TaxTMI 
TaxTMI 
TaxTMI 
2024 (11) TMI 835
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....ion, claiming to be the world's leading entertainment technology company, specializing in motion picture technology and large format motion picture presentations, having its registered office at 2525 Speakman Drive, Mississauga, Ontario, Canada, holding three Awards in its favour, pursuant to the arbitration proceedings, being concluded between it and E-City Entertainment (I) Pvt. Ltd. (Respondent No. 1) before the International Court of Arbitration of the International Chamber of Commerce in London, has approached this Court, by filing the present Arbitration Petition, invoking Section 47, 48 and 49 of the Arbitration and Conciliation Act, 1996 (for short "the Act of 1996"), seeking a declaration that the three Arbitral Awards in its favour, are enforceable under the provisions of Part II of the Act. IMAX also seek directions to enforce and execute the Arbitral Awards as decrees in its favour and against all the Respondents. A direction is also sought against the Respondents to deposit the decretal amount of sum of U.S. $ 11,309,496.06 plus interest at the rate of U.S. $ 2,512.60 per day from 01/10/2007 till payment and realization, with liberty to IMAX to withdraw the same. Pe....
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....h it in due course of my analysis of the counter arguments. Respondent No. 4, E-City Investments and Holdings, is represented by learned senior counsel Mr. Sharan Jagtiani. 4. I have collated the background facts from the arguments advanced on behalf of the respective counsels and as set out in the Arbitration Petition as well as the Affidavits filed on behalf of the Respondents and I deem it appropriate to cull out the sequence of events before I proceed to appreciate the rival contentions advanced and I have tried to be brief in compiling the necessary facts. At the incipience, I must introduce the parties to the Petition. IMAX, a Canadian Corporation, was incorporated as a Federal Company on 11/09/1967 with its Executive Offices, located in New York City, which stake a claim that it is one of the world's leading entertainment companies, engaged in the business of large format projection and sound systems, with its specilization in motion picture technology. The business of the IMAX include the sale or lease of large format projection and sound systems to other companies in various parts of the world. IMAX Limited was incorporated as an Ontario Corporation, a sole shareholder....
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...., which Agreement shall be based substantially on the terms of IMAX's standard lease agreement and the Parties agreed to negotiate in good faith to conclude the negotiations with respect to such Lease Agreement on or before 30/11/2000. The Final Letter Agreement contemplated that each Lease Agreement between IMAX and E-City shall be for a term of twenty (20) years (the "Initial Term"), with one renewal term of ten (10) years (the "Renewal Term"), with a contemplation of renewal of the term at E-City's option for one (1) Thirty-five (35) year, on the same terms and conditions as contained in the Lease Agreement, except the payment of initial rent, which will not be required. I will be referring to the relevant clauses of this Agreement, as I deal with the contest, as the bone of contention between the Parties has its genesis in it. On 22/11/2000, agreement was entered between E-City and IMAX for sale of 3D GT projection system. Further, E-City also entered a maintenance, installation and trade-mark agreement with IMAX Theater Services Ltd., a subsidiary of IMAX Ltd., the term of which was for twenty (20) years. On 20/12/2000, letter was issued by IMAX to E-City acknowledging and....
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.... Master Agreement. The Liability Award ordered an assessment of damages suffered by IMAX. (b) On 24/08/2007, the Arbitral Tribunal issued an Award on the damages phase of the arbitration (the "Quantum Award") holding that E-City Entertainment was required to pay IMAX a sum of U.S. $ 9,406,148.31 (approximately INR 62,22,21,478.86) plus interest at 2% in excess of the prime rate in Canada on that amount, as provided for in the Respondent's contract. (c) After further briefing on the issue of costs and interest, a Final Arbitral Award was declared on 27/03/2008 (the "Final Award") holding that Respondent, E-City Entertainment is liable to pay to the Petitioner IMAX (i) U.S. $ 1,118,558.54 (approximately INR 7,39,86,305.03) by way of interest up to and including 30/09/2007, (ii) U.S. $ 2,512.60 (approximately INR 1,66,215.69) per day from 01/10/2007 until payment of the Award amounting to U.S. $ 9,406,148.31 (approximately INR 62,22,21,478.86) (iii) costs by way of attorney's fees, export fees and related expenses in the sum of U.S. $ 84,789.21 (approximately INR 56,08,854.62) (iv) U.S. $ 400,000 (approximately INR 2,64,53,245.69) fixed by the ICC as the costs of the arbitration t....
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....s applicable, however they themselves stated the place of arbitration to be London. It is pertinent to reproduce the relevant portion in the respondent's application before the ICC while objecting to the authority of the law firms representing the appellant. It stated :- "The seat of this arbitration is London." Therefore, the two reasons for Part-I not being applicable are as follows :- (i) Parties agreed that the seat may be outside India as may be fixed by the ICC; and (ii) It was admitted that the seat of arbitration was London and the award was made there. Therefore, there is no doubt that Part-I has no application because the parties chose and agreed to the arbitration being conducted outside India and the arbitration was in fact held outside India." 10. E-City Entertainment/Respondent No. 1 on 27/11/2014 instituted Suit No. 300/2015 and filed Notice of Motion No. 1112/2016 against IMAX, inter alia, seeking damages and permanent injunction from taking action to enforce the Arbitral Award in New York Court. On 02/02/2015 this Court rejected the Application for grant of ad-interim relief in the Notice of Motion against which E-City filed an Appeal before the Divis....
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....y to the Sheriff of the county of New York to satisfy the judgment, and directing respondents to render an accounting of their corporate assets is denied. This constitutes the decision, order and judgment of the court." 12. Mr. Chinoy while pressing the relief in the present Petition for recognition and enforcement of the Arbitral Award has justified the impleadment of Respondent Nos. 2, 3 and 4 by advancing his submission, that Respondent No. 1, in the midst of arbitration, began to divest the assets of E-City Entertainment in an unlawful manner, with a design to prevent IMAX from recovering the expected damages to be awarded and he would accuse E-City Entertainment of acting in breach of the provisions of Section 391 to 394 of the Companies Act, 1956, by failing to give the Petitioner notice of the demerger process, which could have enabled the Petitioner to appear before the Court and raise an objection, but this opportunity was denied to IMAX. I will be dealing with this point and the response of Mr. Seervai to the said submissions at the appropriate stage. 13. It is also the argument of Mr. Chinoy that it is now a well settled position of law, that in case of a foreign aw....
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....is trying to defeat the execution of the Award passed against him and he would submit that the the frontiers of the doctrine of lifting of corporate veil are unlimited and it must be applied depending upon the realities of the situation, as it aim at doing justice to the parties and the horizon of this doctrine is definitely expanding in the modern scenario. 14. Mr. Chinoy would rely upon the pleadings in the Petition, in an attempt to demonstrate that the Respondents had in a clandestine manner with a clear intention of defrauding Petitioners claim on the arbitral awards, divested assets E-City Entertainment in favour of E-City Real Estate Pvt. Ltd. and E-City Project Construction Pvt. Ltd., by approaching the court under Section 391 to 394 of the Companies Act 1956, to demerge the valuable assets in favour of the two entities. In the Petition, the sequence of events reflecting the scheme of arrangement between the E-City Entertainment and the Respondents Nos. 2 and 3 is specifically pleaded as a deliberate attempt of the Respondents to transfer a substantial portion of E-City Entertainment's assets by preventing IMAX from receiving notice of this transfer, so that it could not ....
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....specifically invited my attention to the pleadings in the Petition to the following effect :- "63. The majority of the assets of the E-City Entertainment were transferred to the E-City Real Estate under Scheme 1 and to the E-City Projects Construction under Scheme 2. As a consequence of same, very less of the assets remained vested in E-City Entertainment. As against the highly depleted assets, E-City Entertainment had on its books of accounts a huge contingent liability which E-City Entertainment knew would become an actual Award. Indeed, the actual damages Award was rendered by the Arbitration Panel while the Scheme 2 demerger was pending, but the Demerger Petition was never amended to inform this Hon'ble Court. As shown by the facts discussed above, all of the Respondents and Directors of all the Respondents conspired against the Petitioner by draining E-City Entertainment's assets. Given the award of damages which the Arbitral Tribunal has awarded, as a result of the sham demerger Petitioner it will not be able to recover the full amount awarded from E-City Entertainment. Further, all the Respondents have conspired together to fraudulently transfer the assets of E-Cit....
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....being numbered as Commercial Execution Application No. 49/2017 only against Respondent No. 1 on 29/03/2017 and it is pending till date, being conscious that leave under Order 21 Rule 22 of the CPC is necessary before proceeding to execute the foreign Award, with the legal fiction of it being executable as Decree of the Court. In the Execution Application, a specific order is passed to the effect that the Execution Application and Chamber Summons filed by the Judgment Debtors will have to await the outcome of Arbitration Petition No. 414 of 2018. c] The transaction contemplated under the Master Agreement is violative of RBI Notification dated 03/05/2000 under the Foreign Exchange Management Act, 1999 ("FEMA"), the Foreign Exchange Management (Current Accounts Transaction) Rules, 2000 and is violative of public policy of India and, therefore, the Awards are unenforceable under Section 48 (2) of the Act of 1996. d] In absence of an appropriate notice being given to Respondent No. 1 of the appointment of the Arbitral Tribunal as also the Arbitral proceedings, the recognition and enforcement of the Award should be refused under Section 48 (1) (b) of the Act of 1996 and also under Se....
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....mitation. According to Mr. Seksaria, the learned single Judge of this Court, while deciding the preliminary issue of limitation on 13/11/2019 had declared that the period of limitation available was 12 years, but it is his submission that the order passed by the learned Single Judge is wiped from its existence and in any case does not operate as res judicata or issue estoppel. Since mere filing of Petition under Section 34 did not operate as automatic say of an Arbitration Award, Mr. Seksaria would submit that E-City Entertainment filed Special Leave Petition against order dated 13.11.2019 before the Supreme Court, which granted interim order staying the Judgment dated 13/11/2019, on 10/01/2020. However, subsequently the three-Judge Bench of the Apex Court in case of Vedanta Ltd. (supra), took note of the order of the learned Single Judge dated 13/11/2019 in the case of IMAX Corporation Vs. E-City Entertainment (L) Pvt. Ltd. and concluded that the Foreign Award was a Decree and, therefore, Article 136 of the Limitation Act is applicable for its enforcement. As a consequence of this decision, the Special Leave Petition filed by E-City was dismissed by the Apex Court and even the R....
