TaxTMI 
TaxTMI 
2024 (11) TMI 835
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....tion (for short "IMAX") , a Canadian Corporation, 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 realizatio....
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....ion Agreement or to the Award and I will he dealing with 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....
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....ting out the terms and conditions upon which E-City shall lease the Systems, 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 ....
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....and that E-City Entertainment had breached its obligation to lease all of the six (6) systems required under the 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 (approximate....
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....en Bulk A/S (supra), and the decisions referred to an followed therein. 32. The respondent contends before us that Part-I of the award was 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 Arb....
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....Goel, Amit Goenka, Laxmi Goel, ZEE TV USA, Inc., Asia TV USA Ltd., and Natural Wellness USA, Inc. to deliver sufficient funds to satisfy the judgment, or directing respondents to deliver their personal property 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 deal....
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....CC OnLine Bom 10695 to buttress his submission that the doctrine of piercing corporate veil is also applicable in execution proceedings, when the Court from the material on record arrive at a conclusion that the Judgment-Debtor 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 Respond....
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....he assets of E-City Entertainment and are running the business undertakings which were previously part of E-City Entertainment, having left the creditor, the E-City Entertainment without any recourse, is his contention. 15. Mr. Chinoy has 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 Arbit....
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....t contemplate execution proceedings under Order XXI of the Code of Civil Procedure ("CPC" for short), which is not relatable to Section 47-49. In the present case, the Petitioner has admittedly filed a separate Application seeking execution under Order 21 Rule 11 of the CPC, 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 o....
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....ourt stayed the proceedings under Section 34 of the Act, and it is on 10/03/2017, the proceedings filed by E-City under Section 34 were held to be not maintainable. In these background facts, this Petition being filed on 02/04/2018 for execution, according to Mr. Seksaria, is filed beyond the period of limitation. 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 IM....
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....(4) SCC 595, to support his submission that the fundamental principle is, that justice is above law and the Court is not precluded from recalling its own order even suo motu or rectifying the error, if it is satisfied that it is necessary to do so. In any case, according to Mr. Seksaria, justice must prevail and no principle 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 wou....
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.... upon approval from RBI and as it contemplated payment of the non refundable deposit of USD 300,000 towards initial rent, the nontransferable trademark license fee, consultancy fees etc. and each of the remittances entailed prior approval of RBI/Government of India on account of the then applicable RBI Notification dated 03/05/2000 under 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 re....
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.... (2021) 19 SCC 629. 24. In addition, Mr. Seksaria has also stressed upon another leg of public policy being "fair hearing" and it is his contention that a party, in an adversery system is required to challenge in cross-examination the evidence of any witness of opposing party, if he wishes to submit to the court that evidence should not be accepted on that point, 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 Ar....
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....use of the proceedings, as Respondent Nos. 2 and 3 are no less than a stranger, as they were not party to arbitration proceedings nor there exists an Award against them. Since the Award is only against Respondent No. 1-E-City Entertainment (I) Pvt. Ltd., its enforcement and recognition shall only be restricted to the party to the award, is his emphatic assertion. Mr. Seervai has 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 attentio....
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.... in confusion and chaos and the finality of the proceedings would cease to have any meaning, he would draw benefit from the decision in Inderjit Singh Grewal Vs. State of Punjab & Anr. (2011) 12 SCC 588. 27. Being extremely critical about the stand adopted by IMAX, that demerger is a "sham" and by referring it as "conspiracy", he would respond by submitting that these words are not to be used as 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",....
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....e Petition is barred by limitation and has referred to the earlier order passed by this Court, when the issue of limitation was agitated by E-City Entertainment and the proceedings were disposed off by order dated 13/11/2019 by the learned Single Judge, by recording a finding that the enforcement/execution proceedings were within limitation on account of the application of Article 136 of the Schedule 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 star....
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....R1-E-City Entertainment Company Private Limited Associate Company R2-E-City Real Estate Private Limited Subsidiary Company R3-E-City Limited Projects Construction Private Subsidiary Company : Shareholding Pattern of Respondent No. 4 E-City Investments: Name of Shareholder No. of Shares % of holding Essel Group Promoter Mr. Atul Goel 1,546,623 19 Essel Group Promoter Mr. Laxmi Goel 26,15,637 32.13 Essel Group 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....
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....to be amended, in order to implead third parties to the execution proceedings, though they were not party to the arbitration proceedings and the basis to implead them being, that monies were purportedly siphoned off in favour of these third parties, who were the related entities. This Court, according to Mr. Jagtiani, dismissed the Chamber Summons, by concluding that the Respondents sought to be added, not being parties to the foreign arbitration proceedings and/or foreign award, 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....
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....s to whether a party could invoke arbitration in respect of an arbitration agreement to which it was not a signatory; and if it can do so, the parameters within which such invocation would be invalid, Mr. Jagtiani has clarified that Chloro Controls India Pvt. Ltd. was rendered in the context of an expressed statutory provision in Part II to extend the arbitration agreements to non-signatories, namely, Section 45 of the Act. According to him, the Apex Court permitted impleadment of the party at 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 partic....
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....erefore pleaded by Mr. Jagtiani that the Chamber Summons filed by Respondent No. 4 should be allowed and its name be struck off from the Petition. POINTS FALLING FOR CONSIDERATION IN THE WAKE OF THE RIVAL CONTENTIONS ADVANCED :- 36. From the rival contentions advanced for the contesting parties through the respective counsel, I can infer the genesis of the dispute, since IMAX in its statement of case in arbitration, alleged breach of agreement dated 28/9/2000 and sought recovery against Respondent, 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 ....
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....it was not formed with any intention to create binding legal relations and was therefore not enforceable in law or equity by the Claimant against the respondent; (b) was an illusory contract that did not give rise to any enforceable legal obligations; and/or (c) was void for uncertainty." It further took a specific stand that even if the letter dated 28/11/2000 gave rise to legally binding obligations, the agreement was vitiated by misrepresentation and performance of such agreement has been terminated by abandonment or acquiescence 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 respond....
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....e Court would allow amendments to pleadings at any stage of an action, unless prejudice would result that would not be dealt with cost or adjournment. By concluding that in the interest of justice, the case required the name of the claimant to be changed from 'IMAX Limited' to 'IMAX Corporation', to reflect that position under the Canadian Law, the Tribunal declined to accept the narrow view of Section 186, which was advanced on behalf of the respondent and preferred the evidence of Mr. Farley Q.C as to the status of IMAX Limited upon merger to the effect that it 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 endeavo....
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....failed to show that the respondents have one and the same entity as E-City, its request for an order to domesticate the Canadian judgment was denied. Reference to the relevant observations would be considered at the relevant time when this issue about alter ego is considered by me. 43. E-City, the Respondent No. 1 has contested the petition on four counts:- "(a) The present Petition has been filed beyond the limitation period. (b) In the scheme of Part II of the Arbitration and Conciliation Act, Sections 47 to 49 do not contemplate exectuion proceedings under Order XXI of the Code of Civil Procedure, 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 Ar....
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.... 1996, the Court would proceed to take further effective steps for execution of the award. This submission is strongly contested by Mr. Seksaria who has opposed the petition on the ground that is not entitled to seek the relief of execution by filing a combined petition, as it has already filed a separate Execution Application under Order 21 Rule 11 of CPC (CEXA 49/2017) even prior to the filing of the present petition which is pending and this Court has kept it in abeyance, by recording that both the Execution Application as well as the Chamber Summons, will have to abate the outcome of the Arbitration Petition. 46. Part II of the Arbitration and Conciliation Act, 1996 provides for enforcement of 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 mann....
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.... recognition and enforcement of a foreign award has different stages; in the first stage, the Court would decide about the enforceability of the award on having regard to the requirements of Section 47 and 48 of the Act of 1996. Once the enforceability is decided, then necessary steps would be required to be taken for execution of the award and it is relevant to reproduce the observation of the Apex Court to the following effect :- "31. Prior to the enforcement of the Act, the Law of Arbitration in this country was substantially contained in three enactments namely (1) The Arbitration Act, 1940, (2) The Arbitration (Protocol and Convention) Act, 1937 and (3) The Foreign Awards (Recognition and Enforcement) Act, 1961. A party holding a foreign award 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 cour....
