TaxTMI 
TaxTMI 
2020 (4) TMI 895
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....FED was a canalizing agency for the Government of India for the exports of the commodity. For any export, which is to be carried forward to next year from the previous year, NAFED required the express permission and consent of the Government of India, being a canalizing agency. The said agreement was entered into by NAFED with the Alimenta S.A. at the rate of USD 765 per metric tonnes (Free on Board). The contract was for the season 1979-80. With the contracted quantity of 5000 metric tonnes, only 1900 metric tonnes could be shipped. The remaining quantity could not be shipped due to damage caused to crop by cyclone etc. in the Saurashtra region. The agreement dated 12.1.1980 was the first agreement. The transaction was governed by covenants such as Force Majeure and Prohibition contained in Clause 14 of the Agreement, whereby in case of prohibition of export by executive order or by law, the agreement would be treated as cancelled. 4. On 3.4.1980, NAFED executed a second Agreement with the Alimenta S.A. to export 4,000 metric tonnes of the commodity at the rate of USD 770 per metric tonnes. The shipment period for both the contracts was August-September, 1980. The second Agreemen....
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....AFED not to implement the previous year contract. It was for a particular season. 11. On 6.12.1980 and 9.12.1980, NAFED again requested the Government of India to allow the release of quota in the current season to fulfil its commitments under the contracts. The Government did not grant permission. The NAFED informed Alimenta S.A. not to nominate the vessel for shipment of the crop due to the Government of India's prohibition to supply the contracted quantity. 12. The Alimenta S.A. on 29.12.1980 treated the telex message dated 20.12.1980 sent by NAFED as a notice of default made to make the supply. The Government of India finally rejected NAFED's request to allow export against previous year's contract vide communication dated 27.01.1981 because of the restricted export policy and quota ceiling. Alimenta S.A. on 5.2.1981 granted the last opportunity to NAFED to give the final offer, otherwise, the dispute would be referred to arbitration, and their nominee would be Mr. A.G. Scott. Accordingly, NAFED was asked to appoint its arbitrator. 13. On 13.2.1981, NAFED informed Alimenta S.A. that the export of the contracted quantity was not possible because of the Government ....
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....ay by the High Court, contumacious steps were taken to appoint the Arbitrator on its behalf and it was further stated that the counsel appearing for Alimenta S.A., stated in the Court that Alimenta S.A. would not proceed further in the arbitration. Ultimately, NAFED filed proceedings in the nature of contempt on 30.10.1981 on the ground that appointment of Arbitrator on behalf of the NAFED violated the orders passed by the High Court dated 20.3.1981 and 22.4.1981. 19. The Delhi High Court decided the said OMP No. 41 of 1981 wherein it held that First Agreement would be governed by arbitration agreement incorporated in FOSFA 20 Contract while there was no arbitration agreement between the parties in so far as the Second Agreement was concerned. On 22.3.1982, Alimenta S.A. filed FAO (OS) No. 24 of 1982 against the order dated 11.12.1981, the same was later withdrawn. Alimenta S.A. filed a special leave petition before this Court on 1.4.1982, which was numbered as Civil Appeal No. 1755 as against the order dated 11.12.1981 of the High Court. This Court passed the order on 30.4.1982, restraining Alimenta S.A. and FOSFA to proceed further in the arbitration. On 4.5.1982, FOSFA sent a t....
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....est was enhanced in the absence of an appeal by Alimenta S.A. The Arbitrator nominee of Alimenta S.A., who passed the award, represented the case on behalf of the Alimenta S.A. before the Board of Appeal. 25. The Alimenta S.A. filed a petition as Suit No. 1885 of 1993 Under Sections 5 and 6 of the Foreign Awards (Recognition and Enforcement) Act, 1961 (for short, "the Foreign Awards Act") seeking enforcement of the initial as well as appellate award passed by the FOSFA and Board of Appeal. 26. NAFED filed objections to the enforceability of the award, on the ground that it was opposed to the public policy as such unenforceable. There was non-compliance with the provisions contained in Section 7(1)(a), (b), and (c) of the Foreign Awards Act. No notice Under Section 101 of the Multi State Cooperative Societies Act was given. The execution was also barred by limitation. It ought to have been filed within 30 days because of Article 119 of Schedule I of the Limitation Act, 1963, and the period of three years was not available to seek its enforcement. The learned Single Judge of the High Court decided the matter against the Appellant-NAFED and decided the same finally after 20 months o....
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....t in the absence of appeal was also illegal. The decision is contrary to the public policy of India as laid down in various decisions. 29. Per contra, Mr. C.A. Sundaram, learned senior Counsel appearing on behalf of the Respondent argued the scope of interference in the enforcement of the foreign award is limited. The award is not against public policy. The due opportunity was given to the NAFED to present its case in the arbitration proceedings. The question of imposition of ban by the Government was gone into by the Arbitral Tribunal, and conclusion was recorded that it was a self-imposed restriction by NAFED. There was no such ban on the export by the Government of India. Because of the findings recorded by the Arbitral Tribunal, it would not be open to this Court to go into its correctness. It was open to the Board of Appeal to award the interest in the absence of an appeal by the Alimenta S.A. Learned Single Judge had the jurisdiction to award the interest while passing decree. There is no bar for the Arbitrator to appear in the appeal on behalf of the Respondent. 30. We first deal with the main submission raised concerning whether NAFED was unable to carry out contractual o....
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....to the extent of such total or partial restriction to prevent fulfilment whether by shipment or by any other means whatsoever and to that extent this contract of any unfulfilled portion thereof shall be extended by 30 days. In the event of shipment during the extended period still proving impossible by reason of any of the causes in this Clause, the contract or any unfulfilled part thereof shall be cancelled. Sellers invoking that Clause shall advice Buyers with due dispatch. If required, Sellers must produce proof to justify their claim for extension or cancellation under the clause. 18. DOMICILE: This contact shall be deemed to have been made in England, and the construction, validity, and performance thereof shall be governed in all respect by English Law. Any dispute arising out of or in connection therewith shall be submitted to arbitration in accordance with the Rules of the Federation. The serving of proceedings upon any party by sending same to their last known address together with leaving a copy of such proceedings at the officers of the Federation shall be deemed good service, Rule of law or equity to the contrary notwithstanding. 20. ARBITATION: Any dispute arisin....
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....e Government. Para 2 of the letter is extracted hereunder: 2. I am told that NAFED could not fulfil some of the contracts for exports last year due to drought in the country. It has been further reported to me that some move is being made to export HPS groundnuts during the current season against the contracts entered into last year. This will be a most undesirable thing to do considering that the prices today are almost three time than the prices prevalent last year. No exporter can undertake to export any commodity with such a wide variation in prices. Moreover the export contracts for last year are not supposed to be carried forward automatically to the next year. Further the export of HPS groundnuts is restricted and under a quota system, NAFED cannot on its own carry forward last year's commitments to the current year without getting the prior approval of the Govt. You may, therefore confirm that NAFED is not considering taking up last year's contracts for implementing in the current crop season. 34. After that, NAFED requested the Government of India again to release quota in the current season to fulfil commitment under the contract for previous year. On 6.12.1980....
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.... to cyclone, etc. the groundnut crop was severely damaged, and there was less production. There was less than 50% recovery. There was an escalation of prices as compared to 1978-79 in 1979-80. It appears that NAFED intended to perform the contract in the oblivion of the fact that being a canalizing agent, it could not have carried out the supply in the next subsequent years. 38. The NAFED in the circumstances after receipt of the letter dated 1.12.1980 of the Department of Agriculture informed the Alimenta S.A. not to nominate the vessel for shipment for the goods due to the Government's prohibition for the supply of the goods. The NAFED wrote a letter again on 9.1.1981 and pointed out to the Government that they were unable to export on account of Government order. The Government was asked to apprise it of the final decision regarding the export of commodities to the Respondent. Letter dated 27.1.1981 reiterating prohibition came to be issued in the aforesaid circumstances. It was taken to be a refusal to supply on the part of the NAFED by the Alimenta S.A., and they asked the NAFED to appoint its Arbitrator. Alimenta S.A. appointed Mr. A.G. Scott as its nominee Arbitrator. A....
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....ued a direction that was binding upon the NAFED. Without permission, it was not possible for the NAFED to carry out its obligation under the Contract and Addenda. 39. It was argued that in common law, frustration does not rescind the contract ab initio, it brings the contract to an end forthwith, without more and automatically, in the sense that it releases both the parties from any performance of the contract while leaving undisturbed any legal rights already accrued or payments already made in accordance with its term. It was further argued that the law later developed through subsequent decisions wherein it was laid down that advance payments made were recoverable by a party. The decision in Davis Contractor Ltd. v. Fareham Urban District Council (1956) 2 All ER 145 by Lord Radcliffe is relied upon wherein the test applied for the frustration of the contract is whether there is a radical change in the obligation. It observed: ... Frustration occurs whenever the law recognises that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically differ....
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....s from the point of view of the object and purpose that the parties had in view when they entered into the contract. This impracticability or uselessness could arise due to some intervening or supervening circumstance which the parties had not contemplated. However, if the intervening circumstance was contemplated by the parties, then the contract would stand despite the occurrence of such circumstance. In such an event, "there can be no case of frustration because the basis of the contract being to demand performance despite the happening of a particular event, it cannot disappear when that event happens". This is what this Court had to say: (AIR pp. 46-49, paras 9-10 & 17) 9. The first paragraph of the Section lays down the law in the same way as in England. It speaks of something which is impossible inherently or by its very nature, and no one can obviously be directed to perform such an act. The second paragraph enunciates the law relating to discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done. The wording of this paragraph is quite general, and though the illustrations attached to it are not at all happy, they cannot deroga....
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....nnot be accepted. 36. On a conspectus of the facts and the law placed before us, we are satisfied that certain circumstances had intervened, making it impracticable for Kenneth Builders to commence the construction activity on the project land. Since arriving at some clarity on the issue had taken a couple of years and that clarity was eventually and unambiguously provided by the report of CEC, it could certainly be said that the contract between DDA and Kenneth Builders was impossible of performance within the meaning of that word in Section 56 of the Contract Act. Therefore, we reject the contention of DDA that the contract between DDA and Kenneth Builders was not frustrated. 43. In the present case, parties have agreed, and in Clause 14 of the Agreement, it was contemplated that during the contract if there is any prohibition of the export or any other executive or legislative Act by or on behalf the Government of the Country of origin, the unfulfilled part of the contract shall be cancelled. Because of the refusal by the Government, it was not permissible to the NAFED to make a supply to the Alimenta S.A. Hence; the unfulfilled part was required to be cancelled. Thus, NAFED ....
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....t have prevented, the contract becomes void as provided in Section 56. However, Section 56 also provides liability for a cause where the promisor has agreed to do something which he knew or with reasonable diligence might have known and which the promisee did not know to be impossible or unlawful. Such a promisor must make compensation to such promise and is liable to pay damages. The latter part of Section 56 is applicable when promisee did not know the act to be impossible or unlawful and that it was not known to the promisor; the action was impossible or unlawful or with reasonable diligence might have known. 48. In the present case, because of the clear stipulation in Clause 14 of the Agreement, it is apparent that the parties have agreed for a contingent contract. They knew very well that the Government's executive, or legislative actions might come in the way as provided in Clause 14 of the Agreement. Thus, in this case, Section 32 of the Contract Act is attracted and not the provisions of Section 56. It was an agreement to do an act impossible in itself without permission, and that is declared to be void by Section 32. The contract was capable of being performed in case....
