TaxTMI 
TaxTMI 
2020 (4) TMI 895
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....ot a Free on Board (FOB) contract. 3. NAFED 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 wa....
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....or the aforesaid reasons, the Government of India asked NAFED 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 ....
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....ide its letter dated 1.5.1981 informed FOSFA that despite the order of stay 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. a....
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....cted to pay interest components at the rate of 11.25% instead of 10.5% p.a. The interest 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 deci....
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....alf of Alimenta S.A. before the Board of Appeal, award was unfair, and enhancement of interest 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 de....
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....whether partially or otherwise, any such restriction shall be deemed by both parties to apply to this contract and 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 Fed....
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....erefore, NAFED was asked not to consider taking up the previous year's contract for implementation in the current crop season and inform it to the 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....
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....thout prior permission of the Government of India, and it executed both the addenda without such permission. 37. The Minutes of Meeting of Business Committee of NAFED, dated 21.11.1980 at Agenda Item No. 4, notes that there were unseasonable rains in the Saurashtra region and due 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....
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....generally and this application was refused in view of the prevailing market conditions both internally and externally. Most certainly no additional quota would have been granted to enable you to fulfil old contracts at the previous season's prices. Yours faithfully (VINOD RAI) Deputy Secretary to the Government of India It is apparent that the Government of India issued 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 relie....
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....ng undertaken on the project land. The Court observed: 30. The interpretation of Section 56 of the Contract Act came up for consideration in Satyabrata Ghose v. Mugneeram Bangur & Co. AIR 1954 SC 44. It was held by this Court that the word "impossible" used in Section 56 of the Contract Act has not been used in the sense of physical or literal impossibility. It ought to be interpreted as impracticable and useless 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 Engla....
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....n Matthey v. Curling, (1922) 2 AC 180 (HL): (AC p. 234) ... a person who expressly contracts absolutely to do a thing not naturally impossible is not excused for non-performance because of being prevented by the act of God or the King's enemies ... or vis major. This being the legal position, a contention in the extreme form that the doctrine of frustration as recognised in English law does not come at all within the purview of Section 56 of the Contract Act cannot 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 pre....
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.... make compensation for the non-performance of the promise. 47. Section 32 of the Contract Act applies in case the agreement itself provides for contingencies upon happening of which contract cannot be carried out and provide the consequences. To this case, provisions of Section 32 of the Contract Act is attracted and not Section 56. In case an act becomes impossible at a future date, and that exigency is not provided in the agreement on the happening of which exigency, impossible or unlawful, the promisor had no control which he could not 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, becaus....
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.... 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 derogate from the general words used in the enactment. This much is clear that the word "impossible" has not been used here in the sense of physical or literal impossibility. The performance of an act may not be literally impossible, but it may be impracticable and useless from the point of view of the object and purpose 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 c....
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....that to the extent that the Indian Contract Act deals with a particular subject, it is exhaustive upon the same and it is not permissible to import the principles of English law dehors these statutory provisions. The decisions of the English Courts possess only a persuasive value and may be helpful in showing how the Courts in England have decided cases under circumstances similar to those which have come before our courts. 15. These differences in the way of formulating legal theories really do not concern us so long as we have a statutory provision in the Indian Contract Act. In deciding cases in India the only doctrine 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 man....
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....tion of the parties are evidence, but evidence only on which the court has to form its own conclusion whether the changed circumstances destroyed altogether the basis of the adventure and its underlying object-Vide Morgan v. Manser, 1947-2 All ER 666 (L). This may be called a Rule of construction by English Judges but it is certainly not a principle of giving effect to the intention of the parties which underlies all Rules of construction. This is really a Rule of positive law and as such comes within the purview of Section 56 of the Indian Contract Act. 50. The Court followed the decision in Satyabrata Ghose (supra) in Naihati Jute Mills Ltd. v. 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....
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.... 10. The doctrine of frustration of contract is really an aspect, or part of the law of discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done and hence comes within the purview of Section 56 of the Indian Contract Act. It should be noticed 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. 13. In English law, therefore, the question of frustration of contract has been treated by courts as a question of construction depending upon the true intention of the parties. In contrast, the statutory provisions contained in Section 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 T....