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....urt. The submission that the execution petition could not be permitted to convert as an application under Section 47 is technical and is of no consequence in the view we have taken. In our opinion, for enforcement of foreign award there is no need to take separate proceedings, one for deciding the enforceability of the award to make rule of the court or decree and the other to take up execution thereafter. In one proceeding, as already stated above, the court enforcing a foreign award can deal with the entire matter. Even otherwise, this procedure does not prejudice a party in the light of what is stated in para 40 of the Thyssen judgment. 49. The applicability of Sections 47 to 49 in regard to the foreign award was once again tested in Vedanta Limited (supra) 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....
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.... the conditions contained in Section 48 are made out. This would be evident from the language of the Section itself, which provides that enforcement of a foreign award may be "refused" only if the applicant furnishes proof of any of the conditions contained in Section 48 of the Act. 83.13 The grounds for refusing enforcement of foreign awards contained in Section 48 are exhaustive, which is evident from the language of the Section, which provides that enforcement may be refused "only if" the applicant furnishes proof of any of the conditions contained in that provision. 83.14 The enforcement court is not to correct the errors in the award under Section 48, or undertake a review on the merits of the award, but is conferred with the limited power to "refuse" enforcement, if the grounds are made 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 ....
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.... is sought to enforce and execute the awards as decree in its favour and against all the Respondents. Prayer clauses (c) and (d) are the reliefs sought under Order XXI of the Code and needless to state that while these reliefs are to be considered, it is open for the judgment debtors to raise the possible objections permissible, while executing the decree. In any case, the Execution Application which is filed will be decided subsequent to the declaration in the petition in terms of prayer clause (a) thereof, as prayers (b), (c) and (d) will be a part of the execution stage. In the wake of the above, Issue No.A is answered by holding that a common petition seeking enforcement and execution as a deemed decree is maintainable in the wake of the law laid down in case of Vedanta Limited (supra) and the issue is answered in favour 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 Arbit....
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....procedural in nature, introduced in the statute with an object that the Court from whom the enforcement is sought, must be satisfied that the award produced before it for enforcement, is a foreign award, as defined and that it is enforceable against persons, who are bound by the award. 56. Coming to the most significant provision in the scheme, in form of Section 48, which contemplate that when the enforcement of foreign award is resisted by a party against whom it is made, the burden is on the party to prove that its case falls within the sub-clauses of sub-section (1) or sub-section (2) of Section 48 of the Act of 1996. In Gemini Bay Transcription Private Limited (supra), it is observed by the Apex Court that the New York Convention, which the Act of 1996 has adopted, has a pro-enforcement bias and unless a party is able to show that its case comes falls within sub-sections (1) and (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....
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....a challenge to the award on merits. 35. Albert Jan van den Berg in his treatise The New York Arbitration Convention of 1958: Towards a Uniform Judicial Interpretation, has expressed the view: "It is a generally accepted interpretation of the Convention that the court before which the enforcement of the foreign award is sought may not review the merits of the award. The main reason is that the exhaustive list of grounds for refusal of enforcement enumerated in Article V does not include a mistake in fact or law by the arbitrator. Furthermore, under the Convention the task of the enforcement judge is a limited one. The control exercised by him is limited to verifying whether an objection of a respondent on the basis of the grounds for refusal of Article V(1) is justified and whether the enforcement of the award would violate the public policy of the law of his country. This limitation must be seen in the light of the principle of international commercial arbitration that a national court should not interfere with the substance of the arbitration." (p. 269) 36. Similarly Alan Redfern and Martin Hunter have said: 'The New York Convention does not per....
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....e to one of the ground stipulated therein being the enforcement of the award to be contrary to the public policy in India and as to what would mean by "public policy" and though I would be referring to the relevant observations to that effect, when I deal with the contention of Mr. Seksaria that the agreement was unenforceable, being not in accordance with the public policy in India, for the present, the relevant observations as regards the scope of Section 48 from the decision, deserve a reproduction :- "50. The US cases show that given the "pro-enforcement bias" of the New York Convention, which has been adopted in Section 48 of the Arbitration Act, 1996-the burden of proof on parties seeking enforcement has now been placed on parties objecting to enforcement and not the other way around in the guise of public policy of the country involved, foreign awards cannot be set aside by second guessing the arbitrator's interpretation of the agreement of the parties; 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 i....
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....n objection was raised about the maintainability of the Petition. The Apex Court finally decided the Petition on 10/03/2017, inter alia, holding that the High Court had no jurisdiction to entertain the Petition under Section 34, as the challenge was to the foreign awards and, this step resulted in institution of the present petition, by invoking Sections 47, 48 and 49 of the Act of 1996 on 02/04/2018, seeking enforcement and execution of the awards in question. Respondent No. 1 invoked the provision of Article 137 under the Schedule to the Limitation Act, while it raised an objection about it being time barred. Referring to Article 137, a residuary clause, which was captioned as, "any other application for which no period of limitation is provided elsewhere in this division", the period of limitation start running when the right to apply accrues, the limitation prescribed being of three years. Reference was also made to Article 136, with the description as, "for the execution of 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 adva....
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.... as urged on behalf of the respondent is accepted, it would be contrary to the principle of law as laid down by the Supreme Court in Fuerst Day Lawson Ltd. Vs. Jindal Exports Ltd. (supra) apart from deeply damaging the decreetal interest of the award creditors apart from being contrary to the object of Section 47 to 49 of the Arbitration Act. 27. In fact the above legal position now stands reinforced as seen from a recent decision of the Supreme Court in M/s. Shriram EPC Ltd. Vs. Rioglass Solar SA, the Supreme Court taking note of the decisions in Fuerst Day Lawson Ltd. Vs. Jindal Exports Ltd. (supra) and Thyssen Stahlunion GMBH Vs. Steel Authority of India Ltd. (supra) has held that the observations of the Supreme Court in Fuerst Day Lawson Ltd. Vs. Jindal Exports Ltd. (supra) that "the 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." to mean that the expression "stamped" means "regarded" This 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 La....
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....at when it was observed in Furest Day Lawson Ltd. Vs. Jindal Exports Ltd (supra) that the Foreign award is already stamped as a decree, it means that "the foreign award is to be regarded as a decree." In view of this clear position in law there is no manner of doubt and more particularly as seen the prayers as made in the petition that this petition cannot be held to be time barred, as contended on behalf of the respondents." 64. The order dated 13/11/2019 to the above effect was challenged by IMAX and during its pendency, a three-Judge Bench of the Supreme Court in Vedanta Limited (supra), by taking note of this order passed by the learned Single Judge on 13/11/2019, reached a conclusion that a foreign award was a decree and, therefore, Article 136 of the Limitation Act is applicable for its enforcement. The issue of limitation for filing an enforcement/ execution application of foreign award under Section 47 of the Act of 1996, was deliberated upon, in the wake of the divergent views being taken by different High Courts with respect to the period of limitation. In making reference to the various decisions, the decision of the learned Single Judge of Bombay High Court in ....
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....proceedings are not civil proceedings. The deeming fiction is restricted to treat the award as a decree of the court for the purposes of execution, even though it is, as a matter of fact, only an award in arbitral proceeding. In Paramjeet Singh Patheja V. ICDS Ltd., this Court in the context of a domestic award, held that the fiction is not intended to make an award a decree for all purposes, or under all statutes, whether State or Central. It is a legal fiction which must be limited to the purpose for which it was created. Paras 39 and 42 of the judgment in Paramjeet Singh Patheja read as : (SCC pp.345-46) "39. Section 15 of the Arbitration Act, 1899 provides for "enforcing" the award as if it were a decree. Thus a final award, without actually being followed by a decree (as was later provided by Section 17 of the Arbitration Act of 1940), could be enforced i.e. executed in the same manner as a decree. For this limited purpose of enforcement, the provisions of CPC were made available for realising the money awarded. However, the award remained an award and did not become a decree either as defined in CPC and much less so far the purposes of an entirely different statute s....
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....ought in by the present Limitation Act, 1963. Under the previous Limitation Act, 1908 there were varying periods of limitation prescribed by Articles 182 and 183 of the said Act, as well as Section 48 of CPC, 1908. Article 182 provided that the period of limitation for execution of a decree or order of any civil court was 3 years, and in case where a certified copy of the decree or order was registered, the period of limitation was 6 years. Article 183 provided that the period of limitation to enforce a decree or order of a High Court was 6 years. Section 48 CPC (which has since been repealed by Section 28 of the Limitation Act of 1963) provided that the period of limitation for execution a decree was 12 years. 75. The Law Commission in its 3rd Report dated 21-7-1956 noted that different time-limits were prescribed for filing an application for execution of decrees or orders of civil courts. It was recommended that the time-limit should be absolute, and there should be no scope for any further extension of time by acknowledgments. There was no justification for making a distinction between decrees or orders passed by the High Court in exercise of original civil jurisdictio....
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....of this Court on 13/11/2019, holding that the Petition was within limitation, it is not open to E-City to once again raise the same contention. In any case, Mr. Chinoy has urged that the learned Single Judge has accepted the principal submission of the Petitioner that the limitation would be governed by Article 136 and he also accepted the alternative submission on behalf of IMAX that even Article 137 is applied, which has prescribed three years as period of limitation, from the point of time, when the right to apply accrues, it was still within limitation, by recording that as per the law laid down by the Supreme Court in Fiza Developers and Inter-Trade Private Limited Vs. AMCI (India) Private Limited & Anr. (2009) 17 SCC 796, the filing of Petition under Section 34 by E-City, operated as a stay on the enforcement of the award and it was only on 10/03/2017, when the Hon'ble Supreme Court dismissed the Section 34 Petition, the enforcement and execution proceedings could have been entertained on behalf of IMAX. E-City preferred Special Leave Petition before the Apex Court against the Judgment dated 13/11/2019, which was dismissed on 18/10/2022, which was subsequent to the d....
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.... of time and this right shall not be light heartedly disturbed. The proof of sufficient cause is a condition precedent for exercise of power vested in the Court under Section 5 of the Limitation Act and the significant consideration would be the diligence of the party and its bona fide. 73. The bar of limitation, as set out in Section 3 of the Limitation Act, 1963, goes to the root of the matter and irrespective of whether the objection has been raised or not, the Court is cast with an independent duty to look into the aspect of limitation. In Noharlal Verma Vs. District Co-Operative Central Bank Limited, Jagdalpur (2008) 14 SCC 445, the said principle has been succinctly set out in the following words :- "32. Now, limitation goes to the root of the matter. If a suit, appeal or application is barred by limitation, a court or an adjudicating authority has no jurisdiction, power or authority to entertain such suit, appeal or application and to decide it on merits. 33. Sub-section (1) of Section 3 of the Limitation Act, 1963 reads as under :- "3. Bar of limitation.-(1) Subject to the provisions contained in Sections 4 to 24 (inclusive), every suit institu....
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....ngh, held that a decision on a question of law is always res judicata. But as observed by Rankin, C.J., in Tarini Charan Bhattacharjee v. Kedar Nath Haldar : "Question of law are of all kinds and cannot be dealt with a though they were all the same. Questions of procedure, questions affecting jurisdiction, questions of limitation, may all be questions of law. In such questions the rights of parties are not the only matter for consideration." We may analyse the illustrative cases relating to questions of law, decisions on which may be deemed res judicata in subsequent proceedings........ 7. Where the law is altered since the earlier decision, the earlier decision will not operate as res judicata between the same parties : Tarini Charan Bhattacharjee's case (supra). It is obvious that the matter in issue in a subsequent proceeding is not the same as in the previous proceeding, because the law interpreted is different." 76. Holding that the question of jurisdiction of the Court, or of procedure, or a pure question of law unrelated to the right of the parties to a previous suit, is not res judicata in the subsequent suit, the observations of Rankin, C.J. i....
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....ed in Mrs. Dossibai N.B.Jeejeebhoy Vs. Khemchand Gorumal & Ors. and it is for the same reason, the Court held that the earlier decision of the Bombay High Court between the same parties relating to the same land is res judicata and it is in this background, the above exposition of law emanated. The question relating to limitation thus cannot be deemed to have been determined by an erroneous decision of the Court and such decision shall not operate as res judicata at a subsequent stage between the same parties because if it is considered to be conclusive, it will assume the status of a special rule that is applicable to the Petitioner and the Respondent No. 1, relating to the jurisdiction of the Court to entertain the application in derogation of the rule declared by the legislature that Article 137 of the Schedule of the Limitation Act and Section 3 of the Limitation Act and, particularly, this is what the law laid down by the Apex Court in Vedanta Limited (supra), concluding that the foreign awards are not decrees of the Indian Civil Court and the application for its execution would be an application not covered under any other Article of the Limitation Act, and, hence, would b....
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....able, it can thereafter proceed to execute the decree without further procedural requirements. It is in these circumstances, while concluding that enforcement and execution can form part of the same proceedings, Article 136 under the Limitation Act is invoked. 79. The point of limitation is also tested in the order dated 13/11/2019, by pitching it against the applicability of the provisions of Article 137 and it is concluded that the petition is not barred by limitation, as by filing of the Section 34 petition by the respondents, the order passed by the learned Single Judge, condoning the delay and holding the petition to be maintainable, was set aside by the Apex Court only on 10/03/2017 and, thereafter, the proceedings under Section 47-49 for enforcement under execution filed on 2/04/2018, even by applying Article 137 of the Limitation Act, is not barred by limitation. The observations in relation to Article 137, on reading of the entire order dated 13/11/2019, are only incidental and non-essential observations as, the objection raised by E-City was specifically premised on the ground that the petition is time barred considering the provisions of Article 137 of the sched....
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....ry language of Section 34' of the Arbitration Act, 1996 obviously what is meant is the language of Section 36 of the Arbitration Act, 1996, as noted by National Buildings Construction Corporation Ltd. vs. Lloyds Insulation India Ltd. (2005) 2 SCC 367 (in paragraph 6). In Fiza Developers and Inter-Trade (P) Ltd. v. AMCI (Budia) (P) Ltd., this Court held: [Fiza Developers & Inter-Trade case, SCC p. 801, para 201 20. Section 36 provides that an award shall be enforced in the same manner as if it were a decree of the court, but only on the expiry of the time for making an application to set aside the arbitral award under Section 34 or such application having been made, only after it has been refused. Thus until the disposal of the application under Section 34 of the Act, there is an implied prohibition of enforcement of the arbitral award. The very filing and pendency of an application under Section 34, in effect, operates as a stay of the enforcement of the award." 33. To state that an award when challenged under Section 34 becomes unexecutable merely by virtue of such challenge being made because of the language of Section 36 is plainly incorrect. As has been pointe....
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....a between the parties as Hindustan Construction Company Ltd. (Supra) has declared the law that there was never an automatic stay on enforcement of an award, upon filing of a petition under Section 34 of the Act and the incidental observation in relation to Article 137 of the Schedule to the Limitation Act, in the order dated 13/11/2019, has also lost its grounds, though I am of the firm view that the reference to Article 137, and its applicability was only a non-incidental discussion. The observations in the order dated 13/11/2019, in so far as Article 137 of the Schedule of the Limitation Act is concerned being only incidental observations, as the objection raised by the Respondent No. 1 and the determination was focused upon the applicability of the Article 136 and therefore, I find substance in the submission of Mr. Seksaria, that the order dated 13/11/2019, cannot operate as res judicata or issue estoppel. 82. Though limitation is a mixed question of law and facts, it will shed the said character and would get itself converted into a pure question of law when the foundational fact(s) determining the starting point of limitation is specifically pleaded in the plaint. In such ....
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....mination of that issue, it may frame the same as a preliminary issue and may deal with the suit only in accordance with the decision on that issue. It cannot be said that such an approach is impermissible in law and in fact, it is perfectly permissible under Order XIV, Rule 2(2)(b), CPC and legal in such circumstances. In short, in view of the decisions and the provisions, referred above, it is clear that the issue limitation can be framed and determined as a preliminary issue under Order XIV, Rule 2(2)(b), CPC in a case where it can be decided on admitted facts." 84. The order dated 13/11/2019, has conclusively held that Article 136 apply to a foreign award, since it is stamped as a decree, by referring to the decision of the Apex Court in Fuerst Day Lawson Ltd. (supra) and M/s. Compania Naviera 'sodnoc vs. Bharat Refinaries Ltd, with respect to limitation being 12 years and the objection raised by E-City that the petition is barred by limitation, by applying Article 137 was rejected. In the wake of the above, since the awards, which are sought to be enforced through the present petition are dated 5/04/2006, 24/08/2007 and 27/03/2008, and as per the law laid down in Vedanta ....
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....nterest or what would be injurious or harmful to the public good or the public interest has varied from time to time." (See: Central Inland Water Transport Corpn. Ltd. v. Brojo Nath Ganguly.) 47. The need for applying the touchstone of public policy has been thus explained by Sir William Holdsworth: "In fact, a body of law like the common law, which has grown up gradually with the growth of the nation, necessarily acquires some fixed principles, and if it is to maintain these principles it must be able, on the ground of public policy or some other like ground, to suppress practices which, under ever new disguises, seek to weaken or negative them." (History of English Law, Vol. III, p. 55) 48. Since the doctrine of public policy is somewhat open-textured and flexible, Judges in England have shown certain degree of reluctance to invoke it in domestic law. There are two conflicting positions which are referred as the 'narrow view' and the 'broad view. According to the narrow view courts cannot create new heads of public policy whereas the broad view countenances judicial law making in this areas. (See: Chitty on Contracts, 26th Edn., Vol. I, a pa....
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.... merits of the dispute. 86. Respondent No. 1, E-City has adopted a specific stand that the transaction contained in Master Agreement is violative of Reserve Bank of India ("RBI")Notification dated 03/05/2000 under the Foreign Exchange Management Act, 1999 and the Foreign Exchange Management (Current Account Transactions) Rules, 2000 and, hence, it amounts to breach of the public policy of India. The aforesaid objection is to be tested by a careful reading of the Final Letter Agreement/Master Agreement dated 28/09/2000 entered between IMAX and E-City, which contemplated opening and developing 20 theaters in India, with E-City's initial commitment to lease six IMAX systems from IMAX. The agreement contemplated entering into an execution of Lease Agreement, post negotiations under good faith on or before 30/11/2000. Clause 14 of the said agreement acknowledged that the structure of the transaction was contingent upon the approval of the Reserve Bank of India and both the parties agreed for reasonable structuring requested by Reserve Bank of India, as long as it do not negatively impact them in a material fashion. The subject agreement inter alia contemplated payment of the follo....
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....and what is urged by Mr. Seksaria, is that enforcement of an award, which fails to recognise the fundamental policy of India must be refused, as any remittance made in contravention of the public policy of India relating to the Export Control Regulation and remittance of foreign exchange, without the approval of RBI/Government of India would impact the enforcement of the Award. In light of Section 5 of FEMA, which empowers the Central Government, in consultation with RBI and in public interest to impose reasonable restrictions for Current Account Transactions, the power available has been exercised by RBI on various Current Account Transactions, including the transaction under the agreement and what is relied upon is the RBI Circular dated 24/08/2000 and the FEMA (Current Account Transaction Rules), 2000. Section 13 of the FEMA has prescribed penalty for contravening any rule, regulation, notification, direction or order issued in exercise of the powers under the Act or if it result in contravention of any condition, subject to which an authorisation is issued by Reserve Bank. RBI Circular of 24/08/2000, issued under FEMA with reference to the Government of India Notificat....
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....ime for import not exceeding one month (three months in case of capital goods). In cases where the advance remittance has been made against a bank guarantee, the guarantee should be suitably amended, if need be, to cover the extended period for import of goods into India; and (e) authorised dealer should ensure that in the event of non-import of goods, the amount of advance remittance is repatriated to India or is utilised for any other purposes for which release of exchange is permissible under the Act, Rules or Regulations made thereunder, to the satisfaction of the authorised dealer." 89. In respect of the transaction contemplated in the LOI (Clause 5 of the agreement) relating to deferred payment of USD 19,00,000 to be paid in several installments over 5 years, including installment worth USD 3,80,000 every year E-City perceived that any remittance over a period of 6 months require approval of RBI/Government of India in accordance with Regulation 5(3) of Reserve Bank Notification dated 03/05/2000. Clause A.12 of Circular NO.9 dated 24/08/2000, which set the time-limit for Import Payments, provided thus :- "A.12 Time Limit for Settlement of Import Payment....
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....y and Commerce for remittances were payment of royalty exceeded 5% on local sales and 8% on exports and lumpsum payment exceeding US$ 2 million was omitted. 91. In the LOI, IMAX was supposed to provide maintenance services, training assistance (clause 6 of the agreement), digital services, delivery installation (clause 8 of the agreement, marketing and programming (clause 11 of the agreement) and E-City was to remit the following amount for the aforesaid services; "Maintenance services/Training Assistance/Marketing and Programming In total an amount of USD 2,20,000 payable for the entire project." 92. The aforesaid clauses in the agreement necessarily contemplated provision of consultancy services procured from outside India and, therefore, required approval of RBI, as remittances of royalty and payment of lumpsum fee under the technical collaboration agreement, not registered with RBI as well as remittances exceeding US$ 100,000 for consultancy services procured from abroad were covered under Rule 5, which required prior approval from RBI for every drawal of foreign exchange transactions covered under Schedule III. 93. FEMA 1999 replacing the Foreign Exc....
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....k of India, is the central Authority responsible for its administration , the violations of FEMA is looked at with seriousness and it may lead to fines upto three times the amount involved and in severe cases, the imprisonment. 94. When a statute impose a penalty for contravention of its provisions, any contract entered by contradicting an express declaration in the statute is void, since imposition of penalty in engaging in a prohibited act is to prevent from something to be done and if a thing is prohibited, doing of that thing is void. If a Contract is entered to undertake a prohibited act, it would be void ab-initio and would become unenforceable.. If the contract, express or implied, is forbidden by law, definitely no Court shall render assistance to such a Contract. The expression "public policy" concerning the agreement relates to the public policy of the country where award is being enforced. Section 23 of the Contract Act, 1872 deals with what consideration and objects are lawful and what not. If the court regards it as immoral or opposed to public policy, in that event, the consideration or object of agreement is said to be unlawful, and any agreement of which the o....
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....n of such shares as done by a duly certified Chartered Accountant, Merchant Banker or Cost Accountant and, as the sale of such shares at a discount of 10% would violate Rule 21 (2) (b) (iii) and the fundamental policy of Indian Law contained in the aforesaid rules would be breached and, therefore, the Award was not capable of being enforced. Referring to the decision of the learned Single Judge of Delhi High Court in case of Cruz City 1 Mauritius Holdings vs. Unitech Ltd. 2017 SCC OnLine Del 7810, the Apex Court arrived at a conclusion that even if a particular act violates any provision of FEMA or the Rules framed thereunder, permission of Reserve Bank of India may be obtained post facto if such violation can be condoned and neither the Award nor the Agreement being enforced by the Award can be held to be having no effect in law, since a rectifiable breach under FEMA can never be held to be violation of fundamental policy of Indian law. 97. Mr. Seksaria has distinguished the said Judgment and observations in Vijay Karia (supra) by submitting that the Reserve Bank of India in reference to the subject Agreement never granted permission and he would submit that Section 47 which....