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....which the parties had in view; and if an untoward event or change of circumstances totally upsets the very foundation upon which the parties rested their bargain, it can very well be said that the promisor finds it impossible to do the act which he promised to do. 10. Although various theories have been propounded by the Judges and jurists in England regarding the juridical basis of the doctrine of frustration, yet the essential idea upon which the doctrine is based is that of impossibility of performance of the contract; in fact, impossibility and frustration are often used as interchangeable expressions. The changed circumstances, it is said, make the performance of the contract impossible and the parties are absolved from the further performance of it as they did not promise to perform an impossibility. The parties shall be excused, as Lord Loreburn says, see - Tamplin Steamship Co. Ltd. v. Anglo Mexican Petroleum Products Co. Ltd., 1916-2 AO 297 at p. 403 (A). If substantially the whole contract becomes impossible of performance or in other words impracticable by some cause for which neither was responsible. In - Joseph Constantine Steamship Line Limited v. Imperial Sme....
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....rine that we have to go by is that of supervening impossibility or illegality as laid down in Section 56 of the Contract Act, taking the word "impossible" in its practical and not literal sense. It must be borne in mind, however, that Section 56 lays down a Rule of positive law and does not leave the matter to be determined according to the intention of the parties. 16. In the latest decision of the House of Lords referred to above, the Lord Chancellor puts the whole doctrine upon the principle of construction. But the question of construction may manifest itself in two totally different ways. In one class of cases the question may simply be, as to what the parties themselves had actually intended; and whether or not there was a condition in the contract itself, express or implied, which operated, according to the agreement of the parties themselves, to release them from their obligations; this would be a question of construction pure and simple and the ordinary Rules of construction would have to be applied to find out what the real intention of the parties was. According to the Indian Contract Act, a promise may be express or implied Vide Section 9. In cases, therefore, where....
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.... Khyaliram Jagannath AIR 1968 SC 522, it held that if the contract contains implied or expressly a term according to which it would stand discharged on the happening of certain contingencies, dissolution of the contract would take place under the terms of the contract itself and such cases would be outside the purview of Section 56 of the Contract Act. Such cases have to be dealt with Under Section 32 of the Contract Act. The Court opined: 7. Such a difficulty has, however, not to be faced by the courts in this country. In Ganga Saran v. Ram Charan, 1952 SCR 36 : (AIR 1952 SC 9) this Court emphasized that so far as the courts in this country are concerned they must look primarily to the law as embodied in Section 32 and 56 of the Contract Act. In Satyabrata Ghose v. Mugneeram, 1954 SCR 310 : (AIR 1954 SC 44) also, Mukherjee, J. (as he then was) stated that Section 56 laid down a Rule of positive law and did not leave the matter to be determined according to the intention of the parties. Since under the Contract Act a promise may be expressed or implied, in cases where the court gathers as a matter of construction that the contract itself contains impliedly or expressly a term acc....
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....on 56 of the Indian Contract Act lay down a positive Rule of law and English authorities cannot therefore be of direct assistance, though they have persuasive value in showing how English courts have approached and decided cases under similar circumstances. 14. Counsel on behalf of the Respondent, however, contended that the contract was not impossible of performance, and the Appellant cannot take recourse to the provisions of Section 56 of the Indian Contract Act. It was contended that under Clause 1 of the Import Trade Control Order No. 2-ITC/48, dated March 6, 1948 it was open to the Appellant to apply for a written permission of the licensing authority to sell the chicory. It is not shown by the Appellant that he applied for such permission and the licensing authority had refused such permission. It was therefore maintained on behalf of the Respondent that the contract was not impossible of performance. We do not think there is any substance in this argument. It is true that the licensing authority could have given written permission for disposal of the chicory under Clause 1 of Order No. 2-ITC/48, dated March 6, 1948 but the condition imposed in Ex. B-9 in the present case is....
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....t arises from the act or election of a party. But for the reasons already given, we hold that this principle cannot be applied to the present case for there was no choice or election left to the Appellant to supply chicory other than under the terms of the contract. On the other hand, there was a positive prohibition imposed by the licence upon the Appellant not to sell the imported chicory to any other party but he was permitted to utilise it only for consumption as raw material in his own factory. We, are accordingly of the opinion that Counsel for the Respondent has been unable to make good his argument on this aspect of the case. 52. In the present case, the High Court observed that it was a case of self-induced frustration. The High Court ignored and overlooked that it was not a case of frustration Under Section 56 of the Contract Act, but there was a stipulation in Clause 14 of the Agreement, the effect of which was ignored and overlooked, and the said term was based upon the law as applicable in India and was based on export restrictions, it was within the realm of public policy. The NAFED was a canalising agency and could not have supplied without prior permission of Gover....