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....nciple of law shall create fetter upon the Court when squarely the matter in dispute, is dependent upon interpretation of the provision of law concerning the power to grant relief and to possess proper jurisdiction. According to him, the issue of limitation will have to be decided in accordance with the law laid down by the Supreme Court in Vedanta Limited(supra) and the only inevitable conclusion is, that the Petition is hopelessly barred by Law of Limitation. In addition, it is also the submission of Mr. Seksaria that the Petition is hopelessly barred in view of the law laid down in Hindustan Construction Company Ltd. & Anr. Vs. Union of India & Ors. (2020) 17 SCC 324 and Vedanta Limited (supra) and it is a matter of public policy, for the interest of the State, not to entertain the proceedings barred by Law of Limitation ipso facto and ipso jure and it would fall within the realm of public policy of India within Section 48 (2) of the Act. 20. Focusing on his second objection, Mr. Seksaria would submit that since the Petitioner had admittedly filed separate application seeking execution only against Respondent No. 1, which is pending, the present Petition to the extent that it....
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....er FEMA and Rules of 2000. Mr. Seksaria has taken me through the list of events and has canvassed that though E-City sought approval from RBI about the remittances required to be made for lease of capital equipment and other sums, it never received the requisite approval and unless and until permission was accorded by Reserve Bank of India, the proposed transaction was not a lawful contract and did not amount to an Agreement within the meaning of Section 10 read with Section 23 of the Contract Act, 1872. When IMAX issued a notice of termination of exclusivity to Respondent No. 1 and asserted that they were at liberty to pursue sale and/or lease of IMAX systems, and notice of default was issued by it, and in the statement of defence, E-City adopted a specific stand that the terms of the Agreement contemplated that it was contingent upon E-City receiving RBI approval. In the liability Award passed by ICC in favour of IMAX, E-city's submission on RBI approval was noted by the Tribunal and in its declaratory Award it specifically noted that there was no hint or suggestion in the letters that it was other than a deal done, but according to Mr. Seksaria, the Tribunal rendered a findin....
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....nt, which is a matter of fairness and this ensure that the witness is given an opportunity to explain his or her evidence if is to be so impugned. Reliance is placed upon the observations of the Supreme Court of England in TUI UK Ltd. vs. GRIFFITHS (2023) UK SC 48 dated 29.11.2023 and it is submitted, that in the facts of the present case there is a denial of justice and fair hearing since the Arbitral Tribunal has conducted the arbitration process irrationally by ignoring and not determining the central issue, which goes to the root of the matter, i.e. the mandatory prior RBI approval and it is submitted that the Tribunal has completely missed the issue by not rendering any finding on the issue of enforceability of the Agreement and the prohibition in law, as it required mandatory RBI approval. Submitting that the Arbitral Tribunal was not alive to the necessity of deciding the issue whether the Agreement was prohibited by law and has presumed and opined in the quantum award by recording the following in Para 56 :- "Accordingly, the Tribunal finds that there is no evidence that there would have been difficulty with the RBI giving the necessary permission." One more Judgment o....
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....placed reliance upon the relevant observations of the Apex Court in the case of Gemini Bay Transcription Private Limited & Anr. Vs. Integrated Sales Service Limited & Anr. (2022) 1 Supreme Court Cases 753, concluding that a non-signatory's objection cannot possibly fit into Section 48 (1) (a) when read alongwith Section 44 of the Act of 1996, as Section 48 (1) (a) refers only to the "parties" to the agreement, referred to in Section 44 (a) and thus, according to him, to include non-parties to the agreement by introducing the word "person" would run contrary to the express language used by the statute. Relying upon this decision, Mr. Seervai has submitted that Chamber Summons was taken out for deletion of Respondent Nos. 2 and 3. 26. One another point on which Mr. Seervai has focused his attention, in contesting the claim in the Petition is, as regards the attack on the demerger orders, which according to him, are passed by the court of competent jurisdiction and it is his contention that the Petitioner is attempting to raise a collateral challenge to the order of demerger passed by the competent Court and this is not a permissible course of action, since IMAX has sought to assail....
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....s magic mantras or catch-all phrase, to defeat or nullify the effect of a legal situation and in absence of sufficiency of grounds, it is not open for IMAX to claim that the demerger orders are nullity in order to visit liability from the Respondents. Further, according to him, an order sanctioning scheme of arrangement operates as judgment in rem, which is good against the whole world and not only bind the parties to the arrangement, but also to the third parties and strangers. By drawing the principle laid down in In re Europlast India Ltd. 2010 Supp BomCR 425, which has pronounced that the scheme of arrangement "represents a contract sanctified by a Courts' approval between the company and the creditors and/or members of the company....sanction of the Court operates as judgment in rem", Mr. Seervai described the argument advanced on behalf of the Petitioner to be monstrously egregious, which therefore must meet rejection. It is his specific contention that if the Petitioner is submitting that it is not seeking recognition in Respondent Nos. 2 and 3, since no role is attributed to them, but despite this, they are foisted with the consequences. Placing reliance upon paragraphs 42....
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....to the Limitation Act, 1963 and this order was assailed before the Apex Court, when the challenge was not entertained and the review thereof was also dismissed on 16/08/2023. It is specifically urged by Mr. Seervai that in the present proceedings, IMAX has failed to assert as to when the cause of action arose for it against the Respondents and when it derived knowledge of the said cause of action, since the pleadings in the Petition are completely silent on this aspect and, therefore, it is not open for the Court to decide such an important issue in absence of pleadings, as it would defeat the purpose of the Limitation Act, 1963. It is his specific contention that the fact of demerger was known to IMAX as far back as June 2011 and, therefore, this ought to have been reckoned as starting point for limitation insofar as the group companies are concerned, but institution of the present proceedings in April 2018, which is beyond the period of three years of limitation, the proceedings must fail. SUBMISSIONS ADVANCED ON BEHALF OF RESPONDENT NO. 4. 29. Mr. Sharan Jagtiani, learned senior counsel, representing Respondent No. 4, a company incorporated on 29/09/2000 with its primary obje....
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....oup Promoter Mr. Chandra Goel 1 0 Essel Group Promoter Mr. Arpit Goel 11,14,351 13.69 Essel Group Promoter Mr. Charu Goel 1,546,623 19 Essel Group Promoter Mr. Ankit Goel 13,16,885 16.18 31. My attention is also invited to some more pleadings, which I will be reproducing when the rival contentions are dealt with. However, at present, I must record the submission of Mr. Jagtiani, who has invited my attention to Chamber Summons No. 100 of 2019, seeking deletion of Respondent No. 4, which received a reply from the Petitioner, reiterating that all the Respondents are part of Essel Group of Companies and they have conspired to fraudulently transfer the assets of Respondent No. 1 to Respondent Nos. 2 to 4 during the pendency of the arbitration proceedings and all the Respondents should be treated as single entities. Mr. Jagtiani has joined hands with Mr. Seervai in submitting that under Part II of the Arbitration and Conciliation Act, 1996, foreign awards are only binding upon the parties to the arbitration proceedings and he has taken me through the whole scheme of Part II and the position that emerges therefrom, specifically by reading of Section 46, which categoricall....
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...., the Chamber Summons appeared to evade the provision, as they were not parties as envisaged under Section 48 of the said Act, as the foreign award was enforceable only against the Judgment Debtor, who was the party to the arbitration agreement and against whom the award was passed and the foreign award cannot be enforced against the additional Respondents, who are neither parties to the arbitration agreement nor to the award. 32. The learned senior counsel representing Respondent No. 4 has also relied upon the most fundamental principle of company law, being that the company is an independent legal entity distinct from its shareholders and any claim against the company must be made against the company itself and not the shareholders, whose liability is restricted to the value of shares in the company and, therefore, the shareholder cannot be made liable for company's debts, subject to certain limited exceptions. The principle, according to Mr. Jagtiani, about the fundamental distinction between the shareholder of a company and the company itself, which was expounded in Salomon Vs. Salomon & Co. Ltd. [1987] AC 22 is firmly embedded in Indian jurisprudence and as time and again be....
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.... the pre-arbitration stage. However, it was reiterated that ordinarily an arbitration agreement takes place between the persons, who are the parties to the arbitration agreement and the substantive contract underlining the agreement. However, only in certain circumstances, a non-signatory should be subjected to arbitration, without prior consent, but it would be an exceptional case. However, by the subsequent decision in the case of Cox and Kings Ltd. (supra), it was clarified that principle of piercing the corporate veil cannot be the sole basis for impleading a non-signatory under the Group of Companies Doctrine and it would require more, such as the common intention of the parties to participate in the transaction. In any case, if the high burden to subject a non-signatory to arbitration has been met, the consequence would be that the non-signatory participates in the arbitration and has the opportunity to present its case. 35. By inviting my attention to the position of law emerging from the various authoritative pronouncements, Mr. Jagtiani has submitted that Respondent No. 1 was incorporated in the year 1999 and the Master Agreement was entered with the Petitioner on 28/09/....
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...., E-City Entertainment (L) Pvt Ltd ("E-City") alleging its breach. The Master Agreement, a detail 11 page agreement set forth a comprehensive plan under which E-City was awarded exclusivity to become IMAX's primary business partner of the large and lucrative Indian Market. In return, E-City committed to lease at least six theatre systems from IMAX at agreed upon prices and dates with a possibility of leasing 14 additional IMAX systems. E-City for a period of time abided by its commitment, but faced the accusation that it took advantage of its exclusivity rights. However, in 2003, when it informed IMAX that it no longer wanted to pursue the Master Agreement, for internal financial reasons and it was scaling back on the development of the family fund centres throughout India in which it had intended to place IMAX systems, IMAX was aggrieved and alleged default of all of their initial payment obligations under the terms of the Master Agreement, which contemplated E-City to have finished making payments for initial rent for all six systems to IMAX by 15, December 2004, but failed to do so. IMAX has specifically pleaded "Notably, this letter noted that although certain terms of the Ma....