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....erring to Renusagar Power Co. Ltd. Vs. General Electric Co. 1994 Supp.(1)SCC 644 has held that "The contravention of any provision of an enactment is not synonymous to contravention of fundamental policy of Indian Law. The expression "fundamental policy of Indian Law" refer to the principles and legislative policy on which the Indian Statute and Laws are founded. The expression "fundamental policy" connotes the basic and substratal rationale values and principles which form the bedrock of values in our country. 99. In the light of principle objective of New York Convention, being to ensure enforcement of Awards, notwithstanding that the Awards are not rendered in conformity to the national laws, the Delhi High Court held that that "the objections to enforcement on the ground of public policy must be such that it offend the core values of a member state's national policy which it cannot be expected to compromise". The Delhi High Court, inter alia, relied on the Judgment of Bombay High Court in POL India Projects Limited vs. Aurelia Reederei Eugen Friederich GmbH Schiffahrtsgesellschaft & Company KG (2015) SCC OnLine Bom 1109, which held that the contention that violation of FE....
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....ssions from the Reserve Bank of India. There may also be a question whether the initial agreement pursuant to which a foreign award has been rendered required any express permission from RBI. However, as indicated earlier, the policy under FEMA is to permit all transactions albeit subject to reasonable restrictions in the interest of conserving and managing foreign exchange. India has not accepted full capital account convertibility as yet. Thus, there are transactions for which permission may not be forthcoming. Whereas certain transactions are permitted under FEMA and regulations made thereunder without any further permissions; other transactions may require express permission from the RBI. However, these considerations can be addressed by ensuring that no funds are remitted outside the country in enforcement of a foreign award, without the necessary permissions from the Reserve Bank of India. This would adequately address the issue of public interest and the concerns relating to foreign exchange management, which FEMA seeks to address. 109 ......... 110. The contention that enforcement of the Award against Unitech must be refused on the ground that it violates ....
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.... policy' to bring the definition in line with the one propounded in Renusagar (supra). Before the recommendations could be implemented, the term 'fundamental policy of Indian law' was construed widely by the Apex Court in ONGC Vs. Western GECO International Ltd. (2014) 9 SCC 263, to include Wednesbury principle of reasonableness when the Apex Court without exhaustively enumerating the purport of the expression 'fundamental policy of Indian law' referred to the three drastic principles which would be understood to be a part and parcel of fundamental policy of Indian law, which included, adopting a judicial approach, following principles of natural justice and absence of perversity or irregularity tested on the touchstone of Wednesbury principles of reasonableness. The Apex Court, thus incorporated the Wednesbury principle of reasonableness as a part of fundamental policy of Indian Law. 103. In Associate Builders Vs. DDA (2015) 3 SCC 49 the Apex Court further fortified this concept of fundamental policy of Indian Law to include - violation of FERA and disregard to the orders of the superior Courts and the three juristic principles as expounded in Western GECO, the principles....
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....ion of any enactment shall not be a breach of fundamental policy of Indian Law and while expounding this proposition, the Apex Court created a narrow opening to include not only legislation/ enactments that can be said to be integral part of the policy of India, but also time honored hallowed principles which are consistently followed by the Courts in India. The time honored hallowed principles forming core value of national policy, may cover an Award which is passed in disregard to the orders passed by the superior Court or passing an Award on the basis of the void contract or upholding the transaction rendered void by a Statute, as these may be some of the illustrations of the legal principles, which are incapable of being compromised, and in any case, the list may not be exhaustive. 107. A contingent contract, which was capable of being performed in case the Government give the requisite authorisation and which was in contemplation at the time of entering into the contract, and when an arbitration award was passed, without such permission being granted by the Government, in National Agricultural Co-Operative Marketing Federation of India (supra), the award was held to be e....
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....refusal by the Government, it was not permissible to NAFED to make a supply to the Alimenta S.A. Hence, the unfulfilled part was required to be cancelled. Thus, NAFED was justified in not making the supply as it would have violated the Export Control Order, and it was not permissible to carry forward the quantity of the previous year to the next year because of the Export Control Order without permission of the Government. 45. It is apparent that the contract came to an end in terms of Clause 14 of the Agreement. The contract became void in view of the provisions contained in Section 32 of the Indian Contract Act, 1881 (for short, "the Contract Act"). The stipulation in Clause 14 releases both parties from the performance of the contract. 46. ... ... ... 47. ... ... ... 48. Section 32 of the Contract Act applies in case the agreement itself provides for contingencies upon happening of which contract cannot be carried out and provide the consequences. To this case, provisions of Section 32 of the Contract Act is attracted and not Section 56. In case an act becomes impossible at a future date, and that exigency is not provided in the agreement on t....
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...., permission was rightly declined by the Government. In the previous year, the commodity could not be supplied due to force majeure. In no event, supply could have been made in December 1980 and January 1981 sans permission from the Government of India." 108. Answering the question as to whether award can be contrary to the public policy, with reference to Section 23 of the Contract Act, which prescribed as to what consideration and objects are lawful and what are not, it was noted that the consideration or object of an agreement is unlawful, if the Court regard it as immoral or against the public policy and it would be void. On an exact exhaustive reproduction of the observations in Renusagar Power Co. Ltd. (supra), Ssangyong Engg. & Construction Co. Ltd. (supra) as well as Western GECO (supra), in the wake of clause 14 of the agreement and as per the law applicable in India, it was concluded that no export could have taken place without the permission of the Government and the appellant-NAFED was unable to supply in absence of these permissions. This was held to be a matter pertaining to fundamental policy of India and the conclusion of the Apex Court was worded explicitly as ....
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....wers and they have tied with world's leader in this field i.e. IMAX Corporation of Canada and they have to import 3D cinema projection equipments on lease, as this technology is exclusively available with IMAX in the world. By clearly stating that they have to pay US$ 1 million as upfront lease consideration in three tranches (non-refundable) and the last tranche would be due on successful installation of the equipment and the other two shall be advance remittances of US$ 300,000 and further US $ 160,000 needs to be paid for a period of five years from the date when the theater commence its commercial operations and also there was a liability to pay the royalties and annual maintenance charges till the lease expired, when the equipment will have to be exported out of India, the necessary approval was sought. On 30/10/2000, SBI (the authorised dealer) addressed a letter to General Manager, Exchange Control Department, RBI by bringing the facts regarding the proposed remittances and seeking approval of US$ 300,000 in terms of E-City's request towards first tranche, in token of acceptance in view of arrangement proposed to be entered by E-City with IMAX. Once again, on 15/12/200....
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....an (supra) relied upon Vijay Karia (supra), while it concluded that the requirement of seeking general or special permission of RBI in respect of transaction covered by Section 31 of the FERA is mandatory and in a transaction of sale or gift of the property situated in India by a foreigner in contravention thereof would be unenforceable in law. While deciding the central issue in the appeal in reference to Section 31 of FERA, 1973 in relation to a transaction entered into, in contravention of that provision is void or is only voidable, Mrs.F, a foreigner and the owner of the property in question gifted it to the respondent, without obtaining previous permission of the Government under the Act of 1973 and even a supplementary gift deed executed in his favour was without seeking the previous permission of RBI. Before executing the gift deed, she had executed an agreement for sale in favour of Mr. R.P. David, father of the appellant, whereunder the title deed of the schedule property was delivered by her to Mr. David. A suit filed by Mr. David was decreed, declaring that he was the absolute owner of the suit property. The appellant, however, filed an appeal before the High Court....
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....n Citizen is not covered thereunder...... 20. In other words, a person, who is not a citizen of India, holding immovable property situated in India was obliged to make disclosure and declaration in that behalf of RBI; and in any case, if he/she intended to dispose of such property by sale, mortgage, lease, gift, settlement or otherwise, was expected to obtain previous general or special permission from RBI. Only the, transfer so intended could be given effect to. It is true that the consequences of failure to seek such previous permission have not been explicitly specified in the same provision or elsewhere in the Act, but then the purport of Section 31 must be understood in the context of intent with which it has been enacted, the general policy not to allow foreign investment in landed property/buildings constructed by foreigners or to allow them to enter into real estate business to eschew capital repatriation, including the purport of other provisions of the Act, such as Sections 47, 50 and 63." 111. The soul of the decision lies in its observation in paragraph 26, which read as under :- "26. It is well established that a contract is void if prohibited by a....
