TaxTMI 
TaxTMI 
2026 (7) TMI 225
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....tional Chamber of Commerce, effective from 01.03.2017 ("ICC rules") by the Arbitral Tribunal ("AT"). FACTUAL BACKGROUND 2. The Award Holder namely, Amadeus IT Group, S.A. (Spain) is a company having its office at Salvador de Madariaga, 128027, Madrid, Spain, and is working as an information technology provider for travel and tourism sector. The Award Holder runs a fully automated platform which performs comprehensive information, communications, reservations, ticketing, and related functions on a worldwide basis. 3. The respondent No. 2 namely, Ebix Inc. is a Delaware, United States of America, based corporation having its registered office at 1 Ebix Way, Johns Creek, 30097, Georgia, USA. 4. The respondent No. 1 i.e., Ebix Cash Limited is a company incorporated in India under the Companies Act, 2013, having its registered office at Plot 122/123, NSEZ, Noida, Phase 11, 201305, Uttar Pradesh. 5. As a part of expansion of business of respondent No. 2 in Asian travel and tourism industry, the respondent No. 2 announced on 17.07.2019 that it is in the process to acquire Yatra Online Inc. marking its entry in the Indian market. 6. The Award Holder and respondent No. 1 e....
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....rally liable. Events Post-Award 16. The Award Holder after receiving no response for the demand notices, proceeded to file a petition being Case No. 1:22-CV-04109-SEG seeking enforcement of the Award before United States District Court ("USDC") for the Northern District of Georgia, Atlanta Division. 17. The Award was duly confirmed in the aforesaid petition by the USDC vide Order dated 21.06.2023. 18. The USDC pursuant to the aforesaid Order, passed a final judgment in effect confirming its Order and ruling in favour of the Award Holder and directing the respondent No. 2 to pay USD 15,070,913.40 plus post judgment interest and the filing fees. Consequently, a writ of execution dated 16.08.2023 was also issued. 19. A forbearance agreement dated 01.09.2023 was executed between the Award Holder and the respondent No. 2, wherein it was agreed that the Award Holder will not immediately proceed with collection of amount pursuant to the Award confirmed by the judgment of USDC, provided respondent No. 2 made payments in accordance with the timelines fixed therein. 20. Some payments were made by respondent No. 2 in accordance with the forbearance agreement, however, for pa....
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....ion". The Award Holder provided a loan to the tune of about USD 15 million to the respondent No. 1, the same was to be paid back out of the money which respondent No. 1 would earn by selling flight tickets. 28. The transactions involving assignments of receivable as in the present case are governed in India by the Factoring Regulation Act, 2011 ("the Factoring Act"). Reliance is placed on Section 2(j) of the Factoring Act to state that the nature of transaction is that of "Factoring business". 29. Further, if any company engages in such factoring arrangement, it necessarily needs to be registered with the Reserve Bank of India ("RBI"), in accordance with the Section 3 of the Factoring Act. 30. On this premise, the arrangement between the Award Holder and respondent No. 1, wherein the respondent No. 1 was provided unsecured loan and the same was repaid by discounting invoices, is in itself not in accordance with the extant rules and legal regime of India. 31. The enforcement of this Award would amount to judicial validation of a foreign currency liability which has arisen out of a structured financial exposure, qua which the Award Holder has not shown any compliance with....
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....from the respondent No. 2 by treating it as the party primarily liable for recovery. 40. The respondent No. 1 was neither made a party to the forbearance agreement nor any obligation was fastened to it. Thus, by such an arrangement, the Award Holder has consciously elected to proceed in to alter the character of the original liability. 41. In this backdrop, there is no subsisting liability/debt under the Award which can be enforced against the respondent No. 1. 42. The Award Holder by restructuring its liability through a forbearance agreement, not including respondent No. 1 in it, and proceeding to pursue a claim in the bankruptcy proceedings, has changed the essential nature of the Award leaving no subsisting debt to be paid. Non-maintainability qua respondent No. 2 43. Mr. Jain, also submits that the respondent No. 2 is a foreign entity incorporated and based outside India, and the same does not fall in the territorial jurisdiction of this Hon'ble Court for the purpose of execution as the execution proceedings are inherently territorial in nature. 44. Since, the Award Holder failed to demonstrate any assets the respondent No. 2 is having in India, the Award can....
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....of those payments or for the purpose of financing. However, in the present case an upfront incentive (advance incentive payment) was given by the Award Holder to the respondent No. 1 which was linked to achieving specific volumes of future airline bookings. The respondent No. 1 then could invoice the Award Holder for incentives on eligible bookings. 54. This is a standard commercial practice which is not only legitimate but also widely practised in the travel technology industry. The present transaction does not contemplate any assignment of invoices or receivables to render it vulnerable to scope of the Factoring Act. 55. Additionally, this objection is not relevant as the Award Holder by way of this petition is seeking enforcement of the Award and not of the Agreement which is executed between the parties. 56. Section 48(2)(b) contain the grounds including that of public policy on which the execution of a foreign award can be rejected and the same are very narrowly interpreted by the Courts in India, to only allow interference on the basis of this exception when the conscience of the Court is deeply shocked or most basic notions of morality and justice are violated. 5....