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....ce by both the parties. E-City while admitting that an agreement was entered into on 22/11/2000 in respect of one IMAX system, specifically adopted a stand that the execution of purchase and maintenance agreement was not done in response to an obligation purportedly contained in the LOI, as alleged in the statement of case and saved by the claimant's letter dated 20/12/2000 and countersigned by the respondent, the purchase and maintenance agreements were terminated. In addition, it was the pleaded case of the Respondent in its statement of defence that EML is not a subsidiary, holding company and/or related company to the respondent, and all and any further negotiations post the executions of the LOI where negotiations relating to the implementation of the terms of LOI and not pursuant to any binding legal obligation. In addition, E-City specifically pleaded about the necessity of approval and permission to be obtained from RBI which was never received. 38. The case of the Respondent in the Statement of Defence in relation to clause No. 3 of the LOI is to the effect that the said clause was merely preface to the future negotiations and it therefore, did not create and legal bin....
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.... be regarded as the same Company as IMAX Corporation. 40. As far as the second issue about damages is concerned, the claim of IMAX focused principally on the revenue, which it could have earned from the six agreements, was accepted as the basis and by deciding its claim for interest along with the mitigation of damages raised by E-City, the Tribunal awarded a sum of US$ 9,406,148.31 as calculated in the award to be paid by the respondent to the claimant IMAX Corporation. It was also directed that the claimant shall pay the interest on the said sum at the Canadian Based US Dollar rate plus 2% and the parties shall endeavour to agree the dates from which the interest should run. In addition, the cost of an incidental to be assessed by the Tribunal, upto the date of final partial award, was also directed to be paid. This award was made in London, the juridical seat of arbitration on 24/8/2003. 41. This was followed by the final award dated 27/3/2008, with the following directions:- "(i) that the respondent do pay to the Claimant the sum of US$ 1,118,558.54 by way of interest upto and including 30th September, 2007; (ii) that the respondent do pay to the Claimant interest at a r....
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....ure, 1908 and the Petitioner has already filed a separate application for execution only against Respondent No. 1, which is pending. The present Petition, which seek relief in the nature of execution, is untenable. c) The present Petition is in essence a Petition challenging the demerger scheme which is not permissible; (d) The invocation of Arbitration was invalid under the laws of Singapore i.e. Seat of Arbitration. (e) Enforcement of the said Foreign Award would be contrary to the public policy of India as per Section 48 (2)(b) of the Arbitration and Conciliation Act, 1996." 44. In the wake of the pleadings in the proceedings including the rejoinder filed by the petitioner as well as the affidavit in reply filed by Respondent Nos. 2 and 3 and on hearing the respective counsel, the following legal issues/points fall for consideration before me. (A) In case of the foreign awards, whether the award holder (IMAX Corporation) is entitled to apply for recognition and enforcement of the Award as deemed decrees and thereafter seek its execution, by filing a common petition. (B) The scope of review under Section 48 of the Arbitration and Conciliation Act, 1996, and whether it ....
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....foreign awards, which is assigned a definite meaning. Section 46 clearly contemplate that any foreign award which would be enforceable under the Chapter shall be treated as binding for all purposes on the persons as between whom it is made. Section 47 contemplate the evidence to be produced before the Court by a party applying for enforcement of a foreign award and it may be in the following form:- "(a) the original award or a copy thereof, duly authenticated in the manner required by the law of the country in which it was made; (b) the original agreement for arbitration or a duly certified copy thereof; and (c) such evidence as may be necessary to prove that the award is a foreign award." Section 48 in Chapter 1 under the caption 'New York Convention Awards" set out the conditions for enforcement of foreign awards and is couched in a negative language by prescribing as to when enforcement of foreign awards may be refused, at the request of the party against whom it is invoked, by contemplating proofs to be furnished by that party, as set out therein. Only upon such proof being tendered, the enforcement of the foreign award may be refused. Section 49 further create a deemi....
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.... was required to take recourse to these enactments. Preamble of the Act makes it abundantly clear that it aims at to consolidate and amend Indian laws relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards. The object of the Act is to minimize supervisory role of court and to give speedy justice. In this view, the stage of approaching court for making award a rule of court as required in Arbitration Act, 1940 is dispensed with in the present Act. If the argument of the respondent is accepted, one of the objects of the Act will be frustrated and defeated. Under the old Act, after making award and prior to execution, there was a procedure for filing and making an award a rule of court i.e. a decree. Since the object of the act is to provide speedy and alternative solution of the dispute, the same procedure cannot be insisted under the new Act when it is advisedly eliminated. If separate proceedings are to be taken, one for deciding the enforceability of a foreign award and the other thereafter for execution, it would only contribute to protracting the litigation and adding to the sufferings of a litigant in terms of money, ti....
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....pra) when the scheme of 1996 Act for enforcement of New York Convention Awards was focused upon and it is held that under the Act of 1996, there is no requirement for the foreign award to be filed before the Seat Court and obtain a decree thereon, after which it becomes enforceable as a foreign decree. Recording that the requirement under the Geneva Convention 1927, being referred to as "Double exequatur" was done away with the New York Convention and under the Act of 1996, a party may apply for recognition and enforcement of a foreign award, without obtaining leave from the Court of the seat in which, or under the laws of which the award was made. Discussing the scheme of the Act of 1996 and from Section 44 to 47, the Apex Court observed thus :- "83.2 Section 44 of the 1996 Act provides that a New York Convention award would be enforceable, if the award is with respect to a commercial dispute, covered by a written agreement in a State with which the Government of India has a reciprocal relationship, as notified in the Official Gazette. 83.3 Section 46 provides that a foreign award which is enforceable under Chapter 1 of Part II of the 1996 Act, shall be treated as final and b....
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....e out. 83.15 If the Court is satisfied that the application under Section 48 is without merit, and the foreign award is found to be enforceable, then under Section 49, the award shall be deemed to be a decree of "that Court". The limited purpose of the legal fiction is for the purpose of the enforcement of the foreign award. The concerned High Court would then enforce the award by taking recourse to the provisions of Order XXII of the CPC." 50. Though Mr. Seksaria would lay his emphasis on the observation in paragraph no. 83.11, in my view, the said observation cannot be read in isolation, but reading of the whole of para 83 with its different parts, it is evidently clear that the enforcement Court may refuse enforcement of a foreign award, if a person against whom it is invoked, is able to offer proof and make out a case under clauses (a) to (e) of the said provision, amounting to the conditions perforcing the Court to refuse the enforcement of the award. A Court may also refuse enforcement by retaining a residual discretion to overrule the objections, only if it finds that overall justice has been done between the parties and may direct enforcement of the award, but by going t....
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....vour of the Petitioner, by holding that a common petition can be entertained for enforcement and execution of the three awards. ISSUE NO.B The scope of review under Section 48 of the Arbitration and Conciliation Act, 1996, and whether it is permissible to undertake the review on the merits of the Award. 53. The scope of Section 48 Chapter II of the Arbitration and Conciliation Act, 1996 relating to enforcement of certain foreign awards, in Chapter I pertain to the New York Convention awards. Upon the evidence produced by a party seeking enforcement of a foreign award, in form of the original award or copy thereof, duly authenticated in the manner required by the law of the country in which it is made or the original agreement for arbitration or a duly certified copy thereof and such evidence, as may be necessary, to prove that the award is a foreign award, the Court before which the evidence is produced, may enforce the award. But, it may refuse the enforcement, if the party furnishes to the Court the proof about the existence of the circumstances stipulated in Section 48 (1) (a) to (e). Similarly enforcement of an arbitral award may also be refused in terms of Section 48 (2) i....
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.... (2) of Section 48, the foreign award must be enforced. The grounds contained in Section 48 are watertight and a reading of the said provision would make it manifestly clear that only if the party against whom the enforcement is invoked furnishes to the Court the necessary proof in form of grounds set out in clauses (a) to (e), the award shall not be enforced. Reading of Section 48 make it evidently clear that no ground outside Section 48 can be looked at and as held in Gemini Bay Transcription Private Limited (supra), the grounds are not to be construed expansively, but narrowly. The relevant observations of the Apex Court in Gemini Bay Transcription Private Limited (supra), deserve a reproduction :- "41. ..... Thus, in Ssangyong Engg. & Construction Co. Ltd. v. NHAI, ["Ssangyong"], it was held: (SCC pp. 172-74, para 45) "45. After referring to the New York Convention, this Court delineated the scope of enquiry of grounds under Sections 34/48 (equivalent to the grounds under Section 7 of the Foreign Awards Act, which was considered by the Court), and held : (Renusagar case, SCC pp.671-72 & 681-82, paras 34-37 & 65-66) "34. Under the Geneva Convention of 1927, in order to o....
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....f 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 7 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." 57. The "pro-enforcement bias" of the New York Convention, which has found its way in Section 48 has cast the burden on the party/parties objecting to the enforcement instead of party seeking enforcement and it is only when the proof is tendered to ....
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....rties; the challenge procedure in the primary jurisdiction gives more leeway to courts to interfere with an award than the narrow restrictive grounds contained in the New York Convention when a foreign award's enforcement is resisted." It is thus well settled, that Section 48, is hedged with pro-enforcement bias and unless the Respondent No. 1 is able to show that its case falls within Section 48 (1) or 48 (2), the foreign award must be enforced. ISSUE NO.C The Arbitration Petition is filed beyond the period of limitation in the wake of the decision of the Apex Court in the case of Government of India Vs. Vedanta Limited (supra). 60. Respondent No. 1 has resisted the recognition of the awards on the ground that the Petition, has been filed after five years and, hence, is barred by the law of limitation. It is an undisputed fact that E-City Entertainment (I) Pvt. Ltd. raised challenge to the foreign awards, by filing Arbitration Petition under Section 34 of the Act of 1996, which on 31/07/2013, came to be admitted, holding that it is maintainable. On IMAX assailing it before the Apex Court, on 19/11/2013, ex-pate ad-interim order was granted staying further proceedings of the Ar....
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....any decree (other than a decree granting a mandatory injunction) or order of any civil court", which prescribe the period of limitation as twelve years. On considering the rival contentions advanced, with E-City specifically raising an objection that there is no application for condonation of delay filed by the Petitioner, the contention was recorded to the effect that even assuming that this Court was wrongly approached under Section 34 proceedings in the year 2008, ultimately the issue was decided by the Apex Court on 10/03/2017, holding that the proceeding filed by Respondent No. 1 under Section 34 were not maintainable and the pendency of these proceedings in no manner could have saved the limitation prescribed under Article 137. The contention that seeking enforcement of an award is governed by substantive provision contained in form of Sections 47 to 49 of the Arbitration and Conciliation Act and the party holding a foreign award cannot sleep over its enforcement/decreetal right arising under the award and cannot seek its enforcement merely because there are some proceedings filed by the award debtor, assailing the awards before a Court, which was not competent to entertain ....
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....means that the foreign award is to be regarded as a decree. The following observations of the Supreme Court in paragraph 19 read thus:- "One sentence in Fuerst Day Lawson (supra) reads, "[T]he only difference as found is that while under the Foreign Awards Act a decree follows, under the new Act the foreign award is already stamped as the decree." This sentence does not lead to the conclusion, following the judgment in Thyssen Stahlunion GMBH Vs. Steel Authority of India Ltd., (1999) 9 SCC 334, that under the 1996 Act, a foreign award is considered to be stamped already. All that this sentence means is that the foreign award is to be regarded as a decree. The expression "stamped" means "regarded". This judgment also does not carry us much further." (emphasis supplied) 63. Even the Petition was tested by applying the provision of Article 137 and an inference was drawn in the wake of the documentary evidence with its chronology that the Petition is not barred by law of limitation, by recording as under :- "28. Now coming to the contention as urged on behalf of the respondents, the main thrust of the respondents' argument is the decision of the learned Single Judge of this Cour....
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....pect to the period of limitation. In making reference to the various decisions, the decision of the learned Single Judge of Bombay High Court in Noy Vallesina Engg. Spa Vs. Jindal Drugs Ltd. 2006 SCC OnLine Bom 545, Imax Corporation Vs. E-City Entertainment (India) (P) Ltd. as well as the decisions of the Madras High Court and the Delhi High Court were taken note of. As regards the view taken in Imax (supra), it was noted that another Single Judge of the Bombay High Court, followed the Judgment in Fuerst Day Lawson Ltd. and held that since the foreign award is already stamped as a decree, the award holder may apply for enforcement, after steps are taken for execution of award under Sections 47 and 48 of the Act of 1996, as in one proceedings, there may be different stages, the first stage being the Court would require to decide on the enforceability of the award, having regard to the requirement of the provision and, thereafter, proceed to take steps for its execution and, therefore, Article 136 would be applicable for enforcement of a foreign award. 65. Their Lordships of the Apex Court, in the wake of the conflicting pronouncements, noted that the Indian Arbitration Act, 1996 ....
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.... and did not become a decree either as defined in CPC and much less so far the purposes of an entirely different statute such as the Insolvency Act are concerned. ** ** ** 42. The words "as if" demonstrate that award and decree or order are two different things. The legal fiction created is for the limited purpose of enforcement as a decree. The fiction is not intended to make it a decree for all purposes under all statutes, whether State or Central." (emphasis supplied) 67. Further observations leading to a conclusion in paragraph 76 to the effect that the period of limitation for filing a petition for enforcement of a foreign award under Sections 47 and 49 would be governed by Article 137 of the Limitation Act, 1963, is supported by the following reasoning :- "72. Foreign awards are not decrees of an Indian civil court. By a legal fiction, Section 49 provides that a foreign award, after it is granted recognition and enforcement under Section 48, would be deemed to be a decree of "that court" for the limited purpose of enforcement. The phrase "that court" refers to the court which has adjudicated upon the petition filed under Sections 47 and 49 for enforcement of the fore....
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....ders passed by the High Court in exercise of original civil jurisdiction, and other decrees. The maximum period of limitation for the execution of a decree or order of any civil court was fixed at twelve years in the new Limitation Act, 1963 from the date when the decree or order became enforceable. In this background, the present Limitation Act, 1963 excludes any application filed under Order 21 from the purview of Section 5 of the Act, with the object that execution of decrees should be proceeded with as expeditiously as possible. The period of limitation for execution of the decree of a civil court is now uniformly fixed at the maximum period of 12 years for decrees of civil courts." 68. Another tenacious justification offered in support of the conclusion drawn is worded as below :- "77. The application under Sections 47 and 49 for enforcement of the foreign award, is a substantive petition filed under the Arbitration Act, 1996. It is a well-settled position that the Arbitration Act is a self-contained code. The application under Section 47 is not an application filed under any of the provisions of Order 21 CPC, 1908. The application is filed before the appropriate High Court....
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....dismissed on 18/10/2022, which was subsequent to the decision of the Apex Court in the case of Vedanta Limited (supra) against which a review petition was filed, but even the same was dismissed on 16/08/2023. Therefore, according to Mr. Chinoy, issue of limitation stands concluded by the Judgment dated 13/11/2019 and it is not open for E-City to re-open the said issue. 71. It is trite position of law that issue of limitation is a pure question of law and would partake as an issue of jurisdiction and, therefore, may not operate as res judicata or an issue of estoppel. The law of limitation is based on the maximum Interest Reipublicae Ut Sit Finis Litium. It is a general principle of general welfare that end should be put to a litigation and the principle is founded on the public policy. Section 3 of the Limitation Act makes it imperative for the Court to dismiss any application, filed beyond the period of limitation, although the point of limitation may be raised as one of the defence. It is only when sufficient cause is shown, the period of limitation is permitted to be extended, as contemplated under Section 5 of the Limitation Act. Statutes of limitation are sometimes described....
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....), every suit instituted, appeal preferred, an application made after the prescribed period shall be dismissed although limitation has not been set up as a defence." (emphasis supplied) Bare reading of the aforesaid provision leaves no room for doubt that if a suit is instituted, appeal is preferred or application is made after the prescribed period, it has to be dismissed even though no such plea has been raised or defence has been set up. In other words, even in absence of such plea by the defendant, respondent or opponent, the court or authority must dismiss such suit, appeal or application, if it is satisfied that the suit, appeal or application is barred by limitation." 74. The issue of limitation goes to the root of a matter and if it is the duty of a court of law to ensure that the proceedings are filed within the prescribed period of limitation, and a Court or an adjudicating authority may not exercise its jurisdiction, if the proceedings are not filed within limitation and shall refrain itself from deciding it on merit, unless the delay is condoned and the proceedings are brought within the period of limitation, it also becomes an issue of jurisdiction. The question ....
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..... Kedar Nath Haldar ILR 56 Cal 723, were reproduced :- "The object of the doctrine of res judicata is not to fasten upon parties special principles of law as applicable to them inter se, but to ascertain their rights and the facts upon which these rights directly and substantially depend; and to prevent this ascertainment from becoming nugatory by precluding the parties from reopening or recontesting that which has been finally decided." In paragraph 10 of the law report, Justice J.C. Shah concluded that a question relating to jurisdiction of a Court cannot be deemed to have been finally determined by an erroneous decision of the Court and if by an erroneous interpretation of the statute, the Court holds that it has no jurisdiction, the question would not operate as res judicata. Similarly, by an erroneous decision, if the Court assumes jurisdiction, which it did not possess under the statute, the question cannot operate as res judicata between the same parties, whether the cause of action in the subsequent litigation is the same or otherwise. 77. If a question arising is a mixed question of law and facts and is determined by, in the earlier proceedings between the same parties....
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...., 1963. In the wake of the decision of the Apex Court to the aforesaid effect in Vedanta Limited (supra), the issue of limitation has to be decided in accordance with the said authoritative pronouncement and applying the same law, the Petition filed by the Petitioner is barred by law of limitation, being filed beyond the prescribed period of three years. If the Petition filed for the reliefs therein is entertained, by ignoring that it is filed beyond the period of limitation and is not accompanied with an application for condonation of delay, it would amount to creating a special statute of law and would convey that the order dated 13/11/2019, where the preliminary issue about the maintainability was decided, but which did not receive approval of the Apex Court, which was confronted with this very issue and the conflicting views of different High Courts were put to rest, then such a view would act in derogation to the law declared by the Apex Court and also the rule declared by the legislature, fixing limitation. 78. Though Mr. Chinoy has attempted to submit that the issue of limitation is foreclosed and the order dated 13/11/2019 operates as res judicata and in any event, it is....
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....ribing period of limitation to be 3 years. While deriving a conclusion that since the foreign award amounts to a decree and therefore, would be governed by Article 136, the submissions advanced on behalf of the petitioner, by way of an alternative limb that even assuming that the provisions of Article 137 are applicable, the Petition is nevertheless within prescribed limitation was also tested. While pronouncing upon the aspect of limitation, one find reference to the arbitration petition filed by the Respondent under Section 34 of the Act of 1996, on 27/11/2008, along with an application for condonation of delay, which was condoned on 10/07/2013, which is held to relate back to the date on which the petition was filed. 80. Reliance is placed on the well settled position of law as set out in Fiza Developers(supra) to the effect that until disposal of the application under Section 34 of the Arbitration Act, there is an implied prohibition on enforcement of the arbitral award as the very filing and pendency of the application under Section 34, in effect operated as stay on the enforcement of the award. Laying emphasis on the provisions of the Arbitration Act, prior to its amendmen....
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.... all that Section 36 states is that enforcement of a final award will be under the CPC, and in the same manner as if it were a decree of the court. In fact, this is how Section 36 has been read by a three-Judge Bench in Leela Hotels Ltd. v. Housing & Urban Development Corpn. Ltd. as follows: (SCC p. 313, para 45) "45. Regarding the question as to whether the award of the learned arbitrator tantamounts to a decree or not, the language used in Section 36 of the Arbitration and Conciliation Act, 1996, makes it very clear that such an award has to be enforced under the Code of Civil Procedure in the same manner as it were a decree of the court. The said language leaves no room for doubt as to the manner in which the award of the learned arbitrator was to be accepted." 38. Thus, the reasoning of the judgments in NALCOS, and Fiza Developer Inter-Trade (P) Ltd. being per incuriam in not noticing Sections 9, 35 and the second part of Section 36 of the Arbitration Act, 1996, do not commend themselves to us and do not state the law correctly. The fact that NALCO has been followed in National Buildings Construction Corpn. Ltd. v. Lloyds Insulation (India) Ltd. (supra) does not take us any....