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....ct makes the transaction void or say that no title in the property passes to the purchaser in case there is contravention of the provision of Section 31 is of no avail, as that does not validate the transaction referred to in Section 31, which is not backed by "previous" permission of RBI. By referring to the distinct opinions expressed by different High Courts, it is held that the decisions, eventually seal the position of law that when the enforcement of the contract is against any provision of law, it will amount to enforcement of an illegal contract, though the contract per say may not be illegal, but its enforcement requires compliance of statutory conditions and its failure would, therefore, amount to statutory violation and this view was found to be acceptable. Holding that the requirement of seeking previous, general or special permission, of RBI is mandatory, the contrary decisions of the High Court were held to have missed the legislative intent and the spirit of enacting Section 31 and until such permission is accorded in law, the transfer cannot be given effect to and for contravening that requirement, the person may be visited with penalty and consequences provided ....
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.......purchase agreements structured in the manner we have in India do not pose an issue for the RBI." However, this statement is not as regards E-City as per the agreement, but was a general statement, as the subject agreement was for lease and not for sale. However, in the award, the Tribunal rejected the argument that the clause concerning RBI rendered the obligations unenforceable, by recording that clause 14 for that matter does not say that the permission of the bank is a condition precedent to the enforcement of the agreement, on the contrary all that clause 14 does, is refer to the obligation of the parties to negotiate a change in the structure, should the RBI not approve it. It is concluded that it was not an escape clause for E-City to avoid any liability, but it was a clause indicating that the parties would restructure their arrangement within the framework of the Master Agreement, if the RBI raise concern. This observation is clearly in teeth of the FEMA as well as notifications/circulars issued by RBI, which clearly contemplated a prior approval. 117. Even Mr. David Berman, the witness on behalf of IMAX, gave a clear admission that in respect of additional p....
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....ntitled to impugn the witness or another parties witness, if he has not asked appropriate question enabling the witness to deal with the same. 120. This issue of requiring mandatory approval of Reserve Bank of India, is actually determined by me as the bone of contention between the Parties, since the objection to the enforceability of the Awards is raised on the ground that the Awards are passed in contravention to the fundamental policy in India and here the FEMA Act and Regulations/Circulars under the said Act. The Arbitral Tribunal ought to have focused upon the specific stand raised by E-City in its statement of defence qua the requirement of mandatory approval of Reserve Bank of India, but unfortunately this was dealt with in a routine manner without focusing upon the same in depth. The Arbitral Tribunal has failed to consider the prime issue whether the Agreement in question is forbidden by law based upon the principal of private International Law viz. a contractual obligation which can be invalidated by Exchange Control Registration if it part of the law in the place of its performance. The Agreement clearly contemplated prior approval of Reserve Bank of India, but th....
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....hich they have given, so as to give them notice, and to give them an opportunity of explanation, and an opportunity very often to defend their own character, and, not having given them such an opportunity, to ask the jury afterwards to disbelieve what they have said, although not one question has been directed either to their credit or to the accuracy of the facts they have deposed to." (Emphasis added) 121. The principle set out by Latham LJ as a general rule was reproduced which read thus : "The general rule in adversarial proceedings, as between the parties, is that one party should not be entitled to impugn the evidence of another party's witness if he has not asked appropriate questions enabling the witness to deal with the criticisms that are being made." It was further elaborated by stating that the procedural fairness not only to the parties but to the witness, requires that if their evidence were to be disbelieved, then they must be given a fair opportunity to deal with the allegation. On taking review of the case law on this point, the rules of natural justice were clearly culled out with reference to Browne Vs. Dunn (1863) 6 R 67 to the following effect....
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....owne (supra), has concluded thus in Para 9 :- "9. The law is clear on the subject. Wherever the opponent has declined to avail /himself of the opportunity to put his essential and material case in cross-examination, it must follow that he believed that the testimony given could not be disputed at all. It is wrong to think that this is merely a technical rule of evidence. It is a rule of essential justice. It serves to prevent surprise at trial and miscarriage of justice, because it gives notice to the other side of the actual case that is going to be made when the turn of the party on whose behalf the cross-examination is being made comes to give and lead evidence by producing witnesses. It has been stated on high authority of the House of Lords that this much a counsel is bound to do when cross-examining that he must put to each of his opponent's witnesses in turn, so much of his own case as concerns that particular witness or in which that witness had any share. If he asks no question with regard to this, then he must be taken to accept the plaintiff's account in its entirety. Such failure leads to miscarriage of justice, first by springing surprise upon the part....
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....nto force of the agreement. On the contrary all that Clause 14 does is refer to the obligation of the parties to negotiate a change in the structure should the Reserve Bank of India not approve it, in itself a recognition that the structure established by the Agreement was binding. It was, after all, that Agreement which would be submitted to the Reserve Bank of India. The renegotiation of the structure must take place within the clearly defined parameters of Clause 14 itself. In the Tribunal's view it would be open to arbitrators, were there to be a dispute as to significant adverse effect, to resolve that by an award." 126. In utter contrast, in Para 54, the Tribunal record that according the evidence of Mr. Burman, the Tribunal has no hesitation in accepting that the Reserve Bank of India has given permission for remittances of funds pursuant to other contracts, which other Indian parties have entered into and, therefore, there could have been no difficulty with the RBI in this respect, the contracts being structured in from of Sale and Purchase, rather than IMAX's customary form of lease. What the Tribunal has failed to consider is, in this particular case where the L....
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.... no objection in sanctioning the scheme of demerger, the Petitions were made absolute, by directing the Company Petitioner to take appropriate steps by passing a special resolution as contemplated under Section 100 of the Companies Act and by declaring that the scheme of de-merger shall come into effect only upon such resolution being passed. The first order dated 20/6/2007 deals with the first de-merger involving E-City Real Estate Pvt. Ltd., whereas, the second dealt with the E-City Project Construction Pvt. Ltd. In the Affidavit filed by Respondent No. 1 to the Petition, the justification for the demerger is offered indicating the process that was followed in the following manner : "I say that since the company had received an attractive investment proposal from a strategic financial investor who was willing to invest in company's properties namely Lucknow, Kanpur and Coimbatore which were compliant with the FDI norms. Therefore, it was decided to demerge the FDI compliant properties into a new company. I say that on August 31, 2006, Board of Directors of Respondent No. 2 approved the scheme of demerger. I say that on October 31, 2006, Board of Directors of Respo....
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....s, 1959. 129. I find substance in the submission of Mr. Seksaria that no notice was required to be given to the Petitioner as it was not a creditor of E-City and it is not necessary to give notice to the contingent creditors. In fact, right of the Petitioner to recover 'damages' was crystalized only when the final Award was passed by the ICC Tribunal and this event occurred on 24/04/2008, which is almost a year after the completion of demerger, through the process contemplated in India. It is worth to note that the declaratory Award cannot be enforced without quantification and, therefore, the final Award dated 24/04/2008 is the one which is sought to be enforced. The annual report of E-city for the financial year 2006,2007 made disclosure of liability towards IMAX and the Petitioner and the pending proceedings. The annual report for the year ending on 31/03/2006 formed part of the Company Petitions filed before this Court for approval of demerger scheme of Respondent Nos. 2 and 3 and, therefore, when an order is passed by a competent Court, permitting the de-merger, there can be no challenge raised to the same. Another submission of Respondent No. 1, which deserve appreciati....
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....alf of the Petitioner for the fiscal year ending on 31/12/2006 had clearly recorded in relation to the same as below :- "Item 3. Legal Proceedings. ......In January 2004, the Company and IMAX Theatre Services Ltd..... on February 1, 2006, the ICC issued an Award on liability finding unanimously in companies favour on all claims....... The ICC Panel has not yet rendered its decision with respect to damages and no amount has yet been recorded for these damages." It is, after this reporting, the partial Award on jurisdiction and quantum was passed by ICC Tribunal on 24.08.2007 and, therefore, the contention of Mr. Chinoy that the scheme of demerger was intended to defraud IMAX, the Petitioner, cannot be accepted. The Petitioner had a knowledge of the demerger of Respondent No. 1 when it approached the Supreme Court of New York as an authenticated true copy of the order dated 31/08/2007 passed by the Bombay High Court in Company Petition No. 407/2007 approving the scheme of demerger between Respondent Nos.1 and 3 was annexed alongwith the proceedings and the certified copy of the same was obtained by the Petitioner on 01/11/2007. Since the Petitioner co....
