TaxTMI 
TaxTMI 
2026 (1) TMI 2
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.... and Mr. Archit Rao i/by Vidhi Partners. JUDGMENT: (PER M. S. SONAK, J.) 1. Heard learned Counsel for the parties. PRELIMINARIES 2. This Commercial Arbitration Appeal is directed against the judgment and order dated October 24, 2024 passed by the learned Single Judge disposing of Commercial Arbitration Petition No. 414 of 2018 along with Chamber Summons No. 99 of 2019, 100 of 2019 and 101 of 2019 under Sections 47 to 49 of the Arbitration and Conciliation Act, 1996 (said Act), thereby refusing to recognise and enforce three foreign arbitral awards dated February 09, 2006, August 24, 2007 and March 27, 2008 [foreign awards] made by the ICC Arbitral Tribunal 3. The 2nd and 3rd Respondents objected to the maintainability of this Appeal. By order dated April 23, 2025, made by the Coordinate Bench of this Court comprising A. S. Chandurkar, J (as His Lordship then was) and M. M. Sathaye, J, rejected the objections regarding maintainability and admitted this Appeal qua all the Respondents. 4. This Court's order dated April 23, 2025, rejecting the objections to maintainability and admitting this Appeal was challenged inter alia by the first Respondent by instituting Pe....
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....e the final arguments in this Appeal. At their request, however, we deferred the hearing to 03.00 pm and commenced the final arguments in this Appeal on November 10, 2025, at 03.00 pm. 10. Final arguments were heard in the afternoon sessions on 10, 11, 12, 13, 18, and 19 November 2025, as during the morning sessions, we had to attend to other matters on the cause list. The final arguments concluded on 18 November 2025, and the matter was closed for orders on that date. GENESIS 11. This Appeal arises in the facts and circumstances set out briefly hereafter. 12. On September 28, 2000, the Appellant - IMAX Corporation ("IMAX") entered into an agreement (Master Agreement) with the first Respondent, i.e. M/s. E-City Entertainment (I) Pvt. Ltd ("E-City"), providing for the lease of six IMAX systems for 20 years, with an option to extend for a further 10 years. 13. Disputes arose between IMAX and E-City during 2003-2004, and IMAX's claim of USD 18.3 million, with interest thereon, was referred to arbitration before the ICC, London. 14. The ICC Arbitral Tribunal disposed of the arbitration proceedings by passing the following three awards [collectively called the foreign ....
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.... E-City with assets worth only USD 769,287. 16. IMAX argues that the relationship between the companies is evident because, inter alia, the fourth Respondent company [holding company], which is held and controlled by Dr Chandra and his family, controls E-city, and has approximately 99% of the shares in the 2nd and 3rd Respondent companies. IMAX submits that the improper diversion and divesting of E-City's assets valued at Rs. 210 Crores and their transfer to related companies was to retain control over such assets, but at the same time to try to render such assets "execution proof" or "immune from execution". 17. On July 22, 2008, E-City filed an Arbitration Petition (L) No.525 of 2008 under Section 34 of the said Act to challenge the foreign awards. IMAX objected to the invocation of Part I (Section 34) of the said Act by contending that this was a case of enforcement of foreign arbitral awards, and therefore, Part II and not Part I of Chapter I of the said Act would govern the review of such foreign arbitral awards. 18. By order dated June 10, 2013, the learned Single Judge of this Court [Anup Mohta, J], overruled the Appellant's objection and held that Part I of Chapter....
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....rastructure and Anr. V/s. Asian Natural Resources (India) Ltd. & Vitol S.A. 2016 SCC OnLine 10695. 24. On July 21, 2018, E-City objected to recognition and/or enforcement of the three foreign awards broadly on the following grounds: - (a) That IMAX's Petition was barred by the limitation period prescribed under Article 137 of the Schedule to the Indian Limitation Act, 1963 ("Limitation Act"); (b) The master agreement between the parties was void for want of RBI clearance mandated under the Foreign Exchange Management Act, 1999 ("FEMA"). Furthermore, the Arbitral Tribunal did not accept the oral testimony of one of E-City's expert witnesses, even though IMAX did not cross-examine such a witness, and this constituted unfairness. On these two grounds, IMAX urged that the enforcement of the foreign awards would be contrary to the public policy of India, and their enforcement ought to be refused under Section 48(2)(b) of the said Act. (c) The IMAX's Petition, in essence, challenged the scheme of arrangement [demerger] already sanctioned by this Court, which was not permissible. (d) The invocation of the arbitration was invalid under the Law of Sing....
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.... (supra) and Hindustan Construction Company (Supra). However, on August 16, 2023, even this Review Petition was dismissed by the Hon'ble Supreme Court. 30. Upon the dismissal of SLP (C) No. 30357 of 2019, IMAX's Petition and the Chamber Summons filed therein were heard by the learned Single Judge [Coram: Bharati Dangre, J]. The final arguments concluded on 07 May 2024, and by the impugned judgment and order dated 24 October 2024 [Dangre, J's order], the Enforcement/Execution Petition and the Chamber Summons were disposed of. 31. Dangre, J's order neatly formulates Issues/Points for determination (A) to (G) and answers them in the following terms: - Issue No. A:- that the common Petition filed by the IMAX seeking Enforcement/Execution of the foreign awards was maintainable and could be entertained. Issue No. B:- that under section 48 of the said Act, it was impermissible for the Court to undertake a review on the merits of the foreign awards. Issues No. C:- that IMAX's Enforcement/Execution Petition was barred by limitation, given the law laid down in Vedanta Ltd. (supra). Issue No. D:- that the master agreement violated the provisions of FE....
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....ement of the foreign awards have been refused on the ground that it would be contrary to the Public Policy of India? (iii) Was this appeal maintainable as against the 2nd, 3rd, and 4th Respondents? (iv) Could the 2nd, 3rd, and 4th Respondents have been impleaded, and execution of the foreign awards have been sought against them in IMAX's petition? RIVAL CONTENTIONS REGARDING THE LIMITATION ISSUE: 36. IMAX, through its Learned Counsel, Mr Chinoy and Mr Shah, contend that Kulkarni, J's order correctly determines the limitation issue. In any event, since the order has attained finality, it operates as res judicata. Accordingly, the issue about IMAX's Petition being within the limitation could not have been revisited at the final hearing stage. They contend that the principle of res judicata applies to two separate stages of the same proceedings. 37. IMAX, through its Learned Counsel, Mr Chinoy and Mr Shah, contended that the finding that IMAX's Petition was within the limitation period prescribed under Article 137 of the Limitation Act was correct and by no means an "incidental observation". They submitted that even the finding of a lack of clarity on the is....
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....e Hon'ble Supreme Court on 16.08. 2023. 41. However, at the final hearing of IMAX's petition, Dangre J's order held that Kulkarni J's order does not operate as res judicata, and the finding therein was revisited, ruling that IMAX's petition was barred by limitation. Therefore, the crucial issue is whether Kulkarni J's order on the limitation issue, which had already attained finality, could have been virtually reviewed or whether such a revisit or review was barred under the principle of res judicata or principles analogous thereto? 42. Kulkarni, J's order holding that IMAX's Petition was not time-barred, attained finality. Subject to the case falling within some of the well-established exceptions to the res judicata rule, its validity or the finding that IMAX's Petition was within the prescribed period of limitation could not have been re-agitated by the parties or revisited in Dangre, J's order disposing of IMAX's Petition at the final stage. The res, in Kulkarni, J's order had already become a judicata. It is well settled that the principle of res judicata, which is founded on public policy, applies between two stages in the same litigation. 43. In Satyadhyan Ghosal V/s....
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....rescribed period of limitation, upon its finality, were binding at the final hearing stage. The same issue could not have been re-agitated or revisited, as has been done in Dangre, J's order, unless, of course, certain well-known exceptions to the application of the principle of res judicata were to apply. The well-known exceptions to the application of the principle of res judicata, however, do not include a plea that the earlier decision was erroneous and, therefore, not binding. Does this case fall within any of the exceptions to the principle of res judicata? 47. To deflect the principle of res judicata, the learned Counsel for the Respondents relied on the following three primary reasons or circumstances, which, according to them, constituted exceptions to the res judicata principle. These reasons were accepted in Dangre, J's order, for revisiting the limitation issue and concluding that IMAX's Petition was barred by limitation when Kulkarni J's order had reached the diametrically opposite conclusion in these very proceedings. 48. The first reason was that Kulkarni, J's order had held that the 12-year limitation period prescribed under Article 136 of the Limitation Ac....
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....taining a time-barred application would render the order made therein as without jurisdiction. They urged that in such circumstances, the rule of res judicata would not apply. 52. To determine whether Kulkarni, J's order operates as res judicata, an analysis of this order becomes necessary. 53. Firstly, this order squarely deals with and rejects the Respondents' preliminary objection that IMAX's Petition against the foreign awards was barred by limitation and consequently, should not have been entertained by the Court, i.e., the learned Single Judge of this Court. 54. Secondly, this order holds that the limitation for filing an Enforcement/execution petition was governed by Article 136 of the Limitation Act, which provided a 12-year limitation period (see paras 9, 20 and 26 of Kulkarni, J's order); 55. Thirdly, this order, in the alternative, and assuming that the three-year period prescribed under Article 137 of the Limitation Act applies, holds that upon considering the factual aspects, IMAX's Petition was still within this three-year limitation period prescribed under Article 137 of the Limitation Act. (See paras 11, 28 and 33 of Kulkarni, J's order). 56. Fourthly....
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....missal order were rejected by the Hon'ble Supreme Court, Kulkarni, J's order that IMAX's Petition was within the prescribed period of limitation, attained finality. Such an order could not have been revisited at the final hearing stage by applying the principle of res judicata, unless, of course, any of the three exceptions relied upon by the Respondents applied. The argument that the subsequent overruling [at least partially] of Kulkarni J's view renders the order inter partes, a nullity and operates as an exception to the principle of res judicata 61. The first exception relied upon by the Respondents concerns the subsequent overruling of Kulkarni, J's, views on two aspects. First, Article 136 of the Limitation Act governs the filing of Enforcement/execution petitions of foreign awards. This view was expressly overruled in Vedanta Ltd (supra), decided by the Hon'ble Supreme Court on 16.09.2020, i.e. about ten months after Kulkarni, J's order was delivered on 13.11.2019. Second, the Hon'ble Supreme Court, in Hindustan Construction Co. (supra), decided subsequently i.e. on 27.11.2019 (about 14 days after Kulkarni, J's order was delivered on 13.11.2019), the Hon'ble Supreme Co....
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....at mere overruling of the principles on which the earlier judgment was passed by a subsequent judgment of a higher forum will not have the effect of uprooting the final adjudication between the parties and setting it at nought. There is a distinction between overruling a principle and reversal of the judgment. The judgment in question itself has to be assailed and got rid of in a manner known to or recognized by law. Mere overruling of the principles by a subsequent judgment will not dilute the binding effect of the decision on inter-parties. 68. The attempt to distinguish Nilima Srivastava (supra) on certain irrelevant grounds cannot be countenanced. Recently, in Rohan Vijay Nahar V/s. In State of Maharashtra Civil Appeal No.5454/2019 decided on 07.11.2025, the Hon'ble Supreme Court held that it was unlawful for a Court to ignore a binding precedent by distinguishing it only superficially, thereby ignoring its essence. 69. The essence and the ratio of Nilima Srivastava (supra) is that the overruling of a precedent denudes it of its precedential status. However, a decision inter partes, even though erroneous, binds the parties, and the doctrine of res judicata would apply to ....
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....become final and was binding on the University. Therefore, even though, according to paragraph 54 of Umadevi (supra), any judgment, which was contrary to the principles settled in Umadevi (supra), shall be denuded of the status as a precedent, such an observation does not absolve the university of its duty to comply with the directions in Gujarat Agricultural University (supra). 75. Thus, it was held that mere overruling of a precedent relied upon in a decision inter partes does not absolve the parties to the decision from complying with such decision. 76. Recently, in Sulthan Said Ibrahim V/s. Prakasan & Ors. 2025 INSC 764, the Hon'ble Supreme Court, after surveying several authorities on the point of the principles of res judicata applying as between two stages in the same litigation, reiterated that "the only manner in which a decision arrived at by a Court of competent jurisdiction can be interfered with is by modification or reversal by the Appellate Authorities". As long as the decision in question was not modified or reversed by the Appellate Authorities, such decision will bind the parties to the litigation even at the subsequent stages of the same suit or proceedings....
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....as within the limitation period under Article 137 (a question of fact and law)-has not been disturbed. Kulkarni J's order, which rejected the limitation objection, was never overturned. Consequently, even if certain legal propositions in Kulkarni, J's order have been subsequently overruled in different cases involving different parties, they do not provide sufficient grounds to revisit the issues that have attained finality inter partes. 82. In the present case, the principle of res judicata could not have been bypassed on the ground that the view taken in Kulkarni, J's order on the applicability of Article 136 to the Limitation Act or that a petition under Section 34 of the said Act operates as an automatic stay on Enforcement/execution proceedings, was subsequently overruled by the Hon'ble Supreme Court in unconnected matters involving unconnected parties. The view that IMAX's Petition was within limitation, assuming Article 137 of the Limitation Act applied, was never disturbed. 83. In fact, even the subsequent decision in Vedanta Ltd (supra) has held that Article 137 would govern the limitation period for filing Enforcement/execution petitions of foreign awards. To that e....
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....y in issue in Kulkarni J's order. The mere fact that this finding was recorded on a demurrer or in response to the alternate and without prejudice argument does not mean that the finding was only an incidental observation. The issue was squarely raised, argued and answered by reference to the law and the facts. 88. The salutary principle of res judicata, which is conceived in public interest, could not have been overcome by dismissing the categorical finding as a mere 'incidental observation'. As is evident from the record, Kulkarni, J's order regarding this categorical finding was never interfered with by the Hon'ble Supreme Court when dismissing the SLP and the review against the SLP dismissal order. The findings in Kulkarni, J's order, were therefore confirmed inter partes. Such a confirmation could not have been set at nought by styling the finding as a mere "incidental observation", which, respectfully, we believe, it was not. 89. The Learned Counsel for the Respondents argued that the Hon'ble Supreme Court had interpreted Kulkarni, J's order, and such interpretation was binding on this court. About the binding authority, there can be no doubt. However, neither in the or....
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....hat the decision or finding which was claimed as finally adjudicated or judicata involved a pure question of law as distinct from a question of fact or a mixed question of law and fact. Secondly, such a finding goes to the root of the Court or Tribunal's jurisdiction to entertain the proceedings. The evolution of precedents on the subject would show that this refers to the Court or Tribunal's lack of inherent jurisdiction to entertain the proceedings before it, rather than a mere incorrect finding by a Court or Tribunal vested with jurisdiction over the subject matter and the parties to a cause. 95. In the present case, neither of the above two conditions is satisfied, even though the law requires that both be satisfied. The finding in Kulkarni, J's order that IMAX's Petition was within the three-year limitation period prescribed under Article 137 was not a finding based on a pure question of law. It was a finding involving a mixed question of law and fact. Secondly, it is well settled that even an erroneous finding on the limitation issue by a Competent Court having inherent jurisdiction to entertain a matter, neither renders the adjudication a nullity nor does it affec....
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....h lacked inherent jurisdiction over the subject matter and the parties. 100. In N. G. Subharaya Setty (supra), the Hon'ble Supreme Court explained its decision in Mathura Prasad Jaiswal (supra) as being an authority for the proposition that an earlier erroneous decision conferred jurisdiction upon a Court, when in fact, it inherently lacked such jurisdiction, cannot be perpetuated by applying the doctrine of res judicata. The Court explained that there can be no estoppel on a pure question of law which relates to inherent jurisdiction. 101. In N. G. Subharaya Setty (supra), the Hon'ble Supreme Court explained the above concept by giving illustrations, such as that a Civil Court cannot send a person to jail for an offence committed under the Penal Code. If it does so, such a judgment would not bind a Magistrate and/or Sessions Court in a subsequent proceeding between the same parties, where the Magistrate sentences the same person for the same offence under the Penal Code. Equally, a Civil Court cannot decide a suit between a landlord and a tenant arising out of the rights claimed under the Rent Act, where the Rent Act clothes a special Court with jurisdiction to decide such s....
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....IR 1964 SC 907, the Judgment Debtor, argued that the decree in OS No. 59 of 1093 in a suit on the hypothecation bond executed by the decree holder was a nullity because the suit was barred by time. Such contention was rejected by the Hon'ble Supreme Court, observing thus: - "... In assuming that the suit was barred by time, it is difficult to appreciate the contention of learned counsel that the decree can be treated as a nullity and ignored in subsequent litigation. If the suit was barred by time and yet, the court decreed it, the court would be committing an illegality and therefore the aggrieved party would be entitled to have the decree set aside by preferring an appeal against it. But it is well settled that a court having jurisdiction over the subject-matter of the suit and over the parties thereto, though bound to decide right may decide wrong; and that even though it decided wrong it would not be doing something which it had no jurisdiction to do. It had the jurisdiction over the subject-matter and it had the jurisdiction over the party and, therefore, merely because it made an error in deciding a vital issue in the suit, it cannot be said that it has acted beyond ....
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....decree passed by the Trial Court can be said to be "null" and "void", in the following terms: - "... In our opinion, the law on the point is well settled. The distinction between a decree which is void and a decree which is wrong, incorrect, irregular or not in accordance with law cannot be overlooked or ignored. Where a court lacks inherent jurisdiction in passing a decree or making an order, a decree or order passed by such court would be without jurisdiction, non est and void ab initio. A defect of jurisdiction of the court goes to the root of the matter and strikes at the very authority of the court to pass a decree or make an order. Such defect has always been treated as basic and fundamental and a decree or order passed by a court or an authority having no jurisdiction is a nullity. Validity of such decree or order can be challenged at any stage, even in execution or collateral proceedings." 110. In Nusli Neville Wadia V/s. Ivory Properties and Ors. (2020) 6 SCC 557, the Hon'ble Supreme Court explained the meaning of the word 'jurisdiction' by stating that it is the authority of law to act officially in a particular matter in hand. It is the power to take cognizan....
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....e. 113. The Hon'ble Supreme Court also held that the word 'jurisdiction', which has been used in several provisions of C.P.C., etc., must be interpreted in the context in which it has been used in such provisions. In the context of Section 9-A CPC, the Court explained that the word "jurisdiction" is qualified with "to entertain the suit", and the expression used is "jurisdiction to entertain the suit". The expression "entertain" means to admit for consideration. It does not mean giving relief. When a suit or proceeding is not thrown out in limine, but the court receives it for consideration for disposal under the law, it must be regarded as entertaining the suit or proceeding. It is inconsequential what the final decision is. The expression "entertain" means to adjudicate upon or to proceed to consider on merits. Further, the Court has held that it is in the context of the 'inherent lack of jurisdiction' to entertain the suit that the expression has been used in Section 9-A of CPC. 114. Finally, in the specific context of the argument based on Section 3 of the Limitation Act, the Hon'ble Supreme Court held that though this Section provides that subject to the provisions conta....
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....led before the Hon'ble Supreme Court consequent upon the dismissal of the SLP against such order. Even the Review Petition against the SLP dismissal order was rejected by the Hon'ble Supreme Court. 118. Besides, as held by the Hon'ble Supreme Court in the case of Ittyavira Mathai (supra) and Bhawarlal Bhandari (supra), even an erroneous decision on the issue of limitation does not go to the root of the jurisdiction of the Court or the Tribunal if such Court or Tribunal does not otherwise inherently lack jurisdiction over the parties or the subject matter. 119. As noted earlier, firstly, the finding in Kulkarni, J's order that IMAX's Petition was within the three-year limitation period prescribed under Article 137 was not a finding based on a pure question of law. The perusal of paragraph 28 of Kulkarni, J's order shows that this finding was based on a mixed question of law and fact. This is because paragraph 28 of Kulkarni, J's order, quite categorically notes the following: - "considering the facts of the present case and as is noted above, that the Supreme Court on 10 March 2017 set aside the order passed by this Court holding that section 34 petition filed by the ....
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....e proceedings cannot be said to be fulfilled in the present case. 125. Noharlar Verma (supra) relied upon in Dangre J's order, was a matter neither concerned with the Application of the principle of res judicata nor does it hold that an order made by a Court or a Tribunal, which does not lack any inherent jurisdiction, amounts to a nullity, simply because its order was made in a Petition or a proceeding which were subsequently found to be instituted beyond the prescribed period of limitation. That was a case where an Appeal was filed in a service dispute beyond the prescribed period of limitation before the Registrar under Section 55 of the Madhya Pradesh Co-operative Societies Act, 1960. The counsel for the Respondent-Bank conceded that the Appeal was within limitation, and therefore, the Registrar took up the Appeal and decided the same on merits. 126. The Bank then challenged the Registrar's order before the High Court. The High Court dismissed the Petition, holding that the Bank, having conceded that the Appeal was within limitation, cannot be allowed to "blow hot and cold" by taking inconsistent pleas and by raising the "technical" defence of limitation. The Hon'ble Supr....
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.... no application seeking such condonation of delay, and without such application, the Court had no power to condone the delay; and, in any event, (ii) also because there was no sufficient cause shown for the condonation of delay. 131. In paragraph 28 of Kulkarni, J's order, it is observed that a broader view is required to be taken to advance the object and intention of the provisions of the Arbitration Act and not a hard and technical approach has urged by the Respondents that the Petition be held time barred, by applying Article 137 of the Limitation Act in the absence of a delay condonation application and the delay being condoned. Further, in paragraph 31 of Kulkarni, J's order, after referring to several decisions, the order concludes by holding that the Respondents' objection that the Petition is required to be held as time-barred cannot be accepted and that IMAX's Petition was filed within the prescribed period of limitation. 132. In Fuerst Day Lawson Ltd. V/s. Jindal Exports Ltd.27, it was held that the question as to whether any period of limitation is prescribed for making an application for enforcement of a foreign award, and if so, what would be that period, is not....
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....writing before relief can be granted under the said section. Had such an application been mandatory, Section 5 of the Limitation Act would have expressly provided so. Section 5 would then have read that the Court might condone delay beyond the time prescribed by limitation for filing an application or appeal, if on consideration of the application of the appellant or the applicant, as the case may be, for condonation of delay, the Court is satisfied that the appellant/applicant had sufficient cause for not preferring the appeal or making the application within such period. Alternatively, a proviso or an Explanation would have been added to Section 5, requiring the appellant or the applicant, as the case may be, to make an application for condonation of delay. However, the Court can always insist that an application or an affidavit showing cause for the delay be filed. No applicant or appellant can claim condonation of delay under Section 5 of the Limitation Act as of right, without making an application." 137. Kulkarni, J's order, when read in its entirety, holds that IMAX's Petition was filed within the prescribed period of limitation. In any event, even if the finding in this ....
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....the contract, and that the finding in the foreign award that the contract was not a contingent contract could not have been revisited or reviewed, as that would amount to a review on the merits of the foreign award. 144. Mr Chinoy and Mr Shah submitted that there was no unfairness involved, and Akshay Chudasama's evidence was not accepted because by the time this evidence was produced, the Arbitral Tribunal had already concluded the issue in the liability award. Besides, expert opinion did not align with several decisions of the Hon'ble Supreme Court directly on the subject. 145. For all these reasons, Mr Chinoy and Mr Shah submitted that the finding in Dangre J's order that enforcement of the foreign award would conflict with India's public policy warrants interference. They relied on Vijay Karia & Ors. V/s. Prysmian Cavi E Sistemi SRL & Ors [(2020) 11 SCC 1], Cruz City Mauritius Holdings V/s. Unitech Ltd 2017 SCC Online Del 7810, POL India Projects Limited V/s. Aurelia Reederei Eugen Friederich GmbH Schiffahrtsgesellschaft and Company KG (2015) SCC Online Bom 1109, Avitel Post Studioz Ltd and Others V/s. HSBC PI Holdings (Mauritius) Ltd (2024) 7 SCC 197, Gemini Bay Transcri....
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....(b) of the said Act. EVALUATION OF THE RIVAL CONTENTIONS ON THE "PUBLIC POLICY ISSUE". 151. To conclude that the enforcement of the foreign award would be contrary to the "Public Policy of India", Dangre, J.'s order accepts the following distinct submissions: - (a) that the master agreement was contrary to the provisions of the Foreign Exchange Management Act (FEMA), and therefore, its implementation by the enforcement or execution of a foreign award would conflict with the public policy of India. (b) that there was procedural unfairness because Akshay Chudasama's expert testimony was not accepted by the arbitral tribunal, even though it was unchallenged in cross-examination. 152. Dangre J's order holds that the foreign awards were against the public policy of India as they had failed to appreciate that the Master Agreement violated the provisions of FEMA, 1999 and the FEMA Capital Account Rules, 2000, which govern the remittances to be made under the Master Agreement. The order reasons that the various transactions under the Master Agreement required the prior approval of RBI, which was admittedly not obtained. Accordingly, enforcement of the foreign awa....
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....t RBI would have approved - has approved the systems that are already there. I mean I am not saying that they are operating illegally. They cannot." 158. Thus, the evidence on record shows that the transactions contemplated under the Master Agreement were, per se, not "prohibited transactions". Secondly, in December 2000, the parties, after receiving no response from the RBI to their applications seeking permission to remit funds, restructured the transaction/arrangement from IMAX's customary lease format to a sale transaction on a deferred payment basis. Thirdly, there is evidence on record, duly accepted by the Arbitral Tribunal, that the RBI had no difficulties in approving the sale transactions on a deferred payment basis and had, in fact, granted approvals for similar transactions involving IMAX and other parties. 159. The evidence in this regard comprises not only the testimony of IMAX's witness, Mr Berman, but also E-City's witness, Mr Mody. Mr Chinoy pointed out that the factum of the re-structure of the transaction was expressly accepted in E-City's "skeletal" submissions. Besides, there is evidence that the parties applied to the RBI on December 15, 2000, for permis....
