TaxTMI 
TaxTMI 
TaxTMI 
2016 (10) TMI 1388
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....s television transmissions." 2.1. The tenure of this agreement was four (4) years and nine (9) months. The agreement commenced on 01.10.2003 and was to expire on 30.06.2008. 2.2. In terms of the said agreement, for the services rendered by the petitioner, the respondent was required to pay US $35,834 per month. 2.3. Under the agreement, it was the respondent's obligation to uplink their digital telecommunication signals to the petitioner's transponder from its own earth station situate in India. 3. Evidently, the respondent, for some reason, experienced, in November, 2004, difficulty in uplinking its television signals to the petitioner's transponder. 3.1. The respondent, thus, called upon the petitioner to render assistance for even uplinking television signals to the petitioner's transponder. 4. It is, in this background, that the agreement was varied to include a provision for additional payments for the uplinking/teleport services, provided by the petitioner, qua its, 1st, 2nd and 3rd channels. The additional payments, factored-in, were US $ 1,00,000, US$ 90,000 and US $80,000, for the 1st, 2nd and 3rd channels, respectively. 5. It appears, that in view o....
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....lead in oral evidence in the matter, proceeded to pass the subject award. 9.1. Before the Arbitrator, the petitioner had cited two witnesses, while the respondent cited one witness. Parties were also given due opportunity to file their written submissions. 10. The Arbitrator, after considering the merits of the matter, gave the following reliefs to the petitioner; which are set out in paragraph 48 of the award. "(i) An order that the Respondent shall pay US$ 384,122.54 to the Claimant for the unpaid fees; (ii) An order that the Respondent shall pay US$ 71,812.21 to the Claimant for Legal Fees and other costs incurred in the arbitration proceedings; (iii) An order that the Respondent shall pay US$ 268,425.88 for interest on unpaid amounts incurred until 31 January 2014; (iv) An order that simple interest of 10% per annum is payable on the sum of US$ 384, 122.54 from 31 January 2014 until full payment." 10.1. It is this award that the petitioner seeks to enforce. 11. Upon notice being issued in the petition, the respondent has filed its objections in the form of a counter affidavit. CONTENTIONS: 11.1. Arguments on behalf of the petitioner have been advanced by Mr. R. Pa....
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.... me ran as follows: The claim, which was subject matter of the award, being barred under the Indian Limitation Act, rendered the award "patently illegal" and, hence, syllogistically would render the award, in conflict, with the public policy of India. 13.5. Learned counsel further argued that, since, the limitation period prescribed under the Singaporean law, was six years, it was in conflict with the Indian law of limitation, which prescribed three years, rendering therefore, the main agreement, itself, void. According to the counsel, this flaw had resulted in the subject award being bad in law. In this context, a reference was made to Section 45 of the 1996 Act. 13.6. The other objection raised by the counsel for the respondent, is that, the Arbitrator had awarded claims even with respect to teleport and occasional services, which were not, subject matter of the agreement between the parties and, therefore, had, in a sense, stepped outside the jurisdiction vested upon him under the agreement. 14. On the other hand, learned counsel for the petitioner largely, relied upon the award in support of his submissions. Learned counsel, however, brought to my notice the fact that not on....
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....d on behalf of the respondent came within the scope of any of the three parameters prescribed by the Supreme Court in Shri Lal's case. 14.8. This apart, learned counsel submitted that limitation was part of procedural law and therefore, would be governed by that curial law, which would govern the arbitration proceedings. Since, the seat of arbitration was Singapore, the applicable curial law was the law of Singapore, and therefore, the claims, which were lodged by the petitioner could only, have been, examined in the light of the period of limitation, provided under the Singaporean law. 14.9. In support of this submission, counsel for the petitioner relied upon the judgment rendered in: NNR Global Logistics (Shanghai) Company Limited and another V. Aargus Global Logistics Private Limited and another, 2012 Indlaw DEL 2087. 14.10. In so far as the objection taken on behalf of the respondent concerning the jurisdiction of the learned Arbitrator to allow the claim with respect to teleport and occasional services was concerned, learned counsel for the petitioner submitted that there were no objections articulated by the respondent in its statement of defence, as noticed in the aw....
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....ees with the submissions of the Counsel for the Claimant that, neither the nationality of a party, nor the actual or possible forum of enforcement are touchstones for the determination of which limitation law applies to the claim. Counsel for the Respondent failed to provide legal bases or authorities to support his contention to the contrary." 17. The respondent questioned the conclusion reached by the learned Arbitrator that the Singaporean Limitation Act would apply based on the following syllogism. The syllogism is articulated as follows: "17.1. The claim made is barred by Indian Limitation Act. Limitation is part of public policy of India. Therefore, claim awarded in violation of Indian Limitation Act would result in the consequent award being in conflict with the public policy of India and hence, unenforceable in India. 17.2. According to me, this argument is flawed, for the reason that, while, limitation is, concededly, part of public policy in India, what would be required to be examined is, as to which law, would govern limitation. The common ground being that limitation, in the facts of this case, is conceded to be part of procedural law. 17.3. Pertinently, though,....
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....es in favour of a person who has prescribed his right over immovable property by the principle of adverse possession." 16. ... 17. The learned Arbitrator ruled that the statute of limitation both in India and Malaysia being procedural, an action could be brought in Malaysia even if the period of limitation for the claims as per the ILA had expired. 18. As regards the question whether the law of limitation is a substantive law or a procedural law, the decision of the Supreme Court in Thirumalai Chemicals Limited v. Union of India is instructive. There it was explained that the procedural law establishes a mechanism for determining the rights and liabilities and machinery for enforcing them. It was categorically held that "right of appeal may be a substantive right but the procedure for filing the appeal including the period of limitation cannot be called a substantive right, and an aggrieved person cannot claim any vested right claiming that he should be governed by the old provision pertaining to period of limitation." It was categorically held that "unless the language used plainly manifests in express terms or by necessary implication a contrary intention a statute divestin....