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....mpany of Respondent Nos.1, 2 and 3, it has arranged for the improper diversion of Respondent No. 1 to Respondent Nos. 2 and 3. 132. The declaration sought in the Arbitration Petition in favour of the petitioner to the effect that the three awards passed by the Arbitral Tribunal are enforceable under Part II of the Act of 1996, and the further direction to enforce and execute them as decree in favour of the petitioner and against all the respondents. Similarly, the relief of deposit of the decretal amounts is also sought against the Respondent Nos.1 to 4, but since Mr. Chinoy has offered a clarity that the petitioner seek recognition only against E-City Entertainment, but since it, with an intention to defeat the awards, it has divested its assets to Respondent Nos. 2 and 3, they are impleaded in the proceedings. It is, therefore, clear from the submission of Mr. Chinoy that the Petitioner do not seek recognition or enforcement against Respondent Nos. 2 and 3, and dealing with the preliminary objection raised on behalf of Mr. Seervai, representing Respondent Nos. 2 and 3, that these entities have no role to play in the whole episode, Mr. Chinoy has invoked the law laid down by....
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.... The second scheme of arrangement (Diversion) between Respondent Nos.1 and 3 is dated 31/8/2007 and it is alleged that immovable properties and assets of Respondent No. 1 valued at Rs.119.80 crores were transferred to Respondent No. 3 in consideration of it allotting shares to the shareholder of Respondent No. 1, i.e. E-City Investment and Holding Co. Ltd., the Respondent No. 4 and E-City Real Estate Pvt. Ltd i.e. Respondent No. 2. Even this scheme received sanction on 31/8/2000. All the Respondents collectively have adopted a stand that since the scheme of demerger was sanctioned by the High Court, and it is now not permissible to re-open them after a lapse of considerable time. Mr. Chinoy insisted in recording his submission that under the two schemes of demerger, the Respondent No. 1 divested and stripped itself virtually all of its assets and improperly divested its properties having a book value of Rs.170 crores and other current assets valued at Rs.38.5 crores to Respondent Nos. 2 and 3, and after this transfer, it is left only with assets worth US$ 769,287. 135. To appreciate whether this Court would be justified in piercing the corporate veil as sought by the Pet....
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....ween whom it was made comes to light when comparing the language of Section 46 (under Part II) and Section 35 (under Part I) of the Arbitration Act. Whilst the finality ascribed to foreign awards under Section 46 is only between the parties to the arbitration proceedings, the finality ascribed to awards under Part I is significantly wider where awards under Part I are held to be final and binding on not only the parties to the arbitration proceedings but also as between the persons claiming under them. 137. Mr. Seervai as well as Mr. Jagtiani have heavily relied upon the decision in case of Gemini Bay Transcription Private Limited (supra) where the detail analysis of the relevant provisions of Part II of the Act is undertaken by the Apex Court, in the backdrop of the issue of enforceability of foreign award against the parties who though non signatories to the to the Arbitration Agreement were parties to the Arbitration Proceedings. The decision has brought about the interplay between distinct provisions in Part II of the Act of 1996 with extreme precision and lucidity and I must reproduce the thrust of the said decision :- "43. Given the parameters, let us examine a....
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....espondents were not parties to the arbitration proceedings and/or the Foreign Award. Such personal liability sought to be imposed upon the Additional Respondents can only be determined in a substantial suit being filed by the Award Holder against the Additional Respondents. By allowing the Award Holder to execute the Foreign Award against the Additional Respondents by making them personally liable, the Executing Court would indeed be proceeding behind and/or beyond the decree. 71. Considering that this is a Foreign Award of which the execution has been sought by the Award Holder, it would be necessary to consider the relevant provision of the Arbitration and Conciliation Act, 1996 viz. Section 48 thereof. Section 48 of the said Act reads thus :- ....... 72. It is clear from this provision that the party against whom the Foreign Award is to be enforced, is required to be given an opportunity as to why the Foreign Award should not be enforced against it. The provision also contemplates a case where the enforcement of the Foreign Award may be refused by the Court and which includes where the subject matter of the difference is not capable of settlement by ar....
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....hen the said BIIL sought to vacate the attachment, the Division Bench of this Court concluded that both BIL and BIIL are in fact, one and the same and therefore, the attachment was in effect of the properties of BIL. the Judgment Debtor. In fact, it appears from the decision of the Single Judge in case of Bhatia Industries And Infrastructure Ltd. (supra) that, the claim made by the BIIL that the coal belonging to it, could not be attached as BIIL is not the Judgment Debtor was held to be false and a finding was arrived at that the coal in fact belonging to BIL who was the Judgment Debtor. In the present case the Award Holder is not going against the Associate Companies who are the Additional Respondent Nos. 1 to 4 in respect of particular assets claiming that they belong to the Judgment Debtor, but is in fact, making the Additional Respondents personally liable in respect of the Foreign Award passed against the Judgment Debtor. Hence, the judgment in Bhatia Industries And Infrastructure Ltd. (supra) will have no application in the facts and circumstances of the present case. In any event, the Supreme Court in case of Bhatia Industries And Infrastructure Ltd. (supra) has kept the qu....
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....hese principles and accordingly, the lifting of the Corporate Veil is not at all justified in the facts and circumstances of the present case. This finding is without prejudice to the earlier finding that in the present case the lifting of the Corporate Veil cannot at all arise as the Additional Respondents are neither the parties to the Foreign Arbitration Agreement nor parties to the Foreign Award and as such cannot be proceeded against in execution of the Foreign Award. Further, the Additional Respondents are neither legal representatives nor representatives of the Judgment Debtor within the meaning of the provisions of the CPC which is a complete code in itself." 142. With reference to the law that has evolved from the Gemini Bay Transcription Private Limited (supra) as well as decision of the learned Single Judge in Mitsui (supra), it can be gainfully inferred that on plain reading of Section 44 to 48 of the Act of 1996, persons other than parties to the commercial relationship cannot be arraigned in enforcement/execution proceedings and it is claimed that IMAX did not implead the Respondents in the arbitral proceedings at the relevant time, as a consequence they were never....
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....entity of the corporation is entirely separate from that of its shareholders; it bears its own name and has a seal of its own; its assets are separate and distinct from those of its members; it can sue and be sued exclusively for its own purpose; its creditors cannot obtain satisfaction from the assets of its members; the liability of the members or shareholders is limited to the capital invested by them; similarly, the creditors of the members have no right to the assets of the corporation. This position has been well established ever since the decision in the case of Salomon v. Salomon & Co. was pronounced in 1897; and indeed, it has always been the well-recognised principle of common law." 144. With this principle in mind, the doctrine of piercing the veil of a corporate entity has to be appreciated, as the object of it is to make those behind the veil i.e. the shareholders, liable for the debts of the company. In Balwant Rai Saluja (supra), where the issue, whether employees of a contractor engaged in statutory canteens would be treated as employees of principal employer came up for consideration, the contractor being the Hotel Corporation of India Limited ("HCI"), which was....
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.... may say that the corporate veil may be lifted where a statute itself contemplates lifting the veil, or fraud or improper conduct is intended to be prevented, or a taxing statute or an beneficent statute is sought to be evaded or where associated companies are inextricably connected as to be, in reality, part of one concern. It is neither necessary nor desirable to enumerate the classes of cases where lifting the veil is permissible, since that must necessarily depend on the relevant statutory or other provisions, the object sought to be achieved, the impugned conduct, the involvement of the element of the public interest, the effect on parties who may be affected etc." 74. Thus, on relying upon the aforesaid decision, the doctrine of piercing the veil allows the court to disregard the separate legal personality of a company and impose liability upon the persons exercising real control over the said company. However, this principle has been and should be applied in a restrictive manner, that is, only in scenarios wherein it is evident that the company was a mere camouflage or sham deliberately created by the persons exercising control over the said company for the purpose ....