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....issue and it warrants postponement of settlement of other issues, till its determination, it may frame the same as a preliminary issue and proceed to deal with the Suit only in accordance with the decision on that issue. 83. In Sukhbiri Devi & Ors. Vs. Union of India & Ors. 2022 SCC OnLine SC 1322, while deciding as to when can a preliminary issue under Order 14 Rule 2 (2) (b) of CPC be formulated, received the answer in the following words:- "17. In view of the legal position obtained from the decision in Nusli Neville Wadia's case the following decisions also assume relevance. In the decision in National Insurance Co. Ltd. v. Rattani this Court held that an admission made in the pleadings by a party is admissible in evidence proprio vigore. Equally well settled is the principle of law that an admission made by a party in his pleadings is admissible against him proprio vigore (see the decisions in Ranganayakamma v. K.S. Prakash (Dead) By LRs. and Vimal Chand Ghevarchand Jain v. Ramakant Eknath Jadoo. 18. In the context of the usage of the expression "admitted facts" in paragraph 52 of the decision in Nusli Neville Wadia's case and the word 'admission' employed the....
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....edule to the Limitation Act, the petition filed under Section 48 of the Act of 1996 in March/ April 2018 is hit by the bar of limitation. Since the period consumed from the day of passing of the last award on 27/03/2008, despite filing of petition under Section 34 of the Act of 1996 in India and since it did not amount to an automatic stay on the enforcement/ execution of the award, it was open to the petitioner to file the enforcement petition within time period of 3 years from the expiry of 28 days from each of the award, as under the English Arbitration Act, 1996, time period to challenge the award is 28 days, and the time to enforce the award began to run on expiry of 28 days from passing of the awards. As a sequel to the above, the present petition in my view is barred by limitation and the argument of Mr. Seksaria on behalf of Respondent No. 1, and entertaining the petition would also be hit by the public policy of India, being not to entertain the proceedings barred by the law of limitation. ISSUE NO. D Whether the transaction contemplated under the Master Agreement is violative of public policy of India, making the Awards unenforceable under Section 48 (2) of the Arbitr....
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....ot closed and though theoretically it may be permissible to evolve a new head under exceptional circumstances of a changing world, it is admissible in the interest of stability of society not to make any attempt to discover new heads in these days" (p. 440) 49. In later decisions this Court has, however, leaned towards the broad view. [See: Murlidhar Agarwal v. State of U.P.; Central Inland Water Transport Corpn. v. Brojo Nath Ganguly at p. 373; Rattan Chand Hira Chand v. Askar Nawaz Jung.] 50. In the field of private international law, courts refuse to apply a rule of foreign law or recognise a foreign judgment or a foreign arbitral award if it is found that the same is contrary to the public policy of the country in which it is sought to be invoked or enforced. The English courts follow the following principles: "Exceptionally, the English court will not enforce or recognise a right conferred or a duty imposed by a foreign law where, on the facts of the particular case, enforcement or, as the case may be, recognition, would be contrary to a fundamental policy of English law. The court has, therefore, refused in certain cases to apply foreign law where to do so would in the ....
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.... give E-city license to use the trademark IMAX and IMAX-3D for the royalty amounts stated therein. Imax would provide services such as maintenance, digital services, delivery and installation and marketing and programming for amount as fees and charges etc." 87. FEMA, a law relating to foreign exchange, enacted with the objective of facilitating external trade and payments and for permitting the orderly development and maintenance of foreign exchange market in India, assigned a definite meaning to the term 'foreign exchange' in Section 2(n) to mean foreign currency, including deposits, credits and balances payable in any foreign currency as well as drafts, travellers cheques, letters of credit or bills of exchange, expressed or drawn in Indian currency, but payable in any foreign currency. It also covers drafts, travellers cheques, letters of credit or bills of exchange drawn by banks, institutions or persons outside India, but payable in Indian currency. Chapter II of FEMA, prescribing regulations and management of foreign exchange, impose prohibition on a person to deal in or transfer any foreign exchange or foreign security to any person, making payment to or for the credit of....
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....reas those mentioned in Schedule III require the prior approval of RBI and the authorised dealers were directed to follow the directions contained in the Annexure while dealing with the applications relating to the import of goods and services into India. The notification clarified that the transactions contained in the Annexure shall be read with the Rules notified by the Government of India on 03/05/2000 and the directions in the Circular have been issued under Section 10 (4) and Section 11 (1) of the FEMA and contravention of any non-observance of these directions is made subject to the penalties prescribed under FEMA. 88. The Annexure contemplate distinct situations and Part 'A' contemplate 'Import of Goods' and cover 'Advance Remittance' in point A.11, which permit authorised dealers to allow advance remittance for import of goods, without any ceiling, subject to the following conditions :- "(c) if the amount of advance remittance exceeds U.S.$25,000 or its equivalent, a guarantee from an international bank of repute situated outside India or a guarantee of an authorised dealer in India, if such a guarantee is issued against the counter-guarantee of an international bank o....
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....of the Reserve Bank/Government of India {cf: Regulation 5(3) of Reserve Bank Notification No.FEMA 3/2000-RB dated May 3, 2000}....." 90. The Foreign Exchange Management (Borrowing or lending in foreign exchange) Regulations, 2000 was enacted in exercise of power conferred by RBI under Section 47 of FEMA, for borrowing or lending foreign exchange from or to a person resident in or outside India, though RBI may for sufficient reason, permit a person to do so. The same regulation also prescribed as below :- "3. An importer in India may, for import of goods into India, avail of foreign currency credit for a period not exceeding six months extended by the overseas supplier of goods, provided the import is in compliance with the Export Import Policy of the Government of India in force." Clause 8 of the agreement pertaining to a non-exclusive, non-transferable license to use the IMAX trade mark in accordance with IMAX's standard license terms, even contemplated prior approval of Government of India and also of RBI, in the wake of the following stipulations in the Foreign Exchange Management (Current Account Transaction) Rules, 2000, as Rules 4 and 5, impose the following restrictions ....
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....the Reserve Bank of India to pass regulations and the Central Government to make Rules, relating to foreign exchange in tune with the foreign trade policy of India. Unlike other Laws where everything is permitted unless specifically prohibited, under FERA of 1973, everything was prohibited unless specifically permitted and noticing that the tone and tenor of the existing legislation was very drastic, it was substituted by the FEMA, which liberalized foreign exchange control and restrictions on foreign investment as the management of foreign exchange becomes necessary and made the transactions for external trade more easier and simpler. The switch to FEMA is clearly marked by the change in the approach on the part of the Government by 'managing' the foreign exchange instead of regulating it and FEMA proceeds on principal that all current account transactions are permitted unless expressly prohibited and all capital account transactions are prohibited unless expressly permitted. The object of FEMA is to protect Indian economy from loss of foreign exchange and to not permit the foreign exchange to be repatriated outside India unless certain prior mandatory stipulations are satisfied.....
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....India, and (3) justice or morality. The expression "public policy of India" in Section 48 (2) (b) has the same import as that of expression "public policy" in Section 7(1)(b)(ii) of the Foreign Awards Act. 95. In the context of challenge to domestic awards, Section 34 of the Arbitration Act differentiates between International Commercial Arbitrations held in India and other arbitrations in India. So far as the 'The Public Policy of India" ground is concerned, both Sections, 34 and 48 are now placed on the same pedestal, so that in an International Commercial Arbitration conducted in India, the ground of challenge relating to "Public policy in India" would be the same as the ground of resisting enforcement of a foreign Award in India. In Ssangyong Engg. & Construction Co. Ltd. vs. NHAI, (2019)15 SCC 131, it is pertinently observed thus : "41. What is important to note is that a decision which is perverse, as understood in paras 31 and 32 of Associate Builders13, while no longer being a ground for challenge under "public policy of India", would certainly amount to a patent illegality appearing on the face of the award. Thus, a finding based on no evidence at all or an award whic....
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.... 47 of FERA no longer exists in FEMA, so that transactions that violate FEMA cannot be held to be void. Also, if a particular act violates any provision of FEMA or the Rules framed thereunder, permission of the Reserve Bank of India may be obtained post-facto if such violation can be condoned. Neither the award, nor the agreement being enforced by the award, can, therefore, be held to be of no effect in law. This being the case, a rectifiable breach under FEMA can never be held to be a violation of the fundamental policy of Indian law. Even assuming that Rule 21 of the Non-Debt Instrument Rules requires that shares be sold by a resident of India to a non-resident at a sum which shall not be less than the market value of the shares, and a foreign award directs that such shares be sold at a sum less than the market value, the Reserve Bank of India may choose to step in and direct that the aforesaid shares be sold only at the market value and not at the discounted value, or may choose to condone such breach. Further, even if the Reserve Bank of India were to take action under FEMA, the non-enforcement of a foreign award on the ground of violation of a FEMA Regulation or Rule would not....
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....the foreign exchange reserves, growth in foreign trade, rationalisation of tariffs, current account convertibility, liberalisation of Indian Investments abroad, increased access to external commercial borrowings by Indian corporates and participation of foreign institutional investors in our stock markets. There was a paradigm shift in the statutory policy. The focus had now shifted from prohibiting transactions to a more permissible environment. The fundamental policy of FEMA no longer proscribes or prohibits Indian entities from expanding their business overseas and accepting risks in relation to transactions carried out outside India. And, as the title of FEMA suggests, the policy now is to manage foreign exchange. Under FEMA, all foreign account transactions are permissible subject to any reasonable restriction which the Government may impose in consultation with the RBI. It is now permissible to not only compound irregularities but also seek ex post facto permission. Thus, the question of declining enforcement of a foreign award on the ground of any regulatory compliance or violation of a provision of FEMA would not be warranted." The Bombay High Court in case of POL India (s....
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....rifying that the Award is in conflict with public policy in India if it is in contravention with the fundamental policy of Indian Law or is in conflict with the basic notions of morality or justice. 101. One of the constituents of public policy of India is the expression "fundamental policy of Indian law". Akin to the explanation (2) of Section 34 (2) of the Act of 1996, Section 48 (2) offers a clarification that whether there is contravention with the fundamental policy of Indian Law, it shall not entail a review on merits of the dispute. In Renusagar Power Co. Ltd. (supra), it was held that violation of Foreign Exchange Regulation Act, 1973, being a statute enacted to safeguard the national economic interest, shall be contrary to the public policy of India and the fundamental policy of Indian law. A decade later in ONGC Vs. Saw Pipes Ltd. (2003) 5 SCC 705, after examining the grounds on which the Award can be set aside under Section 34 of the Act, the Apex Court held that in addition to the narrower meaning given to the term "public policy" in Renusagar (supra) , the Award can be set aside, if it was patently illegal. Although the Apex Court in ONGC Vs. Saw Pipes Ltd. (supra)....
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....d, the suggestion made by the Law Commission were adopted and the Act was amended with effect from 23/10/2015. In Ssangyong Engg. & Construction Co. Ltd. (supra) the Apex Court embarked on the journey of tracing amendments in the backdrop of the statement of object of the 2015 Amendment and it was held that that the expression 'fundamental policy of Indian Law', would be relegated to Renusagar (supra) understanding i.e. violation of provisions of FERA and disregard to the Judgments of of superior of Court. It was further clarified that the meaning of the term would no longer sustain, because under the guise of interfering with an Award on the ground that the Arbitrator did not adopt a judicial approach, the Court's intervention would be touching the merits of the Award, which was impermissible post the 2015 amendment. 104. The Delhi High Court in Cruz (supra) elaborated the expression "fundamental policy" by declaring that the objections on the ground of public policy must be such that it offend the core values of Indian National Policy, and those cannot be expected to be compromised. On the facts of the case it was held that simplicitor violation of any provision of FEMA, unli....
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.... HPS groundnuts, but on account of cyclone, only 1900 metric tonnes was shipped and addendum was executed to the agreement, whereby the period of shipment of the commodity was changed to November-December 1980 for the balance quantity. Clause 14 of the agreement provided that in case of prohibition of export by executive order or by law, the agreement would be treated as cancelled. NAFED had the permission from the Government of India to enter into export for three years i.e. between 1997 - 1980, but no permission under the Export Control Order to carry forward the exports for the season 1979-1980 to the year 1980-1981. Though it sought permission, it was not granted by the Government and an award was passed against NAFED. NAFED, by relying upon clause 14 of the agreement, adopted a stand that on happening of the contingency agreed to by the parties, the contract was rendered unenforceable under Section 32 of the Contract Act and as such, it could not be held liable to pay damages under foreign award. In arriving at a conclusion that the award was unenforceable under Section 7 of the Foreign Awards Act, and while dealing with main objection for enforceability of the award being; ....
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....rovisions 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 the Government gave the requisite authorisation. It is not an event that was not in contemplation at the time of entering into the agreement. Government permission was necessary. Section 56 is not attracted as the promisor and promisee both knew the reason in advance as in agreement such a contingency was provided itself in case of Government's executive order comes in the way, for cancellation of the contract. Thus, the contract became void on the happening of the contingency, as provided in Section 32 of the Contract Act." In conclusion, the Apex Court held thus :- "58. 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 no-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 ....
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....hall 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 NAFED to pay damages as the contract became void. There was no permission to export commodity of the previous year in the next season, and then the Government declined permission to NAFED to supply. Thus, it would be against the fundamental public policy of India to enforce such an award, any supply made then would contravene the public policy of India relating to export for which permission of the Government of India was necessary. 70. In our considered opinion, the award could not be said to be enforceable, given the provisions contained in Section 7 (1) (b) (ii) of the Foreign Awards Act. As per the test laid down in Renusagar, its enforcement would be against the fundamental policy of Indian Law and the basic concept of justice. Thus, we hold that award is unenforceable, and the High Court erred in law in holding otherwise in a perfunctory manner." In the result, the appeal filed by NAFED was allowed and the award was held to be unen....
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.... systems and opening of IMAX theaters around India. On 17/05/2004, IMAX issued a notice of default, in pursuance of the Master Agreement by citing time as its essence. Clarifying that if E-City fails to make arrangements acceptable to IMAX within 20 days, it threatened to enforce its right pursuant to the Master Agreement, including commencement of arbitration proceedings. E-City could not have made any payment without RBI's approval, as this condition was part of the agreement and even IMAX had acknowledged that the structure of the transaction is contingent upon the approval of the RBI. If IMAX would have made payment, it would have been illegal and in violation of the Regulations operating in the country and, since, the agreement was contingent upon the remittances being made with the approval of the RBI, the exposition of law emerging from the National Agricultural Co-Operative Marketing Federation of India (supra) squarely apply to the case of the Petitioner, where the award was held to be unenforceable because the Indian law is not followed. 110. Yet another exposition of law on this subject by the Apex Court is in the case of Asha John Divianathan (supra), which has reiter....
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....sion, reliance was placed upon the decision in the case of Renusagar Power CO. Ltd. (supra) and Vijay Karia (supra). 104. Recording the undisputed fact that Mrs. F was not a citizen of India and she transferred the right, title and interest in the larger property by way of sale to Mr. R.P. David and around the same time, gifted some portion of the property to Vikrant Malhotra, the respondent. As regards the sale deed in favour of Mr. R.P. David, it was executed only after previous permission given by RBI. However, the gift deeds were not backed by RBI's permission, either special or general and in this background, it is noted that the appellant is questioning the validity of the transaction/transfer in favour of respondent No. 1. Focusing upon the avowed object of Section 31, being to minimise the drainage of foreign exchange by way of repatriation of income from immovable property and sale proceeds in case of disposal of property by a person, who is not a citizen of India, its purpose was highlighted being to put restrictions on acquisition, holding and disposal of immovable property in India by foreigners/non-citizens. In paragraphs 19 and 20, the scope of this Section was cle....
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....e it is not intended that a statute would impose a penalty for a lawful act. When penalty is imposed by statute for the purpose of preventing something from being done on some ground of public policy, the thing prohibited, if done, will be treated as void, even though the penalty if imposed is not enforceable...." 112. From the analysis of Section 31 of the Act and upon conjoint reading of Sections 47, 50 and 63 on facts, it was concluded thus :- "32. ...we must hold that the requirement of taking "previous" permission of RBI before executing the sale deed or gift deed is the quintessence; and failure to do so must render the transfer unenforceable in law. The dispensation under Section 31 mandates "previous" or "prior" permission of RBI before the transfer takes effect. For, RBI is competent to refuse to grant permission in a given case. The sale or gift could be given effect and taken forward only after such permission is accorded by RBI. There is no possibility of ex post facto permission being granted by RBI u nder Section 31 of the 1973 Act, unlike in the case of Section 29 as noted in LIC. Before grant of such permission, if the sale deed or gift deed is challenged by a pe....
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....the liability award dated 09/02/2006 passed in favour of IMAX, the submission about RBI' approval is taken note of and even the correspondence made on behalf of the E-City and the authorised dealer (SBI) to the RBI is also produced, but the Tribunal has observed that there was no hint or suggestion in these letters that this was other than the done deed and a further observation in the declaratory award, must be taken note of :- "The Tribunal finds that the parties did intend to create legal relationship and be bound by 28th September, 2000 agreement. That is supported by the contemporaneous record not least E-City's letter to RBI and the SBI." In the statement of defence in the post liability phase also, E-City reiterated that it was obliged under investment to obtain approval from RBI as per Clause 14 of the agreement, but no such transfer came despite request. 116. E-City submitted the expert legal opinion on the RBI and FEMA regime, of Mr. Akshay Chudasama, Indian qualified Advocate and Solicitor of the Supreme Court of England and Wales, where he opined that given that the authorised dealer has sought prior approval to make the remittance, E-City could not have made the re....
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....public policy in India, I deem it appropriate to accept the said contention and in the wake of the finding rendered above, decline the enforcement of the arbitral awards in favour of IMAX. 118. It being a well settled principle, right from the decision of the Apex Court in Renusagar (supra) that violation of Foreign Exchange Act and disregarding the orders of superior courts in India, would be regarded as being contrary to the fundamental policy of Indian Law, since the mandatory condition of obtaining approval of RBI is not satisfied in the present case, which was necessary and the preceding condition for executing an Agreement for Lease, which definitely is not curable in nature, and if any remittances were made without its approval, it would have impacted the Indian economy and affected the interest of the public at large and, therefore, it amounts to breach of fundamental policy of Indian Law as violations of FEMA is not curable and as distinguished, the observations of the Apex Court in the case of Asha John has clarified the position. 119. Another aspect which Mr. Seksaria representing E-City, being a matter of public policy, in form of 'fair hearing' which is placed into s....
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....t of Supreme Court of England in TUI UK Ltd. (supra), delivered on 29/11/2023, when the Appeal raised the question of fairness of the trial and the question was raised, whether the trial Court was entitled to find that the claimant had not proved his case, the claimants expert had given un-contraverted evidence, which was not illogical or inconsistent or based on any misunderstanding of facts or unrealistic assumptions, but was only criticized as being incomplete in its explanations and for its failure expressly to discount on the balance of probabilities of all other possible causes of Mr. Griffiths. The question so arose, when Mr. and Mrs. Griffiths and their youngest son went on a package holiday, which included package of meals. Mr. Griffith suffered a serious stomach upset which left him in long term problem and he sued the travel company. At trial, Mr. and Mrs. Griffiths gave uncontested evidence as to the fact. The evidence of an expert was also lead, who expressed an opinion, that on the balance of probabilities the food or drink served at the hotel was the cause for Mr. Griffiths woes. The travel company defended, but did not require the expert to attend cross-examinatio....
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....adduced the evidence of the impugned witness. (iv) Maintaining the fairness of the trial inchides fairness to the witness whose evidence is being impugned, whether on the basis of dishonesty, inaccuracy or other inadequacy. An expert witness, in particular, may have a strong professional interest in maintaining his or her reputation from a challenge of inaccuracy or inadequacy as well as from a challenge to the expert's honesty. (v) Maintaining such fairness also includes enabling the judge to make a proper assessment of all the evidence to achieve justice in the cause. The rule is directed to the integrity of the court process itself. (vi) Cross-examination gives the witness the opportunity to explain or clarify his or her evidence. That opportunity is particularly important when the opposing party intends to accuse the witness of dishonesty, but there is no principled basis for confining the rule to cases of dishonesty." 122. By reading of the aforesaid principles, which has also found its way in the Indian Jurisprudence, being recognized as a principal of natural justice, if there is no cross-examination on a particular point which has surfaced on record through the t....
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....ny, expressed doubt and derived at a finding that it was not a mandatory requirement and it was not refused, which definitely has resulted into perversity in its finding. In Para 16 of the Partial Final Award on jurisdiction and quantum the Tribunal took note of the following :- "16. In the event, Mr. Chudasama was not called to give oral testimony in London, Mr. Cooperman indicating that he did not require to cross-examine him and Mr. Coomaraswamy SC saying that therefore he would not call him. However, in accordance with normal practice, Mr. Chudasama's statement was admitted as his evidence and became part of the record of the arbitration." 125. Further in the very same Award, when the Respondent raised a issue on the role of RBI, by stating that the lack of RBI approval made the conclusion of any Agreement even less feasible and the RBI never came up with any request or suggestion to make this or another structure more feasible, Tribunal observed thus : "52. But is it open to the Respondent to take this point that the proper exercise of the powers RBI would have precluded the implementation of the contracts as permission would not have been forthcoming? It was to this iss....
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....ign award not only against Respondent No. 1, but against Respondent Nos. 2 to 4 on the premise that the demerger scheme by which assets of Respondent No. 1 were validly and legally transferred in favour of Respondent Nos. 2 and 3 are alleged to be fraudulent transfers, in order to defeat the foreign awards in its favour. It is noted that the scheme of de-merger has been sanctioned by the High Court and is already implemented. It is also evident that the Petitioner was well aware of the demerger scheme when it approached the Court in Ontario, Canada, for recognition of the foreign Award, but instead of raising a challenge to the demerger scheme, the Petitioner preferred to prosecute the proceedings in Canada and subsequently in New York and on failing in its attempts of recognizing and executing foreign award in New York, the Petitioner has approached this Court raising objection to the demerger scheme which was sanctioned by the competent Court in India. 128. I have perused the orders passed by the High Court of Judicature at Bombay, in the Company Petitions, where sanction was sought from the Court to the scheme of demerger under Section 391 to 394 of the Companies Act, 1956. T....
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....of advise of experts, such as APMG and ERNST and Young, this process kick started on 07/06/2005 on which date the Board of Directors of E-City passed a resolution to make the Company FDI compliant and this was much prior to the statement of case by IMAX and even much prior to the passing of Partial Final Award on liability on 09/02/2006. The incorporation of Respondent No. 2 was immediately after the announcement of FDI Policy, whereas, incorporation of Respondent No. 3 was after the Board Meeting dated 07/06/2005, and it is noted by me that only upon sufficient disclosures and statutory compliances being ensured, the High Court allowed the prayer of demerger in the company petitions in accordance with the Companies Act and the Rules thereunder. The order permitting the demerger has ensured the statutory compliance as stipulated under Section 391 (2) of the Companies Act, 1956 viz. i)the latest financial position of the Company and ii) latest Auditors Report on the accounts of the Company. The form and contents of the balance-sheet and profit and loss are stipulated in Section 211 of the Companies Act read with Schedule VI and disclosures as required were made in the Note to Accou....
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....s confidentiality, it being a privileged document, which predate the approved scheme presented before its Board of Directors, being placed before the Court at Ontario and some doubt is raised about the manner in which it has been procured, I do not intend to delve deep into this aspect, but at this stage deem it appropriate to only note that the Petitioner was aware of the proposed scheme of demerger, but chose to maintain silent and now for the first time, the scheme of demerger is called in question. However, with the explanation offered by Mr. Chinoy, that the Petitioner has no intention to raise challenge to the demerger scheme and even the impleadment of Respondent Nos. 2 and 3 is for the reason that the Petitioner perceived it as an attempt to divest E-City of its assets so as to defeat the Award, I deem it appropriate to close this issue at this stage, as I have noted that it is by two orders passed by this Court in the Company Petition, the scheme of demerger between Respondent Nos.1 and 2 and Respondent Nos.1 and 3 has been approved and the schedule to the scheme clearly reflect the book value of the assets vis-a-vis liabilities of the Company and, therefore, there is no g....
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.... the deemed decrees of the three foreign awards made in the ICC Arbitration held in London, U.K., concede to the fact that Respondent Nos. 2 to 4 were not the parties to the arbitration proceedings and are also not award/judgment debtors. He would candidly submit that the Respondent Nos. 2 to 4 have been joined at the execution stage of the awards as the respondents have, during the pendency of the arbitration proceedings, divested the assets and properties of Respondent No. 1 to the Respondent Nos. 2 and 3 Companies through the two schemes of De-merger, leaving E-City Entertainment (L) Pvt Ltd with a meager asset of approx. 700,000 US$. The Respondent No. 1 face an accusation that this improper diversion of its assets to the Respondent No. 2 i.e. E-City Real Estate Pvt. Ltd. took place in June 2007 after the 'liability award' dated 09/03/2006 was made and the improper diversion of balance assets of E-City to the Respondent No. 3, E-City Project Construction Pvt Ltd, took place in August 2007 after both, the liability award' dated 09/07/2007 and the 'quantum award' dated 24/08/2007 were pronounced. As far as Respondent No. 4 E-City Investment and Holding Co. Pvt. Ltd is concerned, ....
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....the execution of the award and in such a situation, if Respondent Nos. 2 and 3 are only the cloaks and mask behind which the Respondent No. 1 attempted to operate, so as to avoid its liability under the awards and the entire assets were transferred only with this intention, then, in such exceptional circumstances, it is permissible to pierce the corporate veil and the law in this regard is, by this time, well settled. It is necessary to note the sequence of incorporation of the Respondent Nos. 2 and 3 and as to how the schemes of De-merger operated. 134. E-City Entertainment (I) Pvt.Ltd, Respondent No. 2 was incorporated on 29/4/2005, a year later, after the claim was instituted by IMAX before the ICC, whereas Respondent No. 3, E-City Project Construction was incorporated was 8/6/2005. The first scheme of arrangement (the Diversion Scheme) between Respondent No. 1 and Respondent No. 2 is dated 20/6/2007 when some assets are alleged to have transferred hands in consideration of the shares being transferred to Respondent No. 4 and Respondent No. 2. It is the accusation against Respondent No. 1 that under the scheme, assets of Respondent No. 1 of Rs.92 crores (i.e. assets with book....
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.... the phrase ".... parties or any person claiming through or under him, ......" 128. Section 49 casts an obligation upon the Court to satisfy itself that the foreign award in consideration before it is enforceable under Chapter II. This would necessarily mean that the Court would have to satisfy itself that the exceptions to enforcement as set out in Section 48 (1) of the Arbitration Act are not attracted, since then the Court is bound to refuse enforcement. It is important to highlight that the scheme of the Arbitration Act as contained in Part II has a categoric distinction in language with regard to provisions that come into play at the pre-arbitration stage when compared to the provisions that are attracted only at the post-award stage. Whilst Section 44 contemplates arbitration proceedings between persons having a legal relationship that may or may not be contractual, Section 45 contemplates invocation of arbitration not only by a party to the agreement also by parties that claim through or under a party to the agreement. In contrast, the post-award provisions such as Sections 46 and 48 read with Section 49 specifically deploy restrictive language that reflects the fact th....
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.... speak of incapacity of parties and the agreement being invalid under the law to which the parties have subjected it. To attempt to bring non-parties within this ground is to try and fit a square peg in a round hole." 138. Reliance is placed by Mr. Chinoy upon the decision of learned Single Judge in Mitsui OSK Lines Limited (Japan) (supra), which is distinguished by Mr. Seksaria, where an execution application seeking execution of a foreign award was sought to be amended in order to implead third parties to the execution proceedings despite them not being parties to the arbitration proceedings. The basis to implead third-parties in this case was that monies had purportedly been siphoned off from award-debtor's account in favor of these third parties who were said to be related entities. In addition, reliance was also placed on the state of affairs between the third-parties and the award-debtor as reflected from the books of account which, according to the award-creditor, demonstrated that the companies' affairs were inextricably linked to one another and they operated in similar businesses. However, the Court was pleased to dismiss the chamber summons after observing as un....
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....hout the same being established. These allegations have been made in support of the Applicant's contention that the Corporate Veil is required to be lifted to execute the Foreign Award against the Additional Respondents albeit they are not parties to the Foreign Award and/or the Foreign Award not having been passed against them. Since various submissions have been made with regard to lifting of the Corporate Veil, it would be necessary to deal with these submissions in order to consider whether the Executing Court can at all lift the Corporate Veil by making parties personally liable to satisfy the decree in execution, when the decree/Foreign Award (in the present case) was not passed against them." 139. The decision in Mitsui (supra) has distinguished the earlier decision of this Court in Bhatia Industries in the following words :- "74. The Award Holder has not been able to produce a Single judgment where, as in the present case, the Additional Respondents are to be made personally liable to satisfy the decree passed against the Respondent/Judgment Debtor. In fact, the judgment relied upon by the Award Holder viz. Bhatia Industries And Infrastructure Ltd. (supra) is entirel....
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....der the enforceability of the Award and, therefore, the entire scheme of Part II including Section 48 which prescribe that foreign awards can only be enforced against parties to the arbitration, was not considered by the learned Single Judge in Bhatia Industries (supra). The decision in Bhatia Industries (supra) was subjected to challenge by way of SLP (c) No. 31066/2016 and by order dated 07.11.2016 the Supreme Court dismissed the SLP by offering a clarification that the question of law set out therein was kept open. 141. In Mitsui (supra) Justice Chagla had an opportunity to deal with the principle of piercing the corporate veil at the stage of execution, in order to proceed against third parties and he distinguished the position in Bhatia Industries (supra) with the following observations : "82. It is thus clear that the context of that decision was in respect of the statute which itself required the Corporate Veil to be lifted. The principles have been set out in above paragraph for lifting of the Corporate Veil, which would arise where statute lifts the Corporate Veil or where protection of public interest is of paramount importance or where company has been formed to evad....