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....red to have licences. They named three trawlers other than the Respondents', and then claimed that they were no longer bound by the charter-party as its object had been frustrated. It was held by the Judicial Committee that the failure of the contract was the result of the Appellants' own election, and that there was therefore no frustration of the contract. We think the principle of this case applies to the Indian law and the provisions of Section 56 of the Indian Contract Act cannot apply to a case of "self-induced frustration". In other words, the doctrine of frustration of contract cannot apply where the event which is alleged to have frustrated the contract 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 accordingl....
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....t is the true position between the parties. Denny Mott's' case, 1944 A.C. 265. Lord Sumner observed in the 'Hirji Mulji' case (1926) A.C. 497 that the legal effect of the frustration of the contract does not depend on the intention of the parties or their opinions or even knowledge as to the events which brought about the frustration but upon its occurrence in such circumstances as to show it to be inconsistent with the further prosecution of the adventure. In my view, this principle is applicable in this case. 23. The main object of the contract was the transhipment of the goods from Bihar to Bengal by Railway & in my opinion, having regard to the events that have happened 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....
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....the sellers are to insure the buyers against this chance of the control of Government going on. For these reasons, I answer the questions which have been put to me in this way: Firstly: Did, in the circumstances hereinbefore mentioned, such a contract become void and were the sellers excused from the performance thereof? My answer is, "yes," the contract became void before breach. Secondly: Are the buyers entitled to recover any compensation from the sellers? I answer that "no," either in respect of goods which were lying ready at the up-country station which the railway company refused to accept for despatch or in respect of goods which were not so delivered. I answer "no" to both parts of the second question 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 differ....
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.... is so fundamental as to be regarded by law as striking at the root. As such, we are of the opinion that the contract was rendered void in terms of Section 32 of the Contract Act. 56. In Narayana Chandrasekhara Shenoy and Bros. by sole Proprietor Narayana Shanbog v. R. Palaniappa Mudaliar AIR 1952 Mad. 670, a question arose whether the Defendant was required to supply jaggery by rail, which became impossible by the issuance of a Government notification controlling the movement of jaggery by rail. The Plaintiff refused to bear the additional expenditure entailed by the change in the mode of transport. The Court held that even assuming that the contract had not become impossible of performance, the Defendant did not commit a breach 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 aft....
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....ailing such agreement, was not in accordance with the law of the country where the arbitration took place; or (v) the award has not yet become binding 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; or (b) if the court dealing with the case is satisfied that---- (i) the subject-matter of the difference is not capable of settlement by arbitration under the law of India; or (ii) the enforcement of the award will be contrary to public policy. (2) If the court before which a foreign award is sought to be relied upon is satisfied that an application for the setting aside or suspension of the award has been made to a competent authority referred to in Sub-clause (v) of Clause (a) of Sub-section (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 enforceme....
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.... mean as the courts in India apply it. This Court held that enforcement of the foreign award would be refused on the ground that it was contrary to public policy if such enforcement would be contrary to (1) fundamental policy of Indian Law, (2) the interest of India, and (3) justice or morality. The relevant portion is extracted hereunder: 63. In view of the absence of a workable definition of "international public policy," we find it difficult to construe the expression "public policy" in Article V(2)(b) of the New York Convention to mean international public policy. In our opinion, the said expression must be construed to mean the doctrine of public policy as applied by the courts in which the foreign award is sought to be enforced. Consequently, the expression 'public policy' in Section 7(1)(b)(ii) of the Foreign 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....
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....ward would be refused on the ground that it is contrary to public policy if such enforcement would be contrary to (i) fundamental policy of Indian law; or (ii) the interests of India; or (iii) justice or morality. 67. Having examined the scope of public policy Under Section 7(1)(b) (ii) of the Foreign Awards Act, we will now proceed to consider the various grounds on the basis of which the said provision is invoked by Renusagar to bar the enforcement for the award of the Arbitral Tribunal. As indicated earlier, Renusagar has invoked the said provision on the ground that enforcement of the award would be contrary to the public policy for the reason that such enforcement-- (a) would involve contravention of the provisions of FERA; (b) would amount to penalising Renusagar for not disregarding the interim orders passed by the Delhi High Court in 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 separate....