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....appened the basis of the contract has been overthrown. In the absence of express intention of the parties, I have to determine what is just & reasonable in view of the non-availability of wagons for transport & the difficulties created by the restrictions or emergency orders. It may be now accepted as settled law that when people enter into a contract which is dependant for its performance on the continued availability of a specific thing & that availability comes to an end by reason of circumstances beyond the control of the parties; the contract is dissolved. According to Lord Wright, the expression 'frustration of the contract' is an elliptical expression. The fuller & more accurate expression is 'frustration of the adventure or of the commercial or practical purpose of the contract.' In my view, the commercial or practical purpose of this contract was defeated or overthrown by the refusal on the part of the Govt. to issue permit & by the non-availability of the transport facilities & the restrictions & embargoes put by the Govt. & ultimately by requisition of the stock of the plff. The real object of the contract as contemplated by the parties was the purchase o....
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....n because the performance having become impossible, no tender could have had any effect upon the railway company. It is important in this case to add that this decision proceeds entirely upon the facts as given to me by agreement, not only the facts as regards the contract and the position of railway traffic but also the facts stated as regards the assumptions and intentions of the parties. When the latter class of facts is not the same, it is very probable that different considerations altogether will prevail. 55. In Smt. Sushila Devi and Ors. v. Hari Singh and Ors., (1971) 2 SCC 288, this Court, while considering Section 56, observed that the impossibility contemplated is not confined to something which is not humanly possible. If the performance of the contract became impracticable, which the parties had in view, then it must be held that the performance of the agreement had become impossible. The Court opined: 11. In our opinion, on this point, the conclusion of the appellate court is not sustainable. But in fact, as found by the trial court as well as by the appellate court, it was impossible for the Plaintiffs to even get into Pakistan. Both the trial court as well as th....
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....each of the contract. In the instant case, export became impossible due to Government's refusal. 57. It would have been unlawful for NAFED to affect the supply in view of the Government's refusal to accord the permission, and both the parties knew it very well and agreed that the contract would be cancelled in such an exigency for non-supply in quantity. Thus, they were bound by the agreement. The award pre-supposes supply could have been made after the Government's refusal. If supply had been made, it would have been unlawful. Thus, the parties agreed for its cancellation as such an award is against the basic law and public policy as applied in India. 58. It is also apparent that the Government rightly objected to the supply being made at the rate of the previous season in the next season, particularly when the prices escalated thrice. The addendum was entered into subsequently, unfairly, and the parties fully understood that the Government would not permit export at the rate on which supply was proposed, and NAFED was acting only as a canalising agent of the Government of India. Thus, for such an unfair contract, permission was rightly declined by the Government. In....
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....ction (1), the court may, if it deems proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to furnish suitable security. (emphasis supplied) 60. It is provided in Section 7(1) (b)(ii) that if the court dealing with the case is satisfied that the enforcement of the award will be contrary to public policy, the foreign award may not be enforced. The foreign award may also not be executed in the case as per Section 7(1)(a)(i) if the parties to the agreement under the law applicable are under some incapacity or agreement is not valid under the law. Similar exigency is provided in Section 7(1)(a)(ii) if proper notice of appointment of Arbitrator is not given or the party was unable to present its case. Section 7(1)(a)(iii) provides that if the award deals with the questions not referred or contains decisions on matters beyond the scope of the agreement renders award unenforceable. Section 7(1)(a)(iv) makes an award not capable of enforcement in case the composition of the Arbitration Tribunal or procedure is not in accordance with the agreement of the parties. 61. The questio....