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....tated to be "International practice" and trying to fit a non-signatory's objection to a foreign award being binding upon it under Section 48 (1) (a). We therefore distinguish Dallah case (Dallah Real Estate & Tourism Holding Co. v. Ministry of Religious Affairs of the Govt. of Pakistan, (201) 1 AC 763: (2010) 3 WLR 1472) on facts as well as on law - a non-signatory's oibjection cannot possibly fit into Section 48 (1) (a) as has been held by us hereinabove. Without delving deep into this problem, it may perhaps be open in an appropriate case for a non-signatory to bring its case within Section 48 (2) read with Explanation 1 (iii) as explained in Sangyong." 143. The learned senior counsel Mr. Jagtiani has invoked the fundamental principle of company law as extended in Salomon (supra), about the company being an independent legal entity distinct from its shareholders and this fundamental principle of company law was found its entry in Indian jurisprudence and was noticed in Tata Engineering and Locomotive Co. Ltd. & Ors. (supra), in the following words :- "24. The true legal position in regard to the character of a corporation or a company which owes its incorporation to a statutor....
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....erce the corporate veil, even in the absence of third-party interests in the company, namely, because it is thought to be necessary in the interests of justice; iii. The corporate veil can be pierced only if there is some impropriety; iv. The impropriety in question must be linked to the use of the company structure to avoid or conceal liability; v. To justify piercing the corporate veil, there must be both control of the company by the wrongdoer(s) and impropriety, that is use or misuse of the company by them as a device or facade to conceal their wrongdoing; and vi. The company may be a "facade" even though it was not originally incorporated with any deceptive intent, provided that it is being used for the purpose of deception at the time of the relevant transactions. The court would, however, pierce the corporate veil only so far as it was necessary in order to provide a remedy for the particular wrong which those controlling the company had done. 73. The position of law regarding this principle in India has been enumerated in various decisions. A Constitution Bench of this Court in LIC v. Escorts Ltd. [(1986) 1 SCC 264], while discussing the doctrine of corporate veil....
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....y may normally comply with the request of a parent company, it is not just a puppet of the parent company. The difference is between having power or having a persuasive position. Though it may be advantageous for parent and subsidiary companies to work as a group, each subsidiary will look to see whether there are separate commercial interests which should be guarded. 102. When there is a parent company with subsidiaries, is it or is it not the law that the parent company has the "power" over the subsidiary. It depends on the facts of each case. For instance, take the case of a one-man company, where only one man is the shareholder perhaps holding 99% of the shares, his wife holding 1%. In those circumstances, his control over the company may be so complete that it is his alter ego. But, in case of multinationals it is important to realise that their subsidiaries have a great deal of autonomy in the country concerned except where subsidiaries are created or used as a sham. Of course, in many cases the courts do lift up a corner of the veil but that does not mean that they alter the legal position between the companies. 103. The Directors of the subsidiary under their articles a....
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....red one legal entity for the purpose of contracts, the Court cannot presume that all subsidiary companies and the holding or parent company shall be considered as one legal person and a contract with one company shall be considered as a contract with every other company of that group. If it is so, then the registration of separate companies as subsidiary companies or wholly owned companies would have no meaning and the Court would be effectively merging all subsidiary companies wholly or partly owned companies into one company. That is not the position under company law or any other law that a subsidiary company practically has no legal existence and it is only the main company which has legal existence. A contract with respondent no. 1 cannot be considered as a contract with respondents No. 2, 3 & 4. If respondents No. 2, 3 & 4 were to be considered one and the same person then there was no reason for the petitioner to enter into contract with only a subsidiary company. The petitioner should have entered into a contract with main company. The very fact that the petitioner entered into a contract with subsidiary company on the basis of an agreement of respondent No. 1 with responde....
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....s held that :- "Whilst it is plain to me that there is a good arguable case that the GBP200,000.00 advanced to Prolink by G represented criminal monies, the real question is whether there is a good arguable case that the company's assets should be treated as G's realisable property. It plainly cannot be the case that every injection of criminal funds into a business would result in the corporate veil being lifted, and a restraint order made against the company in terms that its assets were to be treated as those of the criminal. A much closer examination of the facts than that is required. In my judgment, the circumstances of this case are not such that it is appropriate to maintain the restraint order insofar as it relates to the land and property owned by Powervale Limited at Romford Road....The available evidence does not appear to me to show a substantial arguable case of use of a corporate structure as a device or facade to conceal criminal activity in circumstances where substantial trading activity took place to continue an already existing genuine business, and where the loan was openly recorded. Whilst what occurred no doubt enabled G to invest what appear to be part of ....
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....ignatory as well as non-signatory parties, although the conduct of the non-signatory parties was held to be an indicator of their consent to be bound by the arbitration agreement. Drawing a distinction between the concept of "party", which is distinct and different from the concept of "persons claiming through or under a party to the arbitration agreement", it was held that the underlying basis for the application of Group of Companies doctrine rests on maintaining the corporate separateness of the group companies while determining the common intention of the parties to bind the non-signatory to the arbitration agreement. The Constitution Bench, categorically ruled that the principle of alter ego or piercing the corporate veil cannot be the basis for the application of the Group of Companies doctrine, which has an independent existence as a principle of law which stems from a harmonious reading of Section 2 (1) (h) alongwith Section 7 of the Act of 1996. The approach of the Supreme Court in Chloro Controls India Pvt. Ltd. (supra) to the extent that it traced the Group of Companies doctrine to the phrase "claiming through or under" is held to be erroneous and against the well estab....
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....te structure is used to perpetrate the fraud. The Respondent No. 4 is a distinct legal entity incorporated in the year 2000 with the purpose of being an 'investment company' having its distinct business from the business of the other respondents, which are engaged in the business of entertaining and real estate. Upon the demerger of Respondent No. 1, into resulting entities, i.e. Respondent Nos. 2 and 3, the Respondent No. 4 did not become the owner of any assets of Respondent No. 1 and even as on date, it is the specific case of Respondent No. 4 that its assets are distinct from that of Respondent Nos.1 to 3. The Respondent No. 4's shareholding in Respondent Nos. 2 and 3, from inception has been its asset, as Respondent No. 4 was a member of Respondent Nos.1, 2 and 3, but it is not the owner of the assets of these Companies. 149. Though the claim in the Petition is about the purported fraud engaged by Respondent No. 4, the pleading to that effect is merely vague, as it is asserted that the respondents have conspired to fraudulently transfer the asset of Respondent No. 1 to Respondent Nos. 2 to 4 during the pendency of the arbitration, but except the bare statement, there....
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....and, hence, invocation of arbitration by IMAX Ltd. was invalid under the laws of Singapore 151. The partial final award on jurisdiction and quantum by the ICC has exhaustively dealt with the jurisdictional issue in the wake of the objection raised by the Respondent to the effect that IMAX Ltd. had no legal status pursuant to the corporate law to initiate proceedings in that name in 2004, similarly, IMAX had no capacity in 2004 to appoint an attorney to act on its behalf in connection with such proceedings. The award quoted Mr. Lenczner QC's opinion on 30/08/2006 to the following effect:- "Imax Limited was first incorporated in Ontario on December 14,1998. It paid the statutorily required incorporation fees, filed annual returns, and carried on business in Ontario following its inception. Imax Limited was regulated by Ontario's Minister of Consumer and Business services, and was governed by various Ontario statutes including the OBCA, the Corporations Information Act, and the regulations promulgated thereunder. In March 1999, Imax Limited changed its name to "Imax Ltd." In December 2000, Imax Ltd. left the jurisdiction of Ontario and continued itself as a federal corporation n....
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....s unnecessary given that both the entities were same and all that was necessary was for the purpose of arbitration to change the word "Limited" to the word "Corporation". Mr. Farley QC had opined in support of Mr. Cooperman's submission, opining that Imax Corporation is possessed of all its predecessor amalgamating corporations' rights and privileges, including those under pre-existing contracts and agreements with third parties. If the name of the amalgamating corporation is used, the amalgamated corporation has the rights and obligations entered into under its amalgamating corporation's name. Certainly, to avoid confusion, the name of the amalgamated corporation should be used in business operations. The ICC referred to Canada Business Corporation Act (CBCA) and in particular, Section 186 and took note of the difference of view of the two experts as to the proper interpretation of Section 186 of CBCA, which included the opinion of Mr. Lenczner QC and Mr. Farley QC. 154. Both parties advanced expert evidence on the procedure before the Ontario Court by which amendments are permitted, though both sides accepted that the procedural law of the arbitration is English. However, one o....
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....the reasons noted above, it is inconceivable to me that such a change would not be permitted." 37. The Tribunal declines therefore to accept the narrow view of Section 186 for which Mr Coomaraswamy SC contended and prefers the evidence of Mr. Farley QC as to the status of IMAX Limited upon merger to the effect that it is to be regarded as the same company as IMAX Corporation. 38. It was suggested by Mr Coomaraswamy SC, that even if the Tribunal accepted Mr. Farley QC's Opinion, given the ICC procedures for approval of any Award, it was not open to us, as arbitrators, to change the title of the Final Partial Award and of the Arbitration. The Respondent's application under Article 6.2 of the ICC Rules raises a fundamental question of jurisdiction and invites the Tribunal to rule that this Arbitration and the Final Partial Award is a nullity because IMAX Limited had no legal status or power to make the Reference to Arbitration and to conduct the arbitration as required by the ICC Rules. The Claimant says that all that has happened is that the arbitration has been commenced and conducted in the wrong name. That is the essential dispute which the Tribunal has resolved in the Claiman....
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..... In addition, I have concluded that the Petition is barred by limitation, since in light of the law laid down by the Apex Court in Vedanta Ltd.(supra), the enforcement and execution of a foreign award shall be governed by Article 137 of the Limitation Act, 1963, and though it is permissible to condone the delay, but in absence of the Petitioner seeking condonation of delay, and rather assertively staking the claim that the Petition is within limitation, I am left with no option, but to dismiss the Petition. Similarly, I have also expressed that the impleadment of Respondent Nos. 2 to 4 in the Petition is unwarranted and specifically when Mr. Chinoy has set out his intention clear and loud, that the Respondent Nos. 2 to 4 are impleaded, based on an assumption that the assets of E-City are diverted through them. There could be definitely no challenge raised to the demerger schemes, which by this time are settled, with the sanction from the Company Court in the country and they cannot be re-opened. 157. Though it is sought to be argued on behalf of Respondent No. 1 that there was no valid invocation for the reference to the Arbitral Tribunal and an objection is also raised to the ....