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....Vedanta (supra) to substantiate this submission. 67. It has been held by the Hon'ble Supreme Court in Vedanta (Supra) that in case of enforcement of foreign Awards, the date of accrual of the right to apply is not necessarily the date on which the Award was passed, the right to apply can accrue at a later stage as well. The relevant paragraphs of the judgment reads as under: "30. Article 137 applies to the enforcement of foreign awards, which provides a period of 3 years from "when the right to apply accrues". It was submitted that the right to apply would accrue from the date of making the award. In the present case, the award was passed on 18-1-2011, and the petition for enforcement/execution was filed by the respondents on 14-10-2014. The petition was barred by 268 days beyond the period of limitation. ... 46. In the alternative, it was contended that if Article 137 of the Limitation Act is held to be applicable for the enforcement of foreign awards, the limitation period would commence from "when the right to apply accrues", which does not necessarily mean the date of the award. Had this been the intention of the legislature, it would have been exp....
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....f the country in which it was made; (b) the original agreement for arbitration or a duly certified copy thereof; and (c) such evidence as may be necessary to prove that the award is a foreign award. (2) If the award or agreement to be produced under sub-section (1) is in a foreign language, the party seeking to enforce the award shall produce a translation into English certified as correct by a diplomatic or consular agent of the country to which that party belongs or certified as correct in such other manner as may be sufficient according to the law in force in India. Explanation.-In this section and in the sections following in this Chapter, "Court" means the High Court having original jurisdiction to decide the questions forming the subject-matter of the arbitral award if the same had been the subject-matter of a suit on its original civil jurisdiction and in other cases, in the High Court having jurisdiction to hear appeals from decrees of courts subordinate to such High Court. (Emphasis Supplied) 69. Even Section 34 of the Act, which provides for application for setting aside of domestic Arbitral Award clearly specifies that the ....
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....ion shows that the original of the Award was sent to the Award Holder on 21.02.2022, it is this communication which would be the starting point for reckoning the period of limitation. The notification/letter dated 21.02.2022 is reproduced as under: 74. From a perusal of the aforesaid position, and the notification/letter dated 21.02.2022, it is clear that the right to apply accrued in favour of the Award Holder on 21.02.2022 i.e., the date on which the signed (original) copy of the award was received by the Award Holder in terms of Article 35(1) of the ICC rules, and in this view the petition filed on 20.02.2025 is within the period of limitation. Accordingly, the preliminary objection raised by the respondent No. 1 stands rejected. Violation of Public Policy 75. The scheme of the Act is such that its Part-I governs Domestic Arbitration and Part-II governs the enforcement of certain foreign Awards, more particularly Chapter-I of the Part-II governs the enforcement of foreign Awards falling under the ambit of New York Convention. 76. Section 46 of the Act accords a binding force to the foreign awards for all the relevant purposes, and by virtue of Section 49 of the Act, a f....
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....ing of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or (ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of morality or justice. Explanation 2.-For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute. (3) If an application for the setting aside or suspension of the award has been made to a competent authority referred to in clause (e) of sub-section (1) the Court may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security." 77. In the present case, the core of the controversy can be distilled into one primary issue which is the Award being in contravention of the fundamental policy of India as provided under Section 48(2)(b) read with Explanation 1 (ii) for the reasons as submitted by the respondent No. 1. 78. Section 48(2)(b) of the Act em....
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.... a material issue or claim is rejected, can never fall in this class of cases. Also, issues that the Tribunal considered essential and has addressed must be given their due weight - it often happens that the Tribunal considers a particular issue as essential and answers it, which by implication would mean that the other issue or issues raised have been implicitly rejected. For example, two parties may both allege that the other is in breach. A finding that one party is in breach, without expressly stating that the other party is not in breach, would amount to a decision on both a claim and a counterclaim, as to which party is in breach. Similarly, after hearing the parties, a certain sum may be awarded as damages and an issue as to interest may not be answered at all. This again may, on the facts of a given case, amount to an implied rejection of the claim for interest. The important point to be considered is that the foreign award must be read as a whole, fairly, and without nit-picking. If read as a whole, the said award has addressed the basic issues raised by the parties and has, in substance, decided the claims and counterclaims of the parties, enforcement must follow." 79.....