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....deciding the dispute by the arbitrators could have no bearing on interpretation of Section 34. Further, for achieving the object of speedier disposal of dispute, justice in accordance with law cannot be sacrificed. In our view, giving limited jurisdiction to the court for having finality to the award and resolving the dispute by speedier method would be much more frustrated by permitting patently illegal award to operate. Patently illegal award is required to be set at naught, otherwise it would promote injustice. 31. Therefore, in our view, the phrase "public policy of India" used in Section 34 in context is required to be given a wider meaning. It can be stated that the concept of public policy connotes some matter which concerns public good and the public interest. What is for public good or in public interest or what would be injurious or harmful to the public good or public interest has varied from time to time. However, 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 n....
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....e public policy of India and the court cannot look into the merits of the award at the stage of enforcement of the foreign awards, and observed: 27. In our view, what has been stated by this Court in Renusagar, 1994 Supp (1) SCC 644, 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 case 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 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 ....
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....reign Awards (Recognition and Enforcement) Act, 1961: 7. Conditions for enforcement of foreign awards.--(1) A foreign award may not be enforced under this Act-- * * * (b) if the Court dealing with the case is satisfied that-- * * * (ii) the enforcement of the award will be contrary to the public policy. In construing the expression "public policy" in the context of a foreign award, the Court held that an award contrary to (i) The fundamental policy of Indian law, (ii) The interest of India, (iii) Justice or morality, would be set aside on the ground that it would be contrary to the public policy of India. It went on further to hold that a contravention of the provisions of the Foreign Exchange Regulation Act would be contrary to the public policy of India in that the statute is enacted for the national economic interest to ensure that the nation does not lose foreign exchange which is essential for the economic survival of the nation (see SCC p. 685, para 75). Equally, disregarding orders passed by the superior courts in India could also be a contravention of the fundamental policy of Indian l....
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....If the award was not made a Rule of court, the only course available to an aggrieved party was to resist an action on the award or to file a bill in equity. If the award was made a Rule of court, a motion could be made to the court to set it aside for misconduct of the arbitrator on the ground that it was procured by corruption or other undue means (see Statutes 9 and 10 Will. III, C. 15). At one time an award could not be upset on the ground of error of law by the arbitrator because that could not be said to be misconduct or undue means, but ultimately it was held in Kent v. Elstob, (1802) 3 East 18, that an award could be set aside for error of law on the face of it. This was regretted by Williams, J., in Hodgkinson v. Fernie, (1857) 3 CB (NS) 189, but is now well established. 67. In Ssanyong Engineering & Construction Co. Ltd. v. National Highways Authority of India (NHAI), (2019) 8 SCALE 41, the Court concerning the public policy held: 23. What is clear, therefore, is that the expression "public policy of India," whether contained in Section 34 or in Section 48, would now mean the "fundamental policy of Indian law" as explained in paragraphs 18 and 27 of Associate B....
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....itral awards in international commercial arbitrations will not apply, it is necessary to advert to the grounds contained in Section 34(2)(a)(iii) and (iv) as applicable to the facts of the present case. 33. In Renusagar (supra), this Court dealt with a challenge to a foreign award Under Section 7 of the Foreign Awards (Recognition and Enforcement) Act, 1961 ["Foreign Awards Act"]. The Foreign Awards Act has since been repealed by the 1996 Act. However, considering that Section 7 of the Foreign Awards Act contained grounds which were borrowed from Article V of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 ["New York Convention"], which is almost in the same terms as Sections 34 and 48 of the 1996 Act, the said judgment is of great importance in understanding the parameters of judicial review when it comes to either foreign awards or international commercial arbitrations being held in India, the grounds for challenge/refusal of enforcement Under Sections 34 and 48, respectively, being the same. After referring to the New York Convention, this Court delineated the scope of enquiry of grounds Under Sections 34/48 (equivalent to the grounds ....
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....cle V(1) is justified and whether the enforcement of the award would violate the public policy of the law of his country. This limitation must be seen in the light of the principle of international commercial arbitration that a national court should not interfere with the substance of the arbitration." (p. 269) 36. Similarly Alan Redfern and Martin Hunter have said: The New York Convention does not permit any review on the merits of an award to which the Convention applies and, in this respect, therefore, differs from the provisions of some systems of national law governing the challenge of an award, where an appeal to the courts on points of law may be permitted." (Redfern & Hunter, Law and Practice of International Commercial Arbitration, 2nd Edn., p. 461.) 37. In our opinion, therefore, in proceedings for enforcement of a foreign award under the Foreign Awards Act, 1961, the scope of enquiry before the court in which award is sought to be enforced is limited to grounds mentioned in Section 7 of the Act and does not enable a party to the said proceedings to impeach the award on merits. xxx xxx xxx 65. This would imply that the defence ....
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....ard would be refused on the ground that it is contrary to public policy if such enforcement would be contrary to (i) fundamental policy of Indian law; or (ii) the interests of India; or (iii) justice or morality. This judgment was cited with approval in Redfern and Hunter on International Arbitration by Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter (Oxford University Press, Fifth Ed., 2009) ["Redfern and Hunter"] as follows: 11.56. First, the New York Convention does not permit any review on the merits of an award to which the Convention applies. [This statement, which was made in an earlier edition of this book, has since been cited with approval by the Supreme Court of India in Renusagar Power Co. Ltd. v. General Electric Co. The court added that in its opinion 'the scope of enquiry before the court in which the award is sought to be enforced is limited [to the grounds mentioned in the Act] and does not enable a party to the said proceedings to impeach the Award on merits']. Nor does the Model Law. The same theme is echoed in standard textbooks on international arbitration. Thus, in International Commercial Arbitration ....
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.... the manner in which the arbitrators decide on the merits, with as the only reservation, the respect of international public policy. Even if blatant, a mistake of fact or law, if made by the arbitral tribunal, is not a ground for refusal of enforcement of the tribunal's award. Or, as a Brazilian recognition decision under the Convention held [Judgment of 19 August 2009, Atecs Mannesmann GmbH v. Rodrimar S/A Transportes Equipamentos Industriais e Armazes Gerais, XXXV Y.B. Comm. Arb. 330, 331 (Brazilian Tribunal de Justica) (2010)]: These questions pertain to the merits of the arbitral award that, according to precedents from the Federal Supreme Court and of this Superior Court of Justice, cannot be reviewed by this Court since recognition and enforcement of a foreign award is limited to an analysis of the formal requirements of the award. Commentators have uniformly adopted the same view of the Convention [See, for e.g., K.-H. Bockstiegel, S. Kroll & P. Nacimiento, Arbitration in Germany 452 (2007)]. (at pp. 3707-3710) Likewise, the UNCITRAL Secretariat Guide on the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New ....
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.... 20.3.1981 granted interim stay till 22.4.1981. A telex dated 20.3.1981 was sent informing that the High Court granted an interim stay. The FOSFA vide letter dated 6.4.1981 asked the NAFED to appoint its arbitrator by 20.4.1981. On 9.4.1981, NAFED informed FOSFA about the stay of the arbitration proceedings granted by the High Court. The interim order was extended on 22.4.1981 till further orders. On 23.4.1981, Mr. F.A.D. Ralfe, a nominee of the NAFED, was appointed as Arbitrator by FOSFA in the Arbitration Tribunal in violation of the order passed by the High Court. 71. It was also urged that after that, this Court stayed proceedings on 30.4.1982, it was responded by Alimenta S.A. on 4.5.1982 to NAFED that this Court did not have authority to stay the arbitration proceedings. It was also argued that on 1.5.1981, NAFED objected to the appointment of Mr. F.A.D. Ralphe for their representation in the arbitration. On 30.10.1981, NAFED filed a writ petition against the Alimenta S.A. and Arbitrator to prevent the arbitration proceedings. It was further argued that the Appellant was deprived of appointing arbitrators; the same was against the public policy. As per Rule 1(a) of FOSFA R....