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....nies. If new Directors are appointed even at the request of the parent company and even if such Directors were removable by the parent company, such Directors of the subsidiary will owe their duty to their companies (subsidiaries). They are not to be dictated by the parent company if it is not in the interests of those companies (subsidiaries). The fact that the parent company exercises shareholders' influence on its subsidiaries cannot obliterate the decision-making power or authority of its (subsidiary's) Directors. They cannot be reduced to be puppets. The decisive criterion is whether the parent company's management has such steering interference with the subsidiary's core activities that the subsidiary can no longer be regarded to perform those activities on the authority of its own executive Directors." 146. In K.K. Modi Investment & Financial Services Pvt. Ltd. vs. Apollo International Inc. & Ors. (2009) 2 Arb LR 499, the Delhi High Court was considering whether an arbitration clause could be enforced against non-signatories merely on the ground of economic unity between the entities/persons and in answering the question in the negative, it reiterated that merely because ....
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....t the petitioner knew that respondents No. 1 & 3 were two different legal persons and he was entering into contract with respondent No. 1 or not with respondents No. 2, 3 or 4. The contract between respondent No. 1 & 3 cannot be considered as contract between petitioner and respondents No. 1 & 3 on the ground of economic unity of respondents No. 1 & 3. By the notice dated 22.4.2009 the respondent no. 3 had terminated the license, which it granted to respondent no. 1 under a separate contract which was entered into between respondents No. 1 & 3. The person aggrieved can only be respondent No. 1 who could have invoked arbitration clause contained in the license agreement against respondent No. 3." 147. Mr. Jagtiani has submitted that the reference to the discussion of the law and the manner of its application to the facts, in Crown Prosecution Services Vs. G. [2010] EWHC 1117 (Admin) is apposite, where the UK High Court of Justice was dealing with an application which required it to determine whether the assets of two companies-Prolink and Powervale-could be treated as the assets of one of its shareholders and directors, Mr. G., by piercing the corporate veil. The allegation of....
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....ill-gotten gains. I am not persuaded that on the evidence an arguable case is demonstrated to show that G was attempting to hide behind the corporate veil so as to conceal his crime and his benefits from it..." 148. In the Indian scenario, on domestic front, in Chloro Controls India Pvt. Ltd. (supra), the Apex Court was called upon to decide whether party could invoke arbitration in respect of an arbitration agreement to which it was not a signatory and if so, the parameters within which it can invoke arbitration. Chloro Controls India Pvt. Ltd. (supra) was rendered in the context of an expressed statutory provision in Part II of the Act of 1996 to extend arbitration agreement to non-signatories i.e. Section 45 of the Act which enumerated the power of judicial authority to refer party to the arbitration and with reference to Section 44, it contemplated that a judicial authority shall, at the request of one of the parties or any person claiming through or under him, refer parties to arbitration, unless it finds that the agreement is null and void, inoperative or incapable of being performed. The Apex Court permitted the impleadment of the parties at the pre-arbitration stage, ....
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.... established principles of contract law and corporate law. By setting the law straight, it is pronounced that the Group of Companies doctrine should be retained in the Indian arbitration jurisprudence, considering its utility in determining the intention of the parties in the context of complex transactions involving multiple parties and multiple agreements. The Apex Court emphasized the onus on the party seeking the impleadment of non-signatory to the agreement in order to rope it in the arbitral proceedings and it was held to be permissible only when a strong case on facts and in law was made out. If the high burden to subject a non-signatory to arbitration is made, the consequence would be that the non-signatory participate in the arbitration and avail an opportunity to present its case. However, in the present scenario when the Respondent Nos. 2 to 4 were not parties to the arbitration proceedings and since they are not even parties to the award, merely because it is alleged that the Respondent Nos. 2 to 4 with an intention to divest Respondent No. 1 of its asset, so that the petitioner is not in a position to get the award enforced/executed, by playing a fraud, is not a suf....
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....e statement, there is no material to demonstrate the alleged fraud, as merely alleging fraud is not sufficient as fraud has to be established by cogent evidence. The common thread, which according to the Petitioner, connect all the Respondents are Mr. Atul Goel, Ms. Laxmi Goel, Ms. Chandra Goel, Mr. Arpit Goel, Ms. Charu Goel and Mr. Ankit Goel, the eventual shareholders of Respondent No. 4, who are the eventual holder of Respondent Nos.1 to 3. Therefore, to show that Respondent No. 4 and Respondent No. 1 are alter egos of one another, it would have been necessary to implead the shareholders of Respondent No. 4 and plead specific facts about actions taken by these shareholders. Not only is the Petition entirely devoid of any such pleadings, but the shareholders of Respondent No. 4 have not even been impleaded. 150. Since the Respondent Nos. 2 to 4 who are not signatory to the arbitration agreement are sought to be roped into the present proceedings, which is the post arbitration stage, the burden of establishing the necessity to implead them as parties, is on the petitioner and it is an onerous burden, as they are the parties being proceeded in execution and never had the opport....
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.... continued itself as a federal corporation named "3850391 Canada Inc.". A certificate of continuance was issued pursuant to s.187 of the CBCA [Canadian Business Corporation Act]. On January 1, 2001, 3850391 Canada Inc. amalgamated with Imax Corporation, another already existing dual corporation, pursuant to s. 181 of the CBCA. I have conducted a corporate search and learned that a further amalgamation took place on January 1, 2002 resulting in a successor entity with the same name, "Imax Corporation" On June 16, 2004, Imax Ltd. commenced ICC arbitration proceedings in its own name against E-City. This was done despite the fact that it commenced on January 23, 2004 a separate but related arbitration proceeding in the name of "Imax Corporation". ... On June 7, 2005, Robert D Lister executed a Power of Attorney granting counsel at Kelly Drye & Warren LLP the power to sign all E-City ICC arbitration documents on behalf of Imax Ltd. Mr.Lister executed this Power of Attorney in the capacity of "Executive Vice President, Business and Legal Affairs and general Counsel" of Imax Ltd." 152. IMAX Corporation responded to the application under Art....
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....ough both sides accepted that the procedural law of the arbitration is English. However, one of the experts, Mr. Farley QC was firmly of the view that if this matter was before the Ontario Court, it would permit the change of the name from "Limited" to "Corporation", the change being a formality and not a matter of substance. Recording that the arbitration was subject to ICC Rules and the English Arbitration Act of 1996, but the procedure appears to have been adopted in Ontario Court, being helpful in illustrating whether as a matter of Canadian law, the Tribunal is concerned merely with a change of name or whether it is concerned with substantive rights and who may exercise them. Deliberating on the two contra opinions, the Tribunal accepted Mr. Farley's view that having regard to the substantive law on continuance and amalgamation, the Ontario Courts would regard the amendment of the title of the action as a matter of form, not substance; and that an amendment would be permitted. Further observing that under Ontario law, the Court would allow amendments to pleadings at any stage of an action, unless prejudice would result that could not be dealt with by costs or adjournment, t....
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....been commenced and conducted in the wrong name. That is the essential dispute which the Tribunal has resolved in the Claimant's favour. It would, to adopt the language of Persona, make no sense if, in resolving that dispute, the Tribunal had no power to grant the relief which necessarily follows, namely to change the name of the Claimant, not of course, its identity. The Tribunal plainly has the power to declare that IMAX Ltd is IMAX Corporation and does so." This view being the most plausible view and as the Tribunal has already concluded this issue in the partial final award on jurisdiction and quantum, I do not deem it appropriate to interfere with the said decision on merits, by invoking Section 48 (1) (a) or (d) of the Arbitration Act, as it would be amounting to review of the decision on merits. 155. In the wake of the finding recorded by me on the above issues/points, which arose for consideration, I conclude by holding that the subject contract entered between the Petitioner and the Respondent No. 1, was a contract contingent upon the approval of Reserve Bank of India and IMAX had acknowledged this fact and agreed for any reasonable restructuring, as long as it did no....