TROPIC SHIPPING COMPANY LIMITED Vs. KOTHARI GLOBAL LIMITED

JUDGEMENT

(1.) THE petitioner by the present petition has moved this Court for enforcement of the foreign Award dated 16-6-1997. The arbitral proceedings commenced and also were concluded in England. By the said Award claims as made by the petitioner herein and as set out in the Award had been allowed and the counter claims, by the respondent herein, have been rejected. The interest awarded it at commercial rate from 1-5-1996 to the date of the award. Similarly costs also have been awarded. From the award passed, respondents sought leave of the High Court of Justice Queens Bench Division, Commercial Court, London to appeal. The appeal filed was dismissed by order dated 10-10-1997. While dismissing the appeal filed by the respondents, it was ordered that the appellants do pay the respondents cost of the application to be taxed on the standard basis if not agreed. After the petition was filed before this Court, additional affidavit has been filed. To that is annexed zerox copy of the award of taxed costs. It is also set out that the petitioners have prayed for leave to produce original of the award of taxed cost before Executing the decree in terms of the award.

(2.) ENFORCEMENT of the foreign award is covered by Part II of the Arbitration and Conciliation Act, 1996. Chapter I deals with the New York Convention Awards. The present award is a New York Convention Award. While applying for enforcement of the award, the parties so applying, has to comply with the requirement of section 47 of the Act. The petitioners have complied with the said requirements. The enforcement must be sought before the Court. The Court in the explanation of section 47 and other sections of the chapter means the Principal Civil Court of original jurisdiction in a district and includes the High Courts in exercise of its ordinary original civil jurisdiction, having jurisdiction over the subject matter of the award, if the same had been the subject matter of a suit. The subject matter of the award is a money decree. The respondents have their office and carrying on business within the jurisdiction of this Court, hence, the application for enforcement of the Award before this Court. The enforcement of the foreign Award will be refused unless the party furnishes to the Court the proof as set out in section 48. Enforcement of a foreign award may also be refused under section 49 (2) if the subject matter of the difference is not capable of settlement by arbitration under the law of India or the enforcement of the award would be contrary to the public policy of India. If the Court is satisfied that the foreign Award is enforceable under this chapter, the Award shall be deemed to be decree of that Court under section 49. At the hearing of the petition on behalf of the petitioner it is firstly contended that there was no arbitral clause between the petitioners and respondents herein. This submission is based on the contention that on the fixture note, seal of the petitioners was put as "as Owners Manager only". It is further contended that considering sections 230 and 231 of the Indian Contract Act, an agent could not have invoked the arbitral clauses and as such the contract is contrary to the public policy of India. The issue as to what is the public policy of India in so far as private International Law is concerned came up for consideration before the Apex Court in (Renusagar Power Co. Ltd. v. General Electric Co.), A. I. R. 1994 S. C. 860. Before the Apex Court, however, what was in issue was the Foreign Awards (Recognition and Enforcement) Act. Comparison of the provisions of the said Act with the provisions of the Arbitration Act, 1940 in so far as enforcement of the foreign award is concerned, it is clear, are more or less the same or similar. While considering the public policy under the Foreign Awards (Recognition and Enforcement) Act, the Apex Court held that the enforcement of the foreign Award would be refused on the ground that it is contrary to the public policy, if such enforcement would be contrary to (a) fundamental policy of Indian Law; or (b) the interests of India or (c) justice or morality. Mere contravention of law therefore, even if proved would be no answer. It must fall within the one of the predicates as set out above. In the instant case, the issue, that the agent could not sue, was in issue before the arbitral Tribunal. That has been considered in paragraph two of the Award. The finding was subject to appeal. Appeal filed was rejected. Even otherwise under section 230 of the Indian Contract Act, what is contemplated is that the agent cannot personally enforce the contact entered into by him on behalf of his principal in the absence of any contract to that effect. From the award there is nothing on the face of the award to say that there was no such contract. In case where the party contends that the award is without jurisdiction or nullity, the party must show from the Award itself that it is so without requiring the Court to investigate. Similar is the case in so far as section 231 is concerned. The first contention therefore must be rejected.

(3.) IT is then contended that the respondent herein have not signed the Charter part. That being the case, contract would not be binding on the respondent. If the contract was not binding on the respondent, the Award itself is a nullity at law and hence, against the public policy. Having gone through the award itself, it is clear that this issue again was in issue before the learned arbitrator. Paragraphs 2. 6 to 2. 10 deal with the said issue. The issue cannot be said to be an issue involving public policy and at any rate it being in issue and having been answered, it is not open to the respondent to raise it before the Court. This Court in considering the enforcement, will not consider the merits of the disputes more so in the case where it was in issue and has been heard and concluded. That contention must therefore, be rejected. It is then contended that the proceedings under SIC (SP) Act, 1985 are pending before the BIFR in so far as respondent is concerned. In these circumstances, it is set out considering section 22 of the SIC (SP) Act, 1985, this Court would have no jurisdiction to grant enforcement of the award under sections 46, 47 and 48 what is contemplated is as to when the foreign award would be binding, the procedural requirements and the objections that can be raised. If after hearing the objections, the Court rejects the application and is satisfied that the Foreign Award is enforceable, only then does it become a deemed decree of the Court. As such these will not be the proceedings in execution or distress as contemplated by section 22 of the SIC (SP) Act. A Single Judge of this Court in an unreported judgment in the Arbitration Petition No. 188 of 1995 decided on 23-12-1995 under the Arbitration Act, 1940 has also taken a similar view but under the Foreign Awards (Recognition and Enforcement) Act, that the Court would have jurisdiction at the stage of enforcement of a foreign award. It would therefore, be clear on the consideration of language of section 22 which need not be reproduced that the jurisdiction of the Court is not ousted. It is only when the Court is satisfied that the foreign award is enforceable that the award is deemed to be the decree of that Court and if proceedings in execution are initiated under section 22 of SIC (SP) Act. The learned Counsel however, on behalf of the respondent sought to place reliance on the judgment of the Apex Court in (Thyussen Stahlunion GMBH v. Steel Authority of India Ltd.), 1999 (9) S. C. C. 334 to point out that in so far as Foreign Awards (Recognition and Enforcement) Act is concerned, decree follows but under the new Act, the Foreign Award is already stamped as the decree. This according to learned Counsel would be the distinguishing factor to hold that the Court while considering enforcement of Foreign Award is considering the decree itself. In my opinion, the judgment in Thyssen GMBH (supra) cannot be so read considering the express language of section 49 of the Act of 1996. The Foreign Award continues to remain an award in the country. It is deemed to be a decree only when the Court to which the application is made for enforcement of the foreign award is satisfied that the Foreign Award is enforceable. To my mind therefore, objection under section 22 of the SIC (SP) Act, 1985 must be rejected.