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....le that those who defy a prohibition ought not to be able to claim that the fruits of their defiance are good, and not tainted by the illegality that produced them.' 28. In Gurunath Manohar Pavaskar v. Nagesh Siddappa Navalgund, (2007) 13 SCC 565, this Court while dealing with the similar issues held that even a court in exercise of its inherent jurisdiction Under Section 151 of the Code of Civil Procedure, 1908, in the event of coming to the conclusion that a breach of an order of restraint had taken place, may bring back the parties to the same position as if the order of injunction has not been violated. 29. In view of the above, it is evident that any order passed by any authority in spite of the knowledge of the interim order of the court is of no consequence as it remains a nullity. Thus, it was argued that the appointment of the arbitrator to constitute the Arbitral Tribunal violated the order of the Indian Court and it was against the public policy. Consequently, the Respondent, Alimenta S.A., could not approach the Indian Court to enforce such an award passed by the Arbitral Tribunal. 72. Though this Court passed an interim order, ultimately, it....
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....legal practitioner or unless the Disciplinary Authority, having regard to the circumstances of the case, so permits. 23. It is needless to say that Rule 15 is a mandatory rule. That Rule regulates the guarantee given to Government servants Under Article 311. Government servants, by and large, have no legal training. At any rate, it is nobody's case that the Appellant had legal training. Moreover, when a man is charged with the breach of a Rule entailing serious consequences, he is not likely to be in a position to present his case as best as it should be. The accusation against the Appellant threatened his very livelihood. Any adverse verdict against him was bound to be disastrous to him, as it has proved to be. In such a situation, he cannot be expected to act calmly and with deliberation. That is why Rule 15(5) has provided for representation of a Government servant charged with dereliction of duty or with contravention of the Rule by another Government servant or in appropriate cases by a legal practitioner. 24. For the reasons mentioned above, we think that there had been a contravention of Rule 15(5). We are also of the opinion that the Appellant had not been a....
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....he action was against the concept of justice and Rules of procedure, as observed in The State of Punjab and Anr. v. Shamlal Murari and Anr., (1976) 1 SCC 719, wherein this Court found thus: 8. It is obvious that even taking a stern view, every minor detail in Rule 3 cannot carry a compulsory or imperative import. After all, what is required for the Judges to dispose of the appeal is the memorandum of appeal plus the judgment and the paper-book. Three copies would certainly be a great advantage, but what is the core of the matter is not the number but the presence, and the overemphasis laid by the court on three copies is, we think, mistaken. Perhaps, the Rule requires three copies, and failure to comply therewith may be an irregularity. Had no copy been furnished of any one of the three items, the result might have been different. In the present case, copies of all the three documents prescribed, have been furnished but not three copies of each. This omission or default is only a breach that can be characterised as an irregularity to be corrected by condonation on application by the party fulfilling the condition within a time allowed by the court. We must always remember ....
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....ality of justice at the hands of law troubles a judge's conscience and points an angry interrogation at the law reformer. The processual law so dominates in certain systems as to overpower substantive rights and substantial justice. The humanist Rule that procedure should be the handmaid, not the mistress, of legal justice compels consideration of vesting a residuary power in judges to act ex debito justitiae where the tragic sequel otherwise would be wholly inequitable. ... Justice is the goal of jurisprudence -- processual, as much as substantive. 29. In State of Punjab v. Shamlal Murari, (1976) 1 SCC 719, the Court approved in no unmistakable terms the approach of moderating into wholesome directions what is regarded as mandatory on the principle that: (SCC p. 720) Processual law is not to be a tyrant but a servant, not an obstruction but an aid to justice. Procedural prescriptions are the handmaid and not the mistress, a lubricant, not a resistant in the administration of justice. In Ghanshyam Dass v. Dominion of India, (1984) 3 SCC 46, the Court reiterated the need for interpreting a part of the adjective law dealing with procedure alone....