TaxTMI 
TaxTMI 
2025 (3) TMI 785
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....rs of Commerce, 2012 ('ICC Rules') in ICC Case No. 22523/FS. 2. The Award by the Arbitral Tribunal was a Consent Award arising out of differences and disputes between the parties from the Letter of Comfort dated 12th June/21st August 2013 ('LoC'). 3. The Award Amount along with LoC has been duly authenticated in accordance with Section 47 of A&C Act. 4. Mr. Rajshekhar Rao, Senior Counsel for the Decree Holder, in support of enforcement of the foreign Arbitral Award, places the following facts before the Court. 5. In a contractual dispute between Mercedes-Benz Group AG ('MBAG')/Decree Holder ('DH') and Minda Corporation Limited/Judgment Debtor ('JD'), the dispute was adjudicated before a three-member Arbitral Tribunal at Stuttgart, Germany. The Arbitral Tribunal was informed that the parties had executed a Settlement Agreement dated 30th August 2021 ('Settlement Agreement') and the Tribunal was requested to render a Consent Award on that basis. 6. The basic crux of the Settlement Agreement, was an agreement by Minda Corporation/JD, to pay DH an amount of EUR 5.5 million. The said amount is approximately Rs.52 Crores and has since been deposited by JD, as directed by t....
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....ny that DH had in fact admitted in affidavit filed before this Court that the Award Amount per the Consent Award, did not overlap with any amounts received by DH for MBAG on account of insolvency of Minda Germany. He submitted that in June 2013, Minda Germany had financial trouble and the DH requested Minda India (the JD herein), to place an LoC. 14. On 29th November 2013, Minda Germany went into insolvency. On 29th December 2016, DH filed a request for arbitration for claims against Minda Germany and on that basis the Consent Award was finally passed on 29th November 2021. 15. On 5th January 2022, JD filed for RBI permission to remit the amount. On 16th March 2022, the dealer bank (Federal Bank) wrote to the RBI to remit the said amount. On 13th May 2022, the RBI allowed the said remittance. The email dated 13th May 2022 is extracted hereunder for ease of reference: "2. In the instant case, we do not have objection for remittance of Euro 5.5 million by Minda Corporation Limited to Mercedes Benz AG pursuant to the consent award passed in the arbitration proceedings before the International Chamber of Commerce in Stuttgart, Germany. 3. Further, it is observed....
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....cted below), where a communication was sent to Minda India setting out a deadline to comply with the obligations under the Settlement Agreement: 52. On 7 May 2021, Counsel for Claimant sent the following message to the Tribunal and Counsel for Respondent: "Dear Members of the Tribunal, Counsels for the parties have liaised yesterday. Considering the Corona-situation in India, Claimant is amenable to grant Respondent more time to revert to the Tribunal's draft consent award respectively Claimant's editorial comments thereto. Claimant therefore requests that the Tribunal extend the deadline for Respondent to comment until 31 May 2021. Dear Mr. Hilgard, On behalf of Claimant and MBAG, we hereby set Respondent a deadline until 31 May 2021 to comply with Respondent's obligations arising under the Settlement Agreement to have the Settlement implemented by Consent Award, either by accepting the Tribunal's draft dated 1 April 2021 or Claimant's edits thereto dated 13 April 2021. Should the deadline expire without Respondent accepting either the Tribunal's draft or Claimant's edits, Claimant and MBAG reserve the right to res....
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....ed. Nevertheless, Respondent and Claimant consciously concluded the Minda-Settlement (+ ancillary documents), which provided for a settlement to be implemented by Consent Award. It is now quite plain that Respondent's ability to comply with its obligations arising from the Minda-Settlement was not at all prevented by the second Corona-wave in India, but by its parallel attempts to get access to the Bilgery-Settlement by means of an access to file-motion to the AG Esslingen (see the attached motion for access to the file dated 2 March 2021)." Claimant does not appreciate Respondent's conduct and objects to the requested time-extension for another two months. Respondent does not need another two months to comment on the draft Consent Award. Respondent hopes to obtain the Bilgery-Settlement within these two months in order to re-open the discussions about the Minda-Settlement. The Tribunal may remember that Claimant accepted to reduce the settlement amount in the initial Minda-Settlement from EUR 11 million (see Respondent's email dated 11 March 2020) to EUR 5.5 million because of Respondent's difficult economic situation following the outbreak of the Corona-p....
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....ed that settlement had been concluded between claimant and Minda India and the preamble of the settlement stated that Daimler AG and MBAG confirm that Daimler AG and/or MBAG will not be benefited from any 'double dip' by virtue of the payments agreed by Minda India under the settlement. 23. Further in para 75 (extracted below), a communication of 28th September 2021 by Minda India clearly recorded the confirmation asking the Tribunal to render an Award by consent: "75. Later on 28 September 2021, Counsel for Respondent informed the Tribunal as follows: "On behalf of Respondent, I hereby confirm [sic] that (i) it asks the Tribunal to render an Award by Consent as reflected in the draft circulated by the Tribunal, (ii) subject to and with incorporation of the modifications proposed by Claimant." (emphasis added) 24. Mr. Rao, relied upon the decision in Cruz City 1 Mauritius Holdings v Unitech Limited 2017 SCC Online Del 7810, where the Supreme Court in paras 113 - 115 stated that Unitech resisting enforcement of a Foreign Award is clearly dishonest and no such contentions had been advanced by Unitech before the Arbitral Tribunal and that the only issu....
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.... background facts briefly to establish the context of assessment before this Court. 31. It may be useful to advert to background facts briefly to establish the context of assessment before this Court. 32. MBAG/Award Holder is a company incorporated and existing under the laws of the Federal Republic of Germany. It is a multinational automotive manufacturer, headquartered in Stuttgart, Germany. It's previous name was 'Daimler AG'. On 1st February 2022, its name was changed to 'Mercedes-Benz Group AG' (DH herein). 33. JD/Award Debtor is a company incorporated under the laws of India and is a part of the Ashok Minda Group of Companies engaged in the manufacture of machines and equipment used in the automobile industry. This group of companies was a supplier of automotive parts to the petitioner. The supply was made to petitioner in Germany through subsidiary of respondent namely 'Minda Schenk Plastic Solutions GmbH' (referred to as Minda Germany). In order to guarantee the liabilities of Minda Germany, Minda India provided an LoC for the purpose of expansion of its business of Minda Germany as a supplier to petitioner. The LoC undertook to take all necessary actions to enable....
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....lationship, agreed to resolve the business dispute and terminate the ICC Arbitration. As part of such resolution, Minda Corporation has agreed to make a payment of EUR 5,500,000.00 (in words: Euro Five Million and Five Hundred Thousand) to MBAG in the manner and subject to the terms and conditions stated in this agreement ("Settlement Agreement"). Daimler and MBAG confirm that Daimler and/or MBAG will not be benefited from any double dip by virtue of the payments agreed by Minda Corporation Limited under this Agreement. Therefore, the Parties agree as follows: 1. Minda Corporation agrees to pay to MBAG an amount of EUR 5,500,000.00 (in words: Euro Five Million and Five Hundred Thousand) ("Settlement Amount"), inclusive of Taxes as may be applicable, in accordance with this Settlement Agreement. ... 3.(ii) The Consent Award would not be a determination on merits of the subject matter of the ICC Arbitration. Daimler and Minda Corporation agree that on account of the Consent Award, the proceedings under ICC Arbitration would be terminated, without any of them admitting or accepting any liability on any issue being contested under the said a....
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.... provided under Division 6: "Arbitral Award and termination of proceedings" i.e. Sections 1053, 1054 and 1055 of the GCPC are reproduced below: "Section 1053. Settlement - (1) Where the parties settle the dispute in the course of the arbitral proceedings, the arbitral tribunal will terminate the proceedings. On request by the parties, the arbitral tribunal will record the settlement in the form of an arbitral award on agreed terms, provided that the substance of the settlement does not violate public policy (ordre public). (2) An arbitral award on agreed terms is to be made in accordance with the provisions of section 1054 and must state that it is an arbitral award. Such an arbitral award has the same effect as any other arbitral award on the merits of the case. (3) Insofar as declarations must be recorded by a notary in order to be effective, this requirement is replaced, in the case of an arbitral award on agreed terms, by recording the declarations of the parties in the arbitral award. Section 1054. Form and content of the arbitral award (1) The arbitral award is to be made in writing and is to be signed by the arbitrator or arbitrat....
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....under section 48 (2) (b), which relates to public policy exception, that the objection has been asserted. 45. Explanation 1 to Section 48 (2) (b) of the A&C Act clarifies that the Award will be in conflict with public policy, inter alia if it is in contravention with fundamental policy of the Indian law. Explanation 2 however, further clarifies that this assessment shall not entail a review on the merits of the dispute. 46. The underlying objective of Section 48 of the A&C Act is well articulated by the Supreme Court in Vijay Karia (supra), the relevant paragraphs, are extracted as under: "81. Given the fact that the object of Section 48 is to enforce foreign awards subject to certain well-defined narrow exceptions, the expression "was otherwise unable to present his case" occurring in Section 48 (1)(b) cannot be given an expansive meaning and would have to be read in the context and colour of the words preceding the said phrase. In short, this expression would be a facet of natural justice, which would be breached only if a fair hearing was not given by the arbitrator to the parties. Read along with the first part of Section 48 (1)(b), it is clear that this expressi....
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....rights which fall within the ambit of private international law. 115. The only remaining issue now to be addressed is whether enforcement of the Award would violate the provisions of FEMA." (emphasis added) 48. Considering in the instant case, the issue of violation of provisions of FEMA is not germane to the matter anymore considering the post facto approval of the RBI, the only issue would be whether 'fundamental policy of law' would cover the principal objection of the JD that they did not have visibility of the 'Bilgery Settlement' and therefore, could not ascertain whether there was a 'double dip' by the DH (i.e. recovery both from the Liquidator of Minda Germany and also from Minda India), or if there was a waiver in the 'Bilgery Settlement.' Needless to state, both these aspects become a non-issue since the Consent Award was passed with the JD having full knowledge of what was before them. 49. The Settlement Agreement itself, as evident from the extracts in para 35 above, would show that the agreement was the 'entire agreement' between the parties, superseded and extinguished all previous agreements, promises, assurances, warranties, and parties has a....