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....Awards Act means the doctrine of public policy as applied by the courts in India. This raises the question whether the narrower concept of public policy as applicable in the field of public international law should be applied or the wider concept of public policy as applicable in the field of municipal law. 65. This would imply that the defence of public policy which is permissible Under Section 7(1)(b)(ii) should be construed narrowly. In this context, it would also be of relevance to mention that Under Article I(e) of the Geneva Convention Act of 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 Protocol & Convention Act of 1837 (sic 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 l....
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.... the writ petition filed by Renusagar; (c) would enable recovery of compound interest on interest; (d) would result in payment of damages on damages; (e) would result in unjust enrichment by General Electric; We will examine the submissions of learned Counsel under each head separately. 64. In Oil and Natural Gas Corporation Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705, this Court opined that the phrase "Public Policy of India" in the Arbitration and Conciliation Act, 1996 Under Section 34(2) (b) (ii), with respect to domestic awards, should be given a wider meaning. The court observed: 15. The result is -- if the award is contrary to the substantive provisions of law or the provisions of the Act or against the terms of the contract, it would be patently illegal, which could be interfered Under Section 34. However, such failure of procedure should be patent affecting the rights of the parties. What meaning could be assigned to the phrase "Public Policy of India"? 16. The next Clause which requires interpretation is Clause (ii) of Sub-section (2)(b) of Section 34, which among other things provides that the court may set aside the arbitral award if it conflicts with the "p....
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....er, the award which is, on the face of it, patently in violation of statutory provisions cannot be said to be in public interest. Such award/judgment/decision is likely to adversely affect the administration of justice. Hence, in our view in addition to narrower meaning given to the term "public policy" in Renusagar case, 1994 Supp (1) SCC 644, it is required to be held that the award could be set aside if it is patently illegal. The result would be -- award could be set aside if it is contrary to: (a) fundamental policy of Indian law; or (b) the interest of India; or (c) justice or morality, or (d) in addition, if it is patently illegal. Illegality must go to the root of the matter and if the illegality is of trivial nature it cannot be held that award is against the public policy. Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court. Such award is opposed to public policy and is required to be adjudged void. Additional tests were laid down. The expression 'patently illegal' was also held to be covered in public policy with respect to domestic awards. Illegality goes to the root of the matter, or if the awa....
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....ection 48(2)(b), the expression "public policy of India" must be given a narrow meaning and the enforcement of foreign award would be refused on the ground that it is contrary to the public policy of India if it is covered by one of the three categories enumerated in Renusagar. 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 the "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. 29. We accordingly hold that enforcement of foreign award would be refused Under Section 48(2)(b) only if such enforcement would be contrary to (1) fundamental policy of Indian law; or (2) the interests of India; or (3) justice or morality. The wider meaning given to the expression "public policy of India" occurring in Section 34(2)(b)(ii) in Saw Pipes is not applicable where objection is raised to the enforcement of the fore....
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....ng orders passed by the superior courts in India could also be a contravention of the fundamental policy of Indian law, but the recovery of compound interest on interest, being contrary to statute only, would not contravene any fundamental policy of Indian law (see SCC pp. 689 & 693, paras 85 & 95). 27. Coming to each of the heads contained in Saw Pipes [(2003) 5 SCC 705] judgment, we will first deal with the head "fundamental policy of Indian law." It has already been seen from Renusagar [1994 Supp (1) SCC 644] judgment that violation of the Foreign Exchange Act and disregarding orders of superior courts in India would be regarded as being contrary to the fundamental policy of Indian law. To this, it could be added that the binding effect of the judgment of a superior court being disregarded would be equally violative of the fundamental policy of Indian law. 36. The third ground of public policy is, if an award is against justice or morality. These are two different concepts in law. An award can be said to be against justice only when it shocks the conscience of the court. An illustration of this can be given. A claimant is content with restricting his claim, let us say to Rs.....
