TaxTMI 
TaxTMI 
2024 (12) TMI 877
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....ale, Laveena Tejwani, Anuja Divadkar, Abdul Basit Kudalkar, Dhwani Mehta, Disha Parekh, Madhura Shah, Yash Jadhav, Yashwant Singh, Shivangi, i/b. NDB Law in COMAP/22/2023. For the Respondent: Mr Aspi Chinoy, Senior Advocate, Jatin Pore, Ashwini Hariharan and Vishal Mandal i/b. DSK Legal Nos.1 and 2 in COMAP/542/2019. For the Respondent: Mr Gaurav Joshi, Senior Advocate, Jatin Pore, Ashwini Hariharan and Vishal Mandal i/b. DSK Legal Nos.1 and 2 in COMAP/29/2020 and COMAP/22/2023. From Court Receiver Officer present: Mr N. C. Pawar (O.S.D.) and Mr Gajanan G. Surve, Master (Adm.). JUDGMENT PER (MS SONAK J):- 1. Heard learned counsel for the parties. 2. These are appeals against what the appellants style, "the impugned judgment and order dated 22.02.2018 passed by the learned Single Judge of this Hon'ble Court in purported exercise of powers referable to Order XXI Rule 2, purportedly recording satisfaction of the Arbitral Award dated 14.07.2014 by way of Consent Terms dated 22.02.2018 ". 3. On 18 June 2018, when these appeals were taken up for admission, a preliminary objection was raised about their maintainability. A Coordinate Bench of this Court admitted these appeals "only....
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....able, then the appellants should be granted liberty to approach the Court, which made the impugned judgment and order dated 22 February 2018 with a request to modify/revise the said judgment and order on the ground that the compromise terms are contrary to the law i.e. Foreign Exchange Management Act, 1999 (FEMA). He relied on Banwari Lal vs. Chando Devi and another (1993) 1 SCC 581 and Vipan Aggarwal and another vs. Raman Gandotra and others (2023) 10 SCC 529 to support this contention. RESPONDENTS CONTENTIONS 10. Mr Chinoy, learned Senior Advocate for the first and second respondents, submitted that the issue of maintainability of these appeals stands concluded against the appellants by the detailed judgment and order dated 9 August 2019 in Commercial Appeal (L) No. 109 of 2019 and connected appeals involving the same parties and in the same execution proceedings. He submitted that this judgment and order dated 9 August 2019 operates as res judicata, and based upon the same, even these appeals must be dismissed as not maintainable. He submitted that the principle of res judicata applies at two different stages of the same proceedings. 11. Without prejudice, Mr Chinoy submitted....
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....crores with interest from the appellants. However, since the appellants refused to make any payments under the consent award, R-1 and R-2 applied Section 36 of the ACA to enforce the consent award, seeking to recover an amount of Rs. 276.73 crores from the appellants. A Chamber Summons (L) No. 137 of 2017 was taken out in these proceedings to appoint a Court Receiver in respect of the lands specified in the Chamber Summons. 18. The appellants objected to the enforcement and execution of the consent award dated 14 July 2014, alleging that it violated the provisions of FEMA. However, in these enforcement/execution proceedings, the parties once again filed consent terms, based on which the learned Single Judge of this Court (Executing/Enforcement Court) made the impugned order dated 22 February 2018. Under this order, R-1 and R-2 extended further concessions to the appellants. 19. Without complying with any of the directions in the impugned order dated 22 February 2018, the appellants instituted these appeals, alleging that even the consent terms in the execution/enforcement proceedings before the learned Single Judge violated FEMA provisions. 20. As noted earlier, the order dated ....
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....a fundamental doctrine of all Courts that there must be an end to litigation. This rule embodies a principle of public policy, which, in turn, is an essential part of the rule of law. [S. Ramachandra Rao vs. S. Nagabhushana Rao and others, 2022 SCC OnLine SC 1460]. 25. This doctrine finds expression in Section 11 of CPC, but it is well settled that Section 11 of CPC is not the foundation of this doctrine but is merely the statutory recognition thereof. Accordingly, Section 11 of CPC is not exhaustive of the general doctrine of res judicata. This doctrine is founded on equity, justice and good conscience. [Lal Chand (dead) by L.Rs. vs. Radha Krishan, (1977) 2 SCC 88]. This principle of finality of litigation is based on the high principle of public policy and even the rule of law. [Daryao and others vs. State of U. P. and others, AIR 1961 SC 1457]. In effect, the provision in Section 11 of CPC or the doctrine of res judicata says that once a matter is finally heard and decided between two parties, such a matter will not be allowed to be re-agitated amongst the same parties or the parties claiming under them. The earlier decision will be final with respect to the matter so decided. ....
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....ought to be distinguished on the ground that it was in appeals directed against "interim" orders and the present appeals were directed against "final" orders, even though both were made in the very same proceedings seeking execution/enforcement of the arbitral award dated 14 July 2014. 30. The locus classicus on the point of determining if an issue was "directly and substantially" decided in the previous suit or proceedings is the decision of the Hon'ble Supreme Court in Sajjadanashin Sayed Md. B.E. Edr vs. Musa Dadabhai Ummer and others (2000) 3 SCC 350. Here, the Court held that if the matter was in issue directly and substantially in a prior litigation and decided against a party, the decision would be res judicata in a subsequent proceeding. The expression "directly and substantially" must be contrasted with "collaterally or incidentally". In paragraph 18, the Court referred to similar tests (Mulla, 15th Edition, p.104). The Court quoted the learned author: A matter in respect of which relief is claimed in an earlier suit can be said to be generally a matter "directly and substantially" in issue, but it does not mean that if the matter is one in respect of which no relief is s....
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....The judgment and order dated 9 August 2019 was based upon the decision on that principal issue. Thus, applying the "necessity test" and the "essentiality test", it is apparent that the judgment and order dated 9 August 2019 has finally decided the principal issue, which was directly and substantially involved in the earlier appeals by its judgment and order dated 9 August 2019. 34. Incidentally, we must note that in Commercial Appeal (L) No. 109 of 2019 and connected appeals when the decision of the Coordinate Bench of this Court in Jet Airways (supra) was cited, the appellants argued that Jet Airways was an appeal concerning challenge to a final order disposing of proceedings for execution or enforcement of an arbitral award under Section 36 of the Arbitration Act. On that ground, the Jet Airways (supra) decision was sought to be distinguished. Now that the present appeals are against a similar order disposing of proceedings for execution or enforcement of an arbitral award under Section 36, the appellants urged that the judgment and order dated 9 August 2019 will not apply because the same concerned a challenge to an interim order. By this logic, the appellants cannot object to ....
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....rity alters the law itself since the earlier decision may have attained finality. 38. Neither any of the above exceptions nor, for that matter, the other exceptions referred to in Canara Bank vs. N. G. Subbaraya Setty and another (supra) apply in this matter. We find nothing erroneous in the judgment and order dated 9 August 2019, whether on facts or issues of law relating to the jurisdiction of the Court. No statutory prohibition was ignored, and this is also not a case where the competent legislature or, for that matter, the Hon'ble Supreme Court has altered the legal position with or without any retrospective effect since the earlier decision. Instead, as will be noticed hereafter, the view taken in Kandla Export Corporation (supra), which was relied upon in the judgment and order dated 9 August 2019, has been subsequently reiterated and followed in BGS SGS SOMA JV (supra) and Government of India vs. Vedanta Limited and others (supra). 39. Thus, we are satisfied that the matter of maintainability of appeals against judgments and orders made in proceedings for execution or enforcement of arbitral awards was directly and substantially in issue in the former proceedings, whic....
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....s judicata (for instance, Section 11 of CPC) and 'issue estoppel' (as seen in Order 2, Rule 2 of CPC), which are much more rigid [State of Kerala v. K. K. Mathai, AIR 2018 Kerala 18 (DB)]. 42. To put this doctrine in perspective, the interpretative intricacies in understanding a precedent differ from those involved in understanding the law of the case. A precedent binds to the extent the holding accords with the facts on hand. On the other hand, the law of the case fetters a later Bench in the same case from taking a contrary stand to that taken earlier by the previous Bench. Of course, this constraint flows down to the lower judicial echelons or applies to coordinate Benches, but not appellate or higher fora [Ibid]. 43. Applying the law of the case doctrine as well, we hold that these appeals are not maintainable given the judgment and order dated 9 August 2019 in Commercial Appeal (L) No. 109 of 2019 and connected appeals. Since no arguments were advanced on this law of the case doctrine, we clarify that the invocation of this doctrine should not be taken as the basis for deciding the issue of maintainability of these appeals. Our reasoning rests on the principle of res....
