delay the appellants have categorically stated that they bonafide believed, presumably on legal advice, that Article 116 of the Limitation Act,1963 was applicable and they had acted bonafide in filing the appeal in the Judicial Commissioner's Court within a period of 90 days as per that provision. In the circumstances, we grant the application for condonation of delay and direct that the appeal (being Civil First Appeal No. 6 of 1968) be taken on file and be disposed of by the Judicial Commissioner's Court on merits in accordance with law. The appeal before us is accordingly allowed but in the circumstances of the case there will be no order as to costs. We trust that Civil First Appeal No. 6 of 1968 will be disposed of expeditiously. In my opinion, the most important circumstance in the present case which is in favour of holding that the petitioner did not file this application earlier for bonafide reasons is that the petitioners are the persons who are holding the for....
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....has been given by the applicant for not approaching the court earlier (the applicant being under a bonafide impression that till the appeal filed by the Respondent is pending in this Court, the applicant cannot file the application, that there is no period of limitation provided for making the application under Section 47 that the application for enforcement being an execution application the period of limitation is 12 years) cannot be termed as mala fide. No interest of the applicant can be said to be served, who is having award in his favour, by delaying making an application for conversion of that award into a decree. For all these reasons, therefore, in my opinion, the delay in filing the present petition deserves to be condoned. Notice of motion No. 826 of 2006 is, therefore, granted in terms of prayer Clause (a). 11. Now, challenges raised by the Respondent to the award on merits are to be considered. The first challenge is that the final award is not enforceable, as the award is passed by the arbitral tribunal in disobedience of orders of this Court and therefore, the final award is a nullity. It is submitted that after the partial award was made on 1-2-2000, the Respondent....
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....bmitted that such an order is abinitio-void in international law and is not required to be obeyed. It is further submitted that under Section 9 no order could have been made injuncting the foreign arbitral tribunal from proceeding with the arbitral proceedings. If at all the injunction could have been granted against a party to the arbitration, it is submitted that there is no public policy of India which requires absent foreigners to obey void orders of injunction made by the courts in India. Making of the final award during the operation of the order dated 13-3-2000 does not render the award a nullity as contended. Relying on the judgment of the Supreme Court in the case of Kiran Singh and Ors. v. Chaman Paswan and Ors. , a judgment of the Supreme Court in the case of Harshad Chiman Lal Modi v. DLF Universal Ltd. and Anr. , the Respondent submitted that an order which is null and void can be challenged at any time even in collateral proceedings and when the court declares that order to be nullity, that declaration operates from the date on which that order was made. It is further submitted that the judgment of the Supreme Court in Tayabbhai's case relied on by the Respondent ....
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....not vest power in the court to issue any interim directions or orders to the arbitral tribunal. I have also not been pointed out any other provision in the Arbitration Act, which can be said to confer jurisdiction on the court to issue interim directions, of the nature which has been issued by this Court on 13-3-2000 against arbitral Tribunal. 11A. The Supreme Court in its judgment in the case of Bhatia International v. Bulk Trading S.A. and Anr. , in paragraph 29 has categorically held that under Section 9 of the Arbitration Act, a direction to the arbitral tribunal cannot be made. Paragraph 29 reads as under:- 29. We see no substance in the submission that there would be unnecessary interference by courts in arbitral proceedings. Section 5 provides that no judicial authority shall intervene except where so provided. Section 9 does not permit any or all applications. It only permits applications for interim measures mentioned in Clauses (i) and (ii) thereof. Thus there cannot be applications under Section 9for stay of arbitral proceedings or to challenge the existence or validity of the arbitration agreements or the jurisdiction of the Arbitral Tribunal. All such challenges woul....