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....ental policy of Indian law" as explained in paragraphs 18 and 27 of Associate Builders (supra), i.e., the fundamental policy of Indian law would be relegated to the "Renusagar" understanding of this expression. This would necessarily mean that the Western Geco (supra) expansion has been done away with. In short, Western Geco (supra), as explained in paragraphs 28 and 29 of Associate Builders (supra), would no longer obtain, as under the guise of interfering with an award on the ground that the arbitrator has not adopted a judicial approach, the Court's intervention would be on the merits of the award, which cannot be permitted post amendment. However, insofar as principles of natural justice are concerned, as contained in Sections 18 and 34(2)(a)(iii) of the 1996 Act, these continue to be grounds of challenge of an award, as is contained in paragraph 30 of Associate Builders (supra). 26. Insofar as domestic awards made in India are concerned, an additional ground is now available Under Sub-section (2A), added by the Amendment Act, 2015, to Section 34. Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root ....
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....ds Under Sections 34/48 (equivalent to the grounds Under Section 7 of the Foreign Awards Act, which was considered by the Court), and held: 34. Under the Geneva Convention of 1927, in order to obtain recognition or enforcement of a foreign arbitral award, the requirements of Clauses (a) to (e) of Article I had to be fulfilled and in Article II, it was prescribed that even if the conditions laid down in Article I were fulfilled recognition, and enforcement of the award would be refused if the Court was satisfied in respect of matters mentioned in Clauses (a), (b) and (c). The principles which apply to recognition and enforcement of foreign awards are in substance, similar to those adopted by the English courts at common law. (See Dicey & Morris, The Conflict of Laws, 11th Edn., Vol. I, p. 578). It was, however, felt that the Geneva Convention suffered from certain defects which hampered the speedy settlement of disputes through arbitration. The New York Convention seeks to remedy the said defects by providing for a much more simple and effective method of obtaining recognition and enforcement of foreign awards. Under the New York Convention the party against whom the award is soug....
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....blic policy which is permissible Under Section 7(1)(b)(ii) should be construed narrowly. In this context, it would also be of relevance to mention that Under Article I(e) of the Geneva Convention Act of 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 Protocol & Convention Act of 1837(sic 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. Article V(2)(b) of the New York Convention of 1958 and Section 7(1)(b)(ii) of the Foreign Awards Act do not postulate refusal of recognition and enforcement of a foreign award on the ground that it is contrary to the law of the country of en....
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....Second Ed., 2014) ["Gary Born"], the learned author deals with this aspect of the matter as follows: [12] No Judicial Review of Merits of Foreign or Non-Domestic Awards in Recognition Actions It is an almost sacrosanct principle of international arbitration that courts will not review the substance of arbitrators' decisions contained in foreign or non-domestic arbitral awards in recognition proceedings. Virtually every authority acknowledges this Rule and virtually nobody suggests that this principle should be abandoned. When national courts do review the merits of awards, they labour to categorize their action as an application of public policy, excess of authority, or some other Article V exception, rather than purporting to justify a review of the merits. [a] No Judicial Review of Awards Under New York and Inter-American Conventions Neither the New York Convention nor the Inter-American Convention contains any exception permitting non-enforcement of an award simply because the arbitrators got their decision on the substance of the parties' dispute wrong, or even badly wrong. This is reasonably clear from the language of the Convention, which makes no reference to....
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....refusal Under Article V do not include an erroneous decision in law or in fact by the arbitral tribunal. A court seized with an application for recognition and enforcement under the Convention may not review the merits of the arbitral tribunal's decision. This principle is unanimously confirmed in the case law and commentary on the New York Convention. (emphasis supplied) 68. It is apparent from above-mentioned decisions as to enforceability of foreign awards, Clause 14 of FOSFA Agreement and as per the law applicable in India, no export could have taken place without the permission of the Government, and the NAFED was unable to supply, as it did not have any permission in the season 1980-81 to effect the supply, it required the permission of the Government. The matter is such which pertains to the fundamental policy of India and parties were aware of it, and contracted that in such an exigency as provided in Clause 14, the Agreement shall be cancelled for the supply which could not be made. It became void Under Section 32 of the Contract Act on happening of contingency. Thus, it was not open because of the clear terms of the Arbitration Agreement to saddle the liability upon....