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....under Section 2 (2) of the CPC. The Court held that the expression "as if" in fact, shows the distinction between a decree and an arbitral award. The expression "as if" demonstrates that the arbitral award and the decree differ. The legal fiction created by the expression "as if" is for the limited purpose of facilitating the enforcement of an arbitral award as if it were a decree. The legal fiction was not intended to make the arbitral award a decree for all purposes under all statutes, whether State or Central. The Court held that a legal fiction should not be extended beyond its legitimate field. As such, an award rendered under the provisions of the Arbitration Act cannot be construed as a "decree". 48. Mr Seervai's contention that the Respondents had themselves styled their execution applications as "application for execution under Order XXI, Rule 11 (2) of the Code of Civil Procedure (Rule 313 of the Bombay High Court (Original Side) Rules)" does not convert the proceedings for enforcement of an arbitral award under Section 36 to proceedings for execution under Order XXI of the CPC. The titles that the parties may provide are quite irrelevant. Such a title was perhaps used b....
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....luded by the special provisions of the ACA. Finally, the Coordinate Bench held that the Supreme Court's decision in Fuerst Day Lawson Limited (supra) conclusively determined the question of maintainability and the observations in paragraphs 70 to 73 constitute a binding precedent even in respect of maintainability of an appeal against an order passed in proceedings arising out of a domestic award under Part I of the ACA. KANDLA (SUPRA) PRECEDENT 52. Kandla (supra) is the lead authority for the proposition that the issue of appealability of any orders relating to proceedings under the ACA is to be decided by reference to the ACA itself, which is an exhaustive and self-contained code and not by reference to the provisions of the CPC or the CCA. Only in so far as the forum of appeal is concerned would it be permissible to examine and apply the provisions of CPC and the CCA, but not to determine the appealability issue. 53. In Kandla (supra), the issue which arose for consideration of the Hon'ble Supreme Court was whether any order made in proceedings for execution of a foreign arbitral award under Section 48 of the Arbitration Act was appealable under the CPC or the Commercial Cour....
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....tion's contention that the expression "and from no others" which was conspicuous by its absence in Section 50 of the ACA, was also rejected by the Hon'ble Supreme Court after referring to the observations in paragraphs 60 and 61 of Fuerst Day Lawson Limited (supra). The Court observed (in paragraph 20): "Given the judgment of this Court in Fuerst Day Lawson, which Parliament is presumed to know when it enacted the Arbitration Amendment Act, 2015, and given the fact that no change was made in Section 50 of the Arbitration Act when the Commercial Courts Act was brought into force, it is clear that Section 50 is a provision contained in a self-contained code on matters pertaining to arbitration, and which is exhaustive in nature. It carries the negative import mentioned in paragraph 89 of Fuerst Day Lawson that appeals which are not mentioned therein, are not permissible. This being the case, it is clear that Section 13 (1) of the Commercial Courts Act, being a general provision vis-à-vis arbitration relating to appeals arising out of commercial disputes, would obviously not apply to cases covered by Section 50 of the Arbitration Act." 57. The Court also rejected Kandla Expo....
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.... reference to the provisions of the ACA and reference could be made to Section 13 of the CCA or Letters Patent only for determining the forum of such appeal. The Court held that neither Section 13 nor the Letters Patent could have been invoked if Section 50 of the ACA did not provide for an appeal. 60. The Court held that the matter can be viewed from a slightly different angle. Given both statutes' objects, arbitration is meant to be a speedy resolution of disputes between parties. Equally, enforcement of foreign awards should take place as soon as possible if India is to remain an equal partner, commercially speaking, in the international community. The raison d'être for enacting the CCA is that commercial disputes involving high amounts of money should be speedily decided. Given the objects of both the enactments, if an additional appeal were to be provided when Section 50 does away with an appeal to enforce expeditiously foreign awards, that would amount to turning the Arbitration Act and the Commercial Courts Act on their heads. 61. The Court held that Section 13 (1) of the CCA must be construed in accordance with the object sought to be achieved by the Act. Theref....
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.... of proceedings for execution or enforcement of an award under Section 36 of the ACA, then no such appeal will lie by reference to the CCA or the CPC. The two decisions make it clear that the issue of maintainability must be determined under the ACA, which is an exhaustive self-contained code. Only the forum issue can be decided by referencing the CCA or the CPC. OTHER PRECEDENTS 66. In BGS SGS SOMA JV (supra), the Hon'ble Supreme Court explained that the interplay between Section 37 of the ACA and Section 13 of the CCA was laid down in some detail in the Kandla (supra) judgment. The Court held that the precise question that arose in Kandla (supra) was as to whether an appeal, which was not maintainable under Section 50 of the ACA, was nonetheless maintainable under Section 13 (1) of the CCA. In this context, after setting out various provisions of the CCA and the ACA, the Court held that there was no independent right of appeal under Section 13 (1) of the CCA, which merely provides a forum for filing appeals. The parameters of Section 37 of the ACA alone must be examined to determine whether the appeals were maintainable. The Court then referred to Section 37(1), which had made ....
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.... interpret Section 50 of the ACA, which provided a restrictive category of appealable subject matters and prohibited appeals on other issues. The Court held that the category of appealable matters could not be enlarged by referring to the Letters Patent. The Court noted that the observations in paragraph 10 of Fuerst Day Lawson Limited (supra) were quoted with approval in Union of India vs. Simplex Infrastructures Ltd. (2017) 14 SCC 225, and it was held that after this decision, there was no scope to contend that the remedy of Letters Patent appeal was available. The Court held that this legal position was also restated in Arun Dev Upadhyaya (supra). The Court also referred to Kandla (supra). Finally, it held that given the categorical judgments of the Supreme Court, Jindal's appeal to the Division Bench (Appeal No. 492 of 2006) challenging the order rejecting its objection to enforcement of the award was not maintainable. 71. Finally, even in Government of India vs. Vedanta Limited and others (supra), the Hon'ble Supreme Court held that applications under Sections 47 and 49 for enforcement of foreign awards are substantive Petitions filed under the ACA. The Court held that it was....
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.... latter two enactments do not decide the substantive maintainability of the appeal. Thus, if the appeal is not maintainable under the ACA, then there is no question of referring to the forum provided by the CCA or the CPC and then holding that the appeals are nevertheless maintainable. 75. Similarly, the decisions in D & H India Ltd. (supra), Hubtown Limited (supra) and Sigmarq Technologies Pvt. Ltd. and others (supra) would not apply given the legal position that the issue of maintainability of these appeals must be determined by reference to the provisions of ACA and not the CCA or the CPC. In any event, another Coordinate Bench of this Court, in the case of Shailendra Bhadauria and others (supra), has expressly held that "the earlier view in Hubtown Limited (supra) and Sigmarq Technologies (supra) will have to give way and all the more after the judgments of the Hon'ble Supreme Court delivered in the case of Fuerst Day Lawson Limited v. Jindal Exports Limited and the authoritative and binding pronouncement in the case of Kandla Export Corporation (supra). The statute has to confer a right of appeal. That has to be conferred in clear words. We cannot, as suggested by Mr Andhyaru....
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....ings under the CPC. In the context of such proceedings, the two decisions hold that parties aggrieved by a compromise decree had a right to avail either the remedy of appeal in terms of Order XLIII Rule 1A of CPC or to file an application before the Court which made the compromise decree given the proviso along with Explanation to Rule 3 of Order XXIII of CPC. These decisions do not even remotely deal with proceedings for the enforcement of arbitral awards, and the consent orders compromise orders made in such proceedings. Therefore, the liberty to move the Court which made the order dated 22 February 2018, i.e., the learned Single Judge of this Court, cannot be granted as prayed for. COSTS AND CONCLUSIONS 81. In these matters, we cannot but resist noting that the disputes between the parties culminated in a reference to the Arbitral Tribunal. A consent award dated 14 July 2014 disposed of the arbitral proceedings. Since the appellants failed to honour their undertakings and pay the awarded amounts, the first and second Respondents were forced to file proceedings to enforce the arbitral/consent award dated 14 July 2014. Even these execution/enforcement proceedings were disposed o....