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.... applicable, and that consequential transactions that breach FEMA cannot be considered void. The Court further held that if any act or transaction contravenes a specific provision of FEMA, RBI permission could always be sought post facto if the breach is condonable. 166. Finally, the Court distinguished Dropti Devi V/s. Union of India (2012) 7 SCC 499, noting that FEMA, unlike FERA, does not provide for prosecution or punishment. Therefore, the observations in Dropti Devi (supra) cannot be taken out of context to contend that any violation of FEMA would be sufficient to sustain the defence that enforcement is contrary to the fundamental public policy of India. For all these reasons, the Court concluded that enforcement of a foreign award or agreement underlying the same could be refused on the ground that it contravenes the provisions of FEMA. 167. The Court held that mere contravention of the provision of national law could be insufficient to invoke the defence of public policy when it comes to the enforcement of a foreign award. The Court noted that the fundamental policy of Indian law, as held in Renusagar Power Co. Ltd. V/s. General Electric Co. (1994) Suppl. (1) SCC 644,....
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....ion of expert testimony or in its interpretation of the contractual provisions. Gemini Bay confirms that such contentions are outside the scope of Section 48, which bars a merit-based review. 172. In Banyan Tree Growth Capital LLC (supra), a learned Single Judge of this Court considered the argument that a foreign award could not be enforced because the agreement sought to be implemented violated FEMA and the Rules and Regulations made under FEMA. The Court rejected this argument, inter alia, on the ground that FEMA, though a successor to FERA, had significant differences that could not be ignored. The Court noted that, unlike FERA, FEMA contained no provisions that would void transactions. The fact that RBI permissions may be required to remit funds outside India was not a ground for refusing to enforce a foreign award that may have directed payments to a foreign entity. 173. In POL India Projects Limited (supra), the learned Single Judge of this Court was again concerned with the provisions of the Foreign Exchange Management (Guarantees) Regulations, 2000, since it was alleged that the award creditor could not have executed a guarantee letter without the prior permission of....
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....Cruz City (supra) expressly hold that a mere breach of the provisions of FEMA without anything more is not a ground to refuse the enforcement of a foreign award on the ground that such enforcement would violate the public policy of India. Therefore, based on Asha Divianathan (supra), which concerns FERA rather than FEMA, in the present case, the enforcement of the foreign awards could not have been refused. 178. In any event, in Asha Divianathan (supra), the Hon'ble Supreme Court noted that prior permission of the RBI under Section 31 of FERA was a mandatory precondition for a foreign citizen to transfer immovable property in India. Further, the Court observed that a transaction in breach of this mandatory precondition was void and unenforceable. In the decisions referred to earlier, the Hon'ble Supreme Court has noted that there is no similar provision under the FEMA that declares the transaction void. Accordingly, based upon Asha Divianathan (supra), the enforcement of the foreign awards in the present case could not have been refused. 179. In this case, E-City has secured and enjoyed the benefits under the Master Agreement as restructured or otherwise. However, when it com....
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....nged to a sale format, with the sale prices to be paid on a deferred basis. There was evidence that the RBI routinely approved such transactions or contracts in IMAX cases. E-City's witness, Mr Mody, had also admitted that there was nothing per se illegal about the arrangement, from which E-City has benefited immensely. 183. For all the above reasons, we respectfully dis-agree with the conclusion in the impugned order that the Master Agreement, in its re-structured form or even otherwise violated the public policy of India or that the enforcement of the foreign award which had directed the implementation of such agreements or required E-City to pay for the benefits under such contracts, would be contrary to the public policy of India. The enforcement of the foreign awards, therefore, could not, with respect, have been refused on the ground that it violated India's public policy. The unfairness argument because expert testimony from E-City was not considered. 184. Insofar as the alleged non-consideration of Akshay Chudasama's expert testimony is concerned, firstly, we note that the Tribunal, in its liability award, had already decided the issue of whether the performance of....
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....a rehearing on the merit or a reappreciation of evidence and that only those violations that shock the conscience of the Court would justify refusal to enforce. In Shri Lal Mahal Ltd. (supra), the Court held that disagreements on evidentiary interpretation cannot be a ground to refuse enforcement of a foreign award under Section 48(2)(b) of the said Act. In Gemini Bay Transcription Pvt. Ltd. (supra), the Court held that arguments about error in appreciation of expert testimony and interpretation of contract were matters outside the scope of Section 48 of the said Act. Conclusion on the public policy issue 191. Therefore, considering the facts and law on the subject, we are satisfied that this was not a case in which the enforcement of the foreign award could have been refused on the ground of breach of India's fundamental policy. By attempting to elevate the mere and alleged violation of FEMA or the alleged non-consideration of expert evidence to the status of a public policy issue, the enforcement of the foreign award could not have been refused. MAINTAINABILITY OF THIS APPEAL QUA THE 2ND, 3RD AND 4TH RESPONDENT 192. The third point for determination is whether this ap....
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....rbitration agreement nor to the arbitration proceedings in which the foreign awards have been made. As such, there was no question of even seeking enforcement/recognition of the foreign awards qua the said Respondents. In any event, the challenge in this appeal is now to the refusal to execute the foreign award qua the 2nd, 3rd and 4th Respondents, inter alia, on the ground that they were never parties to the arbitration agreement or the arbitration proceedings. 199. The learned Counsel submitted that, as against such a refusal to execute, neither Section 50(1)(b) nor the scheme of Chapter I Part II of the said Act provided for any appeal. They submitted that an appeal is a creature of a statute, and there is never any inherent right to appeal, nor can a right to appeal be read into a statute by implication. Accordingly, they submitted that this appeal is not maintainable qua the 2nd, 3rd and 4th Respondents. 200. Learned Counsel for Respondents submitted that an appeal might lie against an order denying enforcement/recognition of a foreign award. Still, the legislature has not provided for an appeal against the refusal to execute the Award. Such an appeal would be contrary t....
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....reign awards to which this Chapter applies. 208. Section 49 of the said Act provides that where the Court is satisfied that the foreign award is enforceable under this Chapter, the Award shall be deemed to be a Decree of that Court. Section 50, which deals with "appealable orders", provides that notwithstanding anything contained in any other law for the time being in force, an appeal shall lie from the order refusing to - (a) refer the parties to arbitration under Section 45; (b) enforce a foreign award under Section 48, to the Court authorised by law to hear appeals from such orders. Sub-Section 2 of Section 50 provides that no second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court. 209. Upon reference to the pleadings and prayers in IMAX's petition, it is evident that it was a combined or rolled-up petition seeking both enforcement/recognition and execution of the foreign awards. Though, Part II of Chapter I of the said Act neither provides nor prohibits the filing of such a combined or a rolled up petition, still, given the authoritative pro....
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....e Arbitration Act, 1940 is dispensed with in the present Act. If the argument of the respondent is accepted, one of the objects of the Act will be frustrated and defeated. Under the old Act, after making award and prior to execution, there was a procedure for filing and making an award a rule of court i.e. a decree. Since the object of the Act is to provide speedy and alternative solution of the dispute, the same procedure cannot be insisted under the new Act when it is advisedly eliminated. If separate proceedings are to be taken, one for deciding the enforceability of a foreign award and the other thereafter for execution, it would only contribute to protracting the litigation and adding to the sufferings of a litigant in terms of money, time and energy. Avoiding such difficulties is one of the objects of the Act as can be gathered from the scheme of the Act and particularly looking to the provisions contained in Sections 46 to 49 in relation to enforcement of foreign award. In para 40 of Thyssen Stahlunion GmbH v. SAIL (1999) 9 SCC 334, it is stated that as a matter of fact, there is not much difference between the provisions of the 1961 Act and the Act in the matter of enforcem....
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....ition and execution of foreign awards was maintainable under the legislative scheme under consideration, it would make no difference to the issue of maintainability of appeal against the rejection of such a combined or a rolled up petition, simply on the ground that one of the parties to such petition or proceedings had filed a chamber summons seeking deletion of their names and by a separate order, such chamber summons was allowed by the competent Court and the names of such parties were ordered to be deleted. The argument was that the said Act does not provide an appeal against the Judicial Authority's order allowing such a chamber summons to delete the parties. 214. With respect, such an argument misses the effect and import of the order allowing such a chamber summons to delete the parties. Ultimately, the net effect of an order like the above would be the rejection of the common petition seeking enforcement, recognition and execution of the foreign awards qua the deleted party or parties. Such a refusal or rejection would, in the end, be attributable to or amount to an order refusing to enforce the foreign award under Section 48 of the said Act. This, when coupled with the ....
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....facile and quick enforcement and execution must be preferred over one that renders this process cumbersome or hedged with several avoidable impediments. At least in Arbitration matters, we cannot afford to bemoan that the fundamental problems of an award holder or a decree holder begins after securing an award or a decree. 219. This is even more so in matters of enforcing foreign awards, lest the confidence of the international commercial community be severely dented. The foreign awards or the legal provisions that provide for minimal grounds to interfere with such foreign awards will not amount to much if we return to business as usual by making the enforcement or execution process extremely cumbersome, hyper-technical and dilatory. 220. Recently, in Periyammal (Dead), through LRs V/s. V. Rajamani & Anr. Civil Appeal Nos. 3640-3642 of 2025, the Hon'ble Supreme Court prefaced its judgment by referring to the long and arduous route a decree holder must take to get the fruits of the decree. When he is ready to take a bite of that fruit, he must pass through the same procedural terrain in execution proceedings; the moroseness is writ large on his face. What looked inevitable to ....
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....re would run counter to the provisions or the scheme of Part II of Chapter I of the said Act, which is intended to be a self-contained code. Such an interpretation would also run counter to the decisions of the Hon'ble Supreme Court, which have held that enforcement proceedings in relation to foreign awards constitute a complete code and that there is a need to promote the expeditious disposal of such proceedings. 227. No excessive stress can be laid on the expression "under Section 48" in Section 50(1)(b) of the said Act. Section 50 must be read in its entirety together with the legislative scheme under Part II of Chapter I of the said Act. In Kandla Export Corporation & Anr. V/s. M/s. In Oci Corporation & Anr. (2018) 14 SCC 715, the Hon'ble Supreme Court rejected the argument that the scope of a Section 50 appeal was wider than that of a Section 37 appeal, which dealt only with domestic arbitrations. The Hon'ble Supreme Court held that the absence of the expression "and from no others," though conspicuous by its absence in Section 50 of the said Act, was much wider than the scope of an appeal under Section 37 of the said Act, dealing exclusively with domestic arbitrations. ....
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....issed on merits, the enforcement of the foreign award and consequentially its execution would stand declined. The order in its entirety would become appealable for being challenged under Section 50(1)(b) of the Act of 1996. In our view, the filing of Chamber Summons seeking deletion of the names of the 2nd to 4th respondents and the same being made absolute cannot be the determinative factor as regards maintainability of the appeal under Section 50(1)(b) of the Act of 1996 on the refusal to enforce the Foreign Awards. As the entire Arbitration Petition itself has been dismissed on merits, the Chamber Summons being made absolute is only a consequential order, rather a fall-out of the refusal to enforce and execute the Foreign Awards." 230. The Coordinate Bench, by its order of April 23, 2025, also rejected the argument that an order made on the chamber summons seeking deletion of the 2nd, 3rd and 4th Respondents could not be appealed against, because such an order was not an order refusing the enforcement of the foreign award. This discussion appears in paragraphs 6.9 and 6.10 of the Coordinate Bench's order, which concluded that, because the reasons for the rejection of IMAX's P....
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....espondents cannot be accepted. In these facts, the ratio of the decision in Noy Vallesina Engineering SPA (now known as Noy Ambiente S.p.a) (supra) cannot be applied." 232. Accordingly, apart from our independent reasons, we respectfully agree with the reasons recorded by the Coordinate Bench in its order of April 23, 2025 and proceed to hold that this appeal is maintainable qua all the Respondents, including the 2nd, 3rd and 4th Respondents, who have now raised this plea of maintainability of the appeal qua the 2nd, 3rd and 4th Respondents. 233. The learned Counsel for the Respondents, however, stressed that since the Hon'ble Supreme Court had left all contentions regarding the maintainability of the appeal open, no reference to the Coordinate Bench's reasoning in its order of April 23, 2025, would be appropriate. At least, this is not what the Hon'ble Supreme Court has said when dismissing the SLP against the Coordinate Bench's order of April 23, 2025. 234. Admittedly, the Hon'ble Supreme Court refused to interfere with the Coordinate Bench's order of April 23, 2025, and the Special Leave Petition against the same was dismissed. No doubt, the contentions on behalf of the....
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....the foreign awards. 240. Mr Chinoy and Mr Shah submitted that by applying the law laid down in Balwant Rai Saluja and Anr. V/s. Air India Limited and Ors. (supra) and Bhatia Industries & Infrastructure Limited V/s. Asian Natural Resources (India) Limited & Vitol S.A. (supra), the Enforcement/Executing Court was entitled to enforce/execute the foreign awards against such improperly diverted assets of E-City-the Award Debtor. 241. Mr Chinoy and Mr Shah submitted that the circumstance about the 2nd, 3rd and 4th Respondents not being parties to the arbitral agreement or the arbitral proceedings is quite irrelevant because, admittedly, the 2nd, 3rd and 4th Respondents are all associated Companies of E-City, i.e. the Award Debtor. Further, they are not sought to be personally/independently liable as Award Debtors. Still, execution is sought to be levied against them primarily because they are associated Companies to whom the properties and assets of E-City (1st Respondent), i.e. the Award Debtor, were improperly transferred with the sole intention of frustrating the enforcement/execution of the foreign awards. 242. Mr Chinoy and Mr Shah admitted that E-City's, i.e. the Award Deb....
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....y misconceived and that no execution could be levied against these Respondents or the properties and assets acquired by the 2nd and 3rd Respondents pursuant to valid and validly approved demerger Schemes. 247. Mr Seervai and Mr Jagtiani submitted that the demerger Schemes, which were validly approved, had no nexus with the arbitral proceedings. They submitted that resolutions for such demerger had been passed even before the liability award was made. They submitted that all legal procedures were duly complied with, and even the approval of this Court was obtained for the demerger and transfer of properties and assets. They submitted that IMAX filed no objections despite full knowledge of the demerger proceedings. They submitted that collateral challenges were impermissible. 248. Mr Seervai and Mr Jagtiani submitted that the 2nd, 3rd and 4th Respondents were neither parties to the arbitral agreement nor to the arbitral proceedings. They submitted that making the 2nd to 4th Respondents liable to satisfy the foreign awards to which they were not even parties, and consequently were not given any opportunity to put forth their version, would amount to the grossest breach of the pr....
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....a E- City (1st Respondent); (d) The ICC Arbitral Tribunal made its liability award on 09.02.2006, holding that the Master Agreement gave rise to a legally binding obligation which E-City (1st Respondent) had breached and consequently was liable to pay damages suffered by IMAX; (e) On 20.06.2007, under the first Scheme of Arrangement between E-City (1st Respondent) and E-City Real Estate Private Limited (2nd Respondent), E-City's, i.e. the Award Debtor's properties and assets valued at Rs.92 Crores, i.e. lands at Coimbatore and Lucknow having a book value of Rs. 75 Crores and current assets of Rs. 17.07 Crores, were transferred to the 2nd Respondent, in consideration of the second Respondent allotting shares to the 4th Respondent as shareholders of the 1st Respondent. (f) On 24.08.2007, the Arbitral Tribunal issued the quantum award holding that E-City, i.e. the Award Debtor, was required to pay IMAX a sum of USD 9,406 million with interest thereon; this was only the actual quantification. The liability was already determined under the liability award dated 09.02.2006. (g) On 31.08.2007, the second Scheme of Arrangement between E- City (1st Respon....
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.... the shares in the 2nd and 3rd Respondent companies. 257. In effect, therefore, there is substance in the contention of Mr Chinoy and Mr Shah that the properties and assets of E-City (1st Respondent), valued at Rs.210 Crores, were diverted during the arbitral proceedings and even after the liability award was made to the associated Companies, i.e., the 2nd and 3rd Respondents. This diversion did not involve any payment of money or any properties in exchange to E-City (1st Respondent). Still, it was effected by allotting shares in the 2nd and 3rd Respondent Companies to the 4th Respondent Company, which, in turn, was the major shareholder of E-City (1st Respondent) and held 99% of the shareholding in the 2nd and 3rd Respondent Companies. 258. By this, in effect, the properties and assets of E-City (1st Respondent) were effectively immunised from execution. At the same time, E-City (1st Respondent), through its major shareholder, the 4th Respondent, retained complete control over such properties and assets in the hands of the 2nd and 3rd Respondents. 259. The corporate device was thus an attempt to frustrate the enforcement of the liability, which was in principle already de....
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.... exception to the principle that a company is a legal entity separate and distinct from its shareholders with its own legal rights and obligations. It seeks to disregard the company's separate personality and attribute its acts to those allegedly in direct control of its operations. 265. The Court explained that the starting point of this doctrine was discussed in the celebrated case of Salomon V/s. Salomon & Co. Ltd. 1897 AC 22, by Lord Halsbury LC, to the following effect: "...a company must be treated like any other independent person with its rights and liabilities legally appropriate to itself ... whatever may have been the ideas or schemes of those who brought it into existence." The Hon'ble Supreme Court explained that most of the cases after Salomon (supra) attributed the doctrine of piercing the veil to the fact that the company was a "sham" or a "façade". However, there was yet to be any clarity on the applicability of the said doctrine. 266. The Hon'ble Supreme Court, after referring to the case of Ben Hashem V/s. Ali Shayif 2008 EWHC 2380 (Fam) observed the following in paragraphs 71 to 74: 71. In recent times, the law has been crys....
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.... pierce the corporate veil." 73. The position of law regarding this principle in India has been enumerated in various decisions. A Constitution Bench of this Court in Life Insurance Corporation of India v. Escorts Ltd. & Ors. (1986) 1 SCC 264, while discussing the doctrine of corporate veil, held that: "90. ... Generally and broadly speaking, we 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 a 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 decisions, the doctrine of piercing the veil allows the Court to disregard the separate legal personality of....
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....llegality. 270. The impropriety was linked to the use of the Company's structure to avoid the liability which had arisen and, in any event, was most imminent. The corporate structure, in the present case, was utilised as a "sham" or a "façade" only to render the execution of any arbitral award by IMAX complicated, if not impossible. By using the corporate device, the Respondents Nos. 1 to 4 brought about a situation in which the properties and assets of E-City (1st Respondent) would continue to be controlled by the 4th Respondent, the holding Company. At the same time, such properties and assets would be immune from execution of liabilities imposed by the foreign awards. 271. Therefore, by applying the principles in Balwant Rai Saluja and Anr. (supra) to the facts of this matter, a case is made out for lifting of the corporate veil and holding that the 2nd and 3rd Respondents were impleaded correctly as parties to the enforcement/execution proceedings, and further execution could be levied against the properties and assets of E-City (1st Respondent) improperly diverted or divested in favour of the 2nd and 3rd Respondents. 272. In Bhatia Industries & Infrastructure L....
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....itsui OSK Lines Ltd. (Japan) V/s. Orient Ship Agency Pvt. Ltd. And Others 2020 SCC OnLine Bom 217 to submit that this is a clear authority to hold that the third parties, which never had any opportunity to participate in the arbitral proceedings, should not be forced to suffer the execution of an award made in such proceedings. They contended that if this is permitted, then it would amount to the grossest violation of principles of natural justice and fair play. Strong emphasis was led on the observations in paragraphs 72 to 80 of the learned Single Judge's judgment in which the decisions in the case of Balwant Rai Saluja and Anr. (supra), Bhatia Industries and Infrastructure Ltd. (supra) were considered. 277. We have considered the decision in Mitsui OSK Lines Ltd. (Japan) (supra). The main issue there was whether a third party could be made personally liable to satisfy a decree or a foreign award, even though it was not a party to the arbitration proceedings and no award had been made against it. 278. In this case, IMAX does not argue that the 2nd and 3rd Respondents are personally liable to satisfy the foreign award. However, they contend that the properties and assets of ....
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....fore the Learned Single judge, no such case was established. 282. In the present case, however, the impropriety is evident, as properties and assets valued at Rs.210 Crores held by E-City (1st Respondent) were diverted solely to defeat execution of the liability award. Secondly, in the present case, there is both control of the Company by the wrongdoers and the impropriety, i.e., the Company's use and misuse of them as a device or façade to conceal their wrongdoings. In fact, the wrongdoers have managed to retain complete control over the diverted properties while, at the same time, attempting to render them immune from execution proceedings to defeat the enforcement and execution of the foreign awards. 283. This is not a case in which IMAX is challenging the orders of this Court that sanction the Schemes of Arrangement. Therefore, the arguments that such orders operate in rem rather than merely in personam need not detain us. Even if such orders were made in compliance with the validly prescribed procedures, that by itself would not prevent the enforcing/executing Court from lifting the corporate veil and addressing the impropriety of diverted properties and asset....
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....rate veil can be lifted. 288. In Gilford Motor Company V/s. Horne (1933) 1 CH 935, Horne had been employed by the Company under an agreement that he shall not solicit the customers of the Company or compete with it for a specific period after leaving its employment. After ceasing to be employed by the plaintiff, Horne formed a Company which carried on a competing business and caused all its shares to be allotted to his wife and an employee of the Company, who were appointed as its directors. It was held that since the defendant (Horne) in fact controlled the Company, its formation was a mere 'cloak or a sham' to enable him to break his agreement with the plaintiff. Accordingly, an injunction was issued against him and against the Company he had formed, restraining them from soliciting the plaintiff's customers. 289. In Jones V/s. Lipman (1963) 1 All.ER 442, the seller of a piece of land, sought to evade specific performance of a contract for the sale of the land by converting the land into a Company he formed for that purpose. Initially, the Company was formed by third parties, and the vendor purchased the whole of its shares from them, had the shares registered in his and a ....
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....e was a good arguable case that asset apparently vested in the company were the property of the individual defendant, the court, of its own motion in Mareva proceedings against the director, added the company as a defendant to the action under the provisions of Ord.15, r. 6 and then made a Mareva order against the company, even though it was accepted that the plaintiff had no cause of action against company, because there was otherwise a risk that the assets of the company would be dissipated. 294. In Woolfson V/s. Strathclyde Regional Council (1979) 38 P & CR 521, HL, the Court of Appeal held that piercing of the corporate veil would be permitted where the corporate structure has been used by a defendant inter alia to evade such rights of relief as third parties already possess against him. In some instances, the corporate structure is simply interposed belatedly as an attempt by the defendant to evade rights of relief which third parties already possess against him. For example, in Re Company (1985) BCLC 333, C.A., the defendant used a chain of companies to put assets beyond the reach of the plaintiffs after proceedings against the defendant had been commenced. It was held tha....
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....t IMAX only seeks to go against the diverted properties and assets, we hold that there was nothing wrong in the impleading of the 2nd to 4th Respondents or for seeking execution against such diverted properties and assets. In any event, merely seeking relief in broader terms cannot be a ground to deny relief in narrower terms where a party is found entitled to such relief in terms of the law. The Courts always have the power, and in most cases even the duty to mould the relief after due consideration of the facts and the law on the subject. 301. By the same logic, however, whatever the role of the 4th Respondent, it is established that no properties or assets of E-City (1st Respondent) were diverted to the 4th Respondent. Accordingly, there is no question of holding the 4th Respondent personally liable or levying any execution against the properties and assets of the 4th Respondent. 302. Although the 4th Respondent could have been joined as a proper party to the IMAX Petition, there is still no question of levying any execution against the 4th Respondent or its properties and assets. To this limited extent, therefore, Mr Jagtiani's contention about there being no question of ....
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.... such a burden did not have to be discharged beyond a reasonable doubt. It could be discharged on the touchstone of preponderance of probability. 308. In any event, even assuming that a higher burden was required to be discharged by IMAX, in this case, the facts speak for themselves. The arbitration proceedings had already commenced. Even the liability award was made. After that, under the Schemes of demerger, substantial properties and assets of E-City (1st Respondent) valued at Rs. 210 Crores were diverted to the 2nd and 3rd Respondents. The diversion was not against any consideration in terms of money or exchange of equivalent properties and assets, but against allotment of shares in the 2nd and 3rd Respondents' Companies to the 4th Respondent. The 4th Respondent is nothing but the holding company with about 99% of the shareholding in the 1st, 2nd and 3rd Respondents. 309. As a result of all this, E-City (1st Respondent), which was staring at an award that would have required it to pay USD 9 to 10 million, divested itself of its assets and properties, retaining only USD 700000 in assets. The timing and manner of this diversion, coupled with the fact that control over these....
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....were diverted to the 2nd and 3rd Respondents for satisfaction of the foreign awards. However, such execution can be only qua the diverted properties and assets presently held by the 2nd and 3rd Respondents, and not against the 2nd and 3rd Respondents independently. 314. This means that for the execution of the foreign awards, IMAX can proceed not only against E-City (1st Respondent) but also against the properties and assets of E-City (1st Respondent) diverted to the 2nd and 3rd Respondents under the Schemes of Arrangement sanctioned on 20.06.2007 and 31.08.2007. It is clarified that there can be no execution against any other properties or assets independently held by the 2nd and 3rd Respondents' Companies to satisfy the foreign awards. 315. Insofar as the 4th Respondent is concerned, though there was nothing wrong in its impleadment to IMAX's Petition, since no properties or assets of E-City (1st Respondent) were diverted to the 4th Respondent, there is no question of levying any execution on the 4th Respondent, its properties or assets. CONCLUSIONS AND OPERATIVE DIRECTIONS IN THIS APPEAL: 316. The points for determination formulated in paragraph 32 of this judgment a....
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.... (d) However, no execution shall be levied against the 2nd, 3rd and 4th Respondents, independently, because they are not personally/juridically liable for satisfaction of the foreign awards. The 2nd and the 3rd Respondents are held liable only to the extent of the properties and assets diverted to them from E-City (1st Respondent) under the Schemes of Arrangement dated 20.06.2007 and 31.08.2007. (e) Until the learned Single Judge makes any further orders in the proceedings for the actual execution of the foreign awards/ deemed decrees, E-City (1st Respondent) is restrained from dealing with its properties or assets, which will include the amounts in its bank accounts, etc. Similarly, during the above period, even the 2nd and 3rd Respondents are restrained from dealing with or otherwise alienating in any manner the properties and assets diverted to them under the Schemes of Arrangement dated 20.06.2007 and 31.08.2007. 319. The 1st Respondent has succeeded in frustrating the enforcement of the foreign awards made between 2006 and 2008. Full advantage was taken of the Master Agreement entered into in 2000, and by taking undue advantage of the pressure on the Indian ....