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.... of Indian law, the award must contravene all or any of such fundamental principles that provide a basis for administration of justice and enforcement of law in this country. (Emphasis Supplied) 80. It is the case of the respondent No. 1 that the nature of transaction entered into between the parties in accordance with the Agreement is that of the nature of a "Factoring transaction" regulated by the Factoring Act. The Award Holder not being a company registered as a "Factor" under the relevant Act, cannot undertake such a transaction. Thus, the Award is against public policy more particularly violative of fundamental policy of Indian law i.e., Section 48(2)(b) Explanation 1(ii). 81. Section 2(j) of the Factoring Act defines the term "Factoring business" in the following words: "(j) "factoring business" means the business of acquisition by way of assignment of receivables of assignor for a consideration for the purpose of collection of such receivables or for financing, whether by way of making loans or advances or otherwise, against such assignment, but does not include- (i) credit facilities provided by a bank or a non-banking financial company in ....
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....o meet the minimum booking requirement, the respondent No. 1 was obliged to repay an amount based on the shortfall. 85. The said Agreement is a commercial agreement under which the Award Holder, being a party liable to pay incentives (on eligible bookings) for performance by the respondent No. 1, made an advance payment towards these incentives, which was its own contractual liability. The advance payment of this incentive was in turn coupled with performance based conditions for invoicing and repayment condition in case of shortfall to reach the minimum number of eligible bookings as decided by the parties. Thus, this payment (advance) is in substance a prepaid consideration for anticipated services, and not a loan against receivable owed to respondent No. 1 by some third parties. 86. The respondent No. 1 in addition has also failed to demonstrate how does the transaction involves any assignment to Award Holder of the respondent No. 1's receivables. There is no such involvement of assignment of any form of receivables. 87. In this backdrop the transaction between the Award Holder and respondent No. 1 is a purely commercial transaction wherein Award Holder and respondent N....
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....es, it is apposite at this stage to see the judgment of Hon'ble Supreme Court wherein the essential elements for its applications are laid down. The relevant paragraphs of the judgment titled Transcore v. Union of India (2008) 1 SCC 125 read as under: "64. In the light of the above discussion, we now examine the doctrine of election. There are three elements of election, namely, existence of two or more remedies; inconsistencies between such remedies and a choice of one of them. If any one of the three elements is not there, the doctrine will not apply. According to American Jurisprudence, 2d, Vol. 25, p. 652, if in truth there is only one remedy, then the doctrine of election does not apply. In the present case, as stated above, the NPA Act is an additional remedy to the DRT Act. Together they constitute one remedy and, therefore, the doctrine of election does not apply. Even according to Snell's Principles of Equity (31st Edn., p. 119), the doctrine of election of remedies is applicable only when there are two or more co-existent remedies available to the litigants at the time of election which are repugnant and inconsistent. In any event, there is no repugnancy nor ....
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....medy against one of the jointly and severally liable Award Debtor shall not extinguish or result in waiver of right to proceed against the other, unless there is a clear unequivocal stipulation to this effect in the Award. In the present case, the Award Holder availed its remedy against respondent No. 2 before the US Bankruptcy Court and also entered into a forbearance agreement with it. However, at that stage, the Award Holder was neither proceeding against nor prosecuting any claim against the respondent No. 1. 99. At the cost of repetition, I am compelled to say that it is a settled position of law that the scope of refusal for enforcement of a foreign Award is limited and the same is only allowed when any ground as incorporated under Section 48 of the Act is attracted. The respondent No. 1 in the present case has fleetingly raised these arguments which do not demonstrate at all, violation of any grounds under Section 48(2)(b). Extinguishment of Debt. 100. The respondent No. 1 has also raised an objection that the Award Holder has out of its own volition altered the nature of liability arising out the Award by entering into a forbearance agreement with the respondent No....
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...., respondent no. 2 defaulted in fulfilling its payment obligations under the forbearance agreement. 107. Additionally, the position can be clearly inferred from a bare perusal of the Order dated 02.08.2024 passed by the US Bankruptcy Court. Paragraph No. 42 of the Order reads as under: "42. Nothing in the Plan or this Order waives or releases any claims of Amadeus against any non-Debtor, including, without limitation, EbixCash Private Limited (formerly EbixSoftware India Private Limited), or otherwise prohibits Amadeus from pursuing such claims." (Emphasis Supplied) 108. In this view of the matter, the forbearance agreement or the Award Holder pursuing its Claim before the US Bankruptcy Court does not bar the right of the Award Holder to proceed against the respondent No. 1 which is independently liable by virtue of its joint and several liability. The plan under Chapter 11 of the Bankruptcy Code, before the US Bankruptcy Court specifically incorporated the aforesaid statement to reserve this right of the Award Holder against the respondent No. 1. 109. Neither the forbearance agreement nor the proceedings before the US Bankruptcy Court, on their own terms....