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....tion of an Indian court by litigating in India. The question then is what would amount to submission to jurisdiction. Thus, apart from Section 9 not conferring jurisdiction on this Court to make an order against the arbitral tribunal, in view of the fact that the arbitral tribunal was constituted by the ICC International Court in London and two of the three members of the arbitral tribunal were foreigners, who were not in India, this Court had no jurisdiction to make the order dated 13-3-2000 and therefore for this reason also the order dated 13-3-2000 is a nullity. 12. In fairness of the Respondent, it is to be said that even on behalf of the Respondent no attempt was made to say that the order dated 13-3-2000 was within the jurisdiction of this Court, in a petition filed under Section 9. The submission of the Respondent is that even assuming that this Court did not have the jurisdiction to make the order dated 13-3-2000, till that order is set aside, it was binding on the arbitral tribunal and therefore, the final award made by the arbitral tribunal is a nullity in the eyes of law. In support of this submission, the Petitioner relies on a judgment of the Supreme Court in the cas....
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....ered the question as to whether in a case where Section 9A does not apply and an interim order is made and the court ultimately finds that it had no jurisdiction to make the order, the order would cease to apply from the date of the Court holding that it had no jurisdiction to make the order or the order will cease to exist from the date on which it was made. Though that question has not been considered by the Supreme Court in its judgment in Tayabbhai's case, it has been considered by the Supreme Court in other cases. The Supreme Court in its judgment in the case of Harshad Chimanlal Modi v. DLF Universal Ltd. and Anr. has referred to the law laid down by the Supreme Court on this question in its judgment in paragraphs 30, 31, 32 and 33. They read as under:- 30. We are unable to uphold the contention. The jurisdiction of a court may be classified into several categories. The important categories are (i) territorial or local jurisdiction; (ii) pecuniary jurisdiction; and (iii) jurisdiction over the subject-matter. So far as territorial and pecuniary jurisdictions are concerned, objection to such jurisdiction has to be taken at the earliest possible opportunity and in any case....
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....assed by a court without jurisdiction is a coram non judice. 33. In Kiran Singh v. Chaman Paswan this Court declared; (SCR p.121) It is a fundamental principle well established that a decree passed by a court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction...strikes at the very authority of the court to pass any decree, and such a defect cannot be cured even by consent of parties. It can be taken as a settled law that an order made by a court having no jurisdiction is non est and its invalidity can be set up in any proceedings, where that order is sought to be enforced as foundation of right. In the present case, the Respondent is relying on the order dated 13-3-2000 made by this Court to assert the right to get a declaration because of that order that the final award made in breach of that order is unenforceable. Therefore, the Petitioner was entitled to claim in those proceedings that the order dated 13-3-2000 is a nullity because this Court had no jurisdiction to make the order. 12A. The Su....
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.... 13-3-2000 passed by this Court. 13. The next challenge to the award on merits is that enforcement of the award will be contrary to the prevalent Foreign Exchange Laws. It is submitted that the Respondent had invoked the arbitration clause under ECAAP. In the same arbitration proceedings the Petitioner filed a counter claim, which has been awarded by the arbitral tribunal in favour of the Petitioner. So far as ECAAP is concerned, it has not been approved by the Reserve Bank of India. It is submitted that making of payment under a contract which has not been approved by the RBI is contrary to the provisions of the Foreign Exchange Regulations Act and therefore, it is opposed to the public policy of India. In reply it is submitted that the submissions of the Respondent is incorrect and misconceived as it ignores the provisions of Section 47 of FERA 1973. The Petitioner relies on the observations of the Supreme Court in paragraphs 81 to 83 of its judgment in the case of Renusagar Power Co. Ltd. v. General Electric Co. . It is submitted that the Respondent has claimed that permission is required under Section 9 of the FERA, which is not obtained by the Petitioner. According to the Pe....
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....any such term would be due, whether as debt, damages or otherwise, but-(a) the said provisions shall apply to sums required to be paid by any judgment or order of any Court as they apply in relation to other sums; (b) no steps shall be taken for the purpose of enforcing any judgment or order for the payment of any sum to which the said provisions apply except as respects so much thereof as the Central Government or the Reserve Bank, as the case may be, may permit to be paid; and (c) for the purpose of considering whether or not to grant such permission, the Central Government or the Reserve bank, as the case may be, may require the person entitled to the benefit of the judgment or order and the debtor under the judgment or order, to produce such documents and to give such information as may be specified in the requisition. 82. In Dhanrajaspal Gobindram v. Shamji Kalidas and Co. , this Court has construed the provisions of Section 21 of the Foreign Exchange Regulation Act, 1947. Sub-section (3) of Section 21 of the said Act was more or less similar to Section 47(3) of FERA. This Court has held: Sub-section (3) allows legal proceedings to be brought to recover sum due as a debt, ....
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.... Respondent that the terms of reference which were duly signed by the arbitrators and the parties state that the jurisdiction of the tribunal results only from Article 12.4.2 of the ECAAP. The Respondent had invoked the arbitration clause in the ECAAP. The arbitration clause under the ECAAP was rightly invoked by the Respondent because the Respondent wanted to enforce the obligations under the ECAAP against the Petitioner. The counter claims, however, submitted by the Petitioner pursuant to which the award has been made against the Respondent were in relation to making of payment by the Respondent to the Petitioner. The payment obligations under the ECAAP were novated by the parties. The payment obligations of the Respondent arose out of the ECA, which was entered into by the parties specifically for the purpose of making payment by the Respondent to the Petitioner. ECA had also arbitration clause, but the arbitration clause was not invoked either by the Petitioner or by the Respondent. As the parties had entered into a fresh agreement, ECA, in relation to the payment part only. The terms of ECAAP relating to payment were not in force and therefore, the award made by the arbitral t....
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....under Section 48(c) one of the grounds on which a foreign award can be challenged is that the award deals with the differences not contemplated by or not filing within the terms of the submissions to the arbitration. So far as the submissions to the arbitration are concerned, perusal of the terms of reference before the arbitral tribunal shows that counter claims made by the Petitioner were part of the terms of reference. Therefore, they were within the terms of submissions to arbitration. Therefore, it cannot be said that the enforcement of the award can be denied by the court on the ground that the award deals with differences not contemplated by the terms of submissions to arbitration. Perusal of the provisions of Section 48 shows the ground that the arbitral tribunal had no jurisdiction to make the award is not one of the grounds on which under Sub-section 1 of Section 48, the court can decline to enforce a foreign award. Section 34 also does not have a provision empowering the court to set aside a domestic award on the ground that the arbitral tribunal has no jurisdiction to make the award. But under Section 34, the court can set aside a domestic award on the ground that the ....
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.... by ECA. For these reasons, therefore, I do not find any substance in the contentions urged on behalf of the Respondent that the enforcement of the award should be refused for this reason. 15. The last ground on which the award is challenged is that the arbitral tribunal has awarded an amount of Swiss Fr.1,453,316 to the Petitioner as loss suffered by Enco with interest. This award is outside the scope of submissions to arbitration and is against the public policy of India, as it amounts to unjust enrichment by the Petitioner. It is submitted that there is no averment or material produced on record (i) that Enco suffered any loss; (ii) under which agreement they could claim that lossunder which agreement they could claim that lossunder which agreement they could claim that loss against the Respondent; (iii) that the Petitioner had paid or obliged to pay Enco any amount; (iv) that the Petitioner had an obligation to indemnify the Enco. It is submitted that at the time of recording terms of reference, the Respondent was asked to consider joining of Enco as party to the arbitration. The Respondent refused. Thus, Enco was not party to the arbitration. It is submitted that even assumi....
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..... Under the ECAAP, the Respondent was under an obligation to indemnify the Petitioner for any loss suffered by the Petitioner. It is an admitted position that there is no material on record to show that Enco, in fact, suffered any loss, that Enco has initiated any proceedings for recovering any amount of loss from the Petitioner. The Enco was also not a party to the arbitration. So far as the obligation of a person who is to indemnify the other is concerned, the Supreme Court in its judgment in the case of State Bank of Saurashtra v. Ashit Shipping , has clearly held that in cases of indemnity the question of making good loss arises only when there is a proof that loss is suffered. So far as the judgment relied on by the Petitioner of this Court is concerned, in that judgment also the court has observed: At law an action on the contract of indemnity normally does not lie until the promise has been actually indemnified by paying the third party's claim. The right to indemnify, however, may arise under a special contract, on the true construction of which the right may be enforced, even at law, before actual loss has been sustained. But in equity, the rules of which now prevai....