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....ply to FOSFA for the appointment of an arbitrator on behalf of the other party. As there was restraint order, the appointment of Arbitrator by FOSFA Under Rule 1(d) of the Rules was illegal. A party claiming arbitration could only apply for the appointment of Arbitrator on behalf of another party. Learned senior Counsel further urged that the action taken was in contravention of natural justice and is a nullity violating the interim order of the court as opined in Manohar Lal (Dead) by Lrs. v. Ugrasen (Dead) by Lrs. and Ors., (2010) 11 SCC 557. In Manohar Lal (supra), the court held thus: 24. In Mulraj v. Murti Raghunathji Maharaj AIR 1967 SC 1386, this Court considered the effect of action taken subsequent to passing of an interim order in its disobedience and held that any action taken in disobedience of the order passed by the Court would be illegal. Subsequent action would be a nullity. 25. In Surjit Singh v. Harbans Singh, (1995) 6 SCC 50, this Court while dealing with the similar issue held as under: (SCC p. 52, para 4) 4. ... In defiance of the restraint order, the alienation/assignment was made. If we were to let it go as such, it would defeat the ends of justice and ....
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.... Court permitted the arbitration proceedings to continue. As such, we are of the opinion that though it would have been proper for the FOSFA to comply with the interim orders passed by this Court, the proceedings in which the temporary orders were given were dismissed way back in the year 1987. At that time, the question was required to be agitated. This Court permitted to continue proceedings in 1987. The said questions ought to have been raised at that stage; we cannot permit the Appellant to raise them now. Hence, at this stage, we are not inclined to entertain and examine merits of the argument mentioned above. 73. Learned senior Counsel appearing on behalf of the Appellant also argued that NAFED was not allowed to have any legal representation before the arbitral tribunal or in the Board of Appeal. Rule 3 of the FOSFA Rules bars the parties from having legal representation before the Arbitral Tribunal. However, Rule 6 empowers the Board of Appeal to allow legal representation to the parties in case of particular circumstances. The NAFED through its solicitor M/s. Clyde and Company submitted letters on 16.1.1990 and 13.5.1990 to permit legal representation. However, the same w....
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....inst the Appellant. Hence we direct that no fresh enquiry shall be held against the Appellant, and he be restored to the position to which he would have been entitled to but for the impugned order. The appeal is accordingly allowed. The Appellant is entitled to his costs from the Respondents both in this Court as well as in the High Court. The decision of Board of Trustees of the Port of Bombay v. Dilipkumar Raghavendranath Nadkarni and Ors. (1983) 1 SCC 124 has been relied on, wherein it was held: 9. We concern ourselves in this case with a narrow question whether where in such a disciplinary enquiry by a domestic tribunal, the employer appoints Presenting-cum-Prosecuting Officer to represent the employer by persons who are legally trained, the delinquent employee, if he seeks permission to appear and defend himself by a legal practitioner, a denial of such a request would vitiate the enquiry on the ground that the delinquent employee had not been afforded a reasonable opportunity to defend himself, thereby vitiating one of the essential principles of natural justice. (emphasis supplied) 74. It is not disputed that before the Arbitration Tribunal, the Rule debars legal repres....
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....he administration of justice. Where the non-compliance, tho' procedural, will thwart fair hearing or prejudice doing of justice to parties, the Rule is mandatory. But, grammar apart, if the breach can be corrected without injury to a just disposal of the case, we should not enthrone a regulatory requirement into a dominant desideratum. After all, courts are to do justice, not to wreck this end product on technicalities. Viewed in this perspective, even what is regarded as mandatory traditionally may, perhaps, have to be moderated into wholesome directions to be complied with in time or in extended time. Be that as it may, and ignoring for a moment the exploration of the true office of procedural conditions, we have no doubt that what is of the essence of Rule 3 is not that three copies should be furnished, but that copies of all the three important documents referred to in that suit shall be produced. We further feel that the court should, if it thinks it necessitous, exercise its discretion and grant further time for formal compliance with the Rule if the copies fall short of the requisite number. In this view and to the extent indicated, we overrule the decision in Bikram Das....