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....rts of the country where enforcement is sought if the arbitral procedure "was not in accordance with the agreement of the law of the country where the arbitration took place." 23. In Naviera Amazonica Peruana S.A. v. Compania Internacional De Seguros Del Peru (1988) 1 Lloyd's Rep 116 (CA), it was held: "All contracts which provide for arbitration and contain a foreign element may involve three potentially relevant systems of law: (a) the law governing the substantive contract; (2) the law governing the agreement to arbitrate and the performance of that agreement; (3) the law governing the conduct of the arbitration. In the majority of the cases all three will be the same, but (1) will often be different from (2) and (3) and occasionally, but rarely, (2) may also differ from (3)." 24. The following observations of Mustill and Boyd have been relied upon by the Supreme Court in Dozco India Private Limited v. Doosan Infracore Company Limited (2011) 6 SCC 179 and Sumitomo Heavy Industries Ltd. v. ONGC Ltd. (1998) 1 SCC 305: "there is a strong prima facie presumption that the parties intend the curial law to be the law of the 'seat' of the arbitration, i.e., the place....
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.... 20.1. This question can be answered in two ways. First, that since, one has concluded that the Indian Law of Limitation would not apply, there could be no question of violation of Public Policy of India. 20.2. Second, which is a reasoning that flows from the first conclusion - that a claim awarded contrary to the period of limitation, prescribed under the Indian Limitation Act could, at best, be termed in the given situation, as an infraction of an Indian Legislation, and that such infraction, would, necessarily, not, impinge upon the fundamental policy of India. As was observed in Renusagar's case, which was cited with approval in Shri Lal Mahal, "contravention of law alone will not attract the bar of public policy and something more than contravention of law is required". 20.3. Once it is held that, in the given facts, Singaporean law of limitation would apply, then the breach, if any, of the Indian Limitation Act, would be a contravention of a procedural law, which would not necessarily, as indicated above, impinge upon the fundamental policy of India. 20.4. The Supreme Court in the case of Shri Lal Mahal's case noticed its own decisions in ONGC Ltd. V. Saw Pipes - [....
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....y this Court while applying the rule of public policy between a matter governed by domestic laws and a matter involving conflict of laws. It has been held in unambiguous terms that the application of the doctrine of "public policy" in the field of conflict of laws is more limited than that in the domestic law and the courts are slower to invoke public policy in cases involving a foreign element than when purely municipal legal issues are involved. 24. Explaining the concept of "public policy" vis-à-vis the enforcement of foreign awards in Renusagar, this Court in paras 65 and 66 (pgs. 681-682) of the Report stated: 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 t....
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....t of an award after it becomes final. Having that distinction in view, with regard to Section 34 this Court said that the expression "public policy of India" was required to be given a wider meaning. Accordingly, for the purposes of Section 34, this Court added a new category - patent illegality - for setting aside the award. While adding this category for setting aside the award on the ground of patent illegality, the Court clarified that 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 public policy. Award could also be set aside if it was so unfair and unreasonable that it shocks the conscience of the court. 26. .... 27. In our view, what has been stated by this Court in Renusagar 3 with reference to Section 7(1)(b)(ii) of the Foreign Awards Act must equally apply to the ambit and scope of Section 48(2)(b) of the 1996 Act. In Renusagar3 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) w as held to mean "public policy of India". A dis....
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....w, though, in my opinion, it is the correct conclusion given the facts obtaining the present case. Thus, in my view, it cannot be said that the impugned award is violative of the fundamental policy of Indian law, if the test of plausible view is applied. 23. In view of the above, the objection raised on this score, on behalf of the respondent, has to be rejected, as being untenable. It is held accordingly. 24. This brings me to the other ground of challenge, which is, that the, Arbitrator, in awarding claims, in respect of teleport and occasional services, had stepped out of the periphery, i.e., the jurisdiction prescribed for him by the agreement. 25. In respect of this objection, the argument advanced by the petitioner's counsel, that the respondent, had not, raised this objection till such time closing submissions were propounded on behalf of the respondent, before the Arbitrator, appears to be correct. 25.1. The reason, that, I am persuaded to come to this conclusion is based on a perusal of the defence statement filed before the learned Arbitrator. A perusal of the defence statement would show that the only objection which the respondent had raised, vis-à-vis, j....
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....ore, based on the testimony of respondent's, witness No. 1, Mr. M. Ravindran, the learned Arbitrator did come to the conclusion that teleport services were an integral part of the transponder services, i.e., the main agreement and that the issue pertaining to outstanding fees in respect of the three services, i.e., transponder services, teleport and occasional services, was discussed and, consequently, formed part of the two meetings held on 31.01.2006 and 02.08.2006. Findings to this effect are found in paragraph 38 of the award. 28. This brings me to the last aspect, which was raised before me, i.e., if the Indian Limitation Act were to apply, the claims made by the petitioner under the agreement were not sustainable, as it had been rendered null and void on account of expiry of period of limitation. 28.1. In this context, quite strangely, Section 45 of the 1996 Act was sought to be taken recourse to by the counsel for the respondent. In my view, as has been correctly found by the learned Arbitrator, the Section obliges a judicial Authority to refer parties to Arbitration, unless it is found that such an agreement is either null and void or, inoperative or, incapable of bei....