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Bombay High CourtIndian Cases

Tropic Shipping Company Limited vs Kothari Global Limited on 9 October 2001

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Bombay High Court
Tropic Shipping Company Limited vs Kothari Global Limited on 9 October, 2001
Equivalent citations: 2002(2)BOMCR93, (2002)3BOMLR44, 2002(2)MHLJ585
Author: F.I. Rebello
Bench: F.I. Rebello

F.I. Rebello, J.

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 is 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 Queen’s 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 respondent’s cost of the application to be taxed on the standard basis of not agreed. After the petition was filed before this Court, additional affidavit has been filed. To that is annexed xerox 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 Ideals with the New York Convention Awards. The present Award is a New York contention Award. While applying for enforcement of the Award, the parties so applying, has to comply with the requirements 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 Owner’s 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 insofar as private International Law is concerned came up for consideration before the Apex Court in Renusagar Power Co. Ltd. vs. General Electric Co. . 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 insofar 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 contract 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 insofar 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 as 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.

4. It is then contended that the proceedings under SIC (SP) Act, 1985 are pending before the BIFR insofar 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 Thyssen Stahlunion GMBH vs. Steel Authority of India Ltd. , to point out that insofar 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. It is then contended that the perusal of the Award would indicate that the interest has been awarded from 1.5.1996 to the date of the Award. The learned counsel drew my attention to the prayer clause wherein interest is sought at the rate of 8% p.a. from the date of the Award i.e. 16.6.1997 till the date of payment/realization. To this argument, on behalf of the petitioners, it is contended, placing reliance on the affidavit of Anthony Robert Swinnerton, Solicitor of the Supreme Court in England and specifically paragraph 8 that under Section 17 of the Judgment Act, 1838, the interest is payable by the respondents to the claimants from the date of the Award upto the total of principle and interest to that date. The interest would be payable at the rate of 8% pursuant to the Judgment order dated 1993. On behalf of the respondents, their learned counsel has relied on the Judgment of the learned single Judge of this Court in the case of Toepfer International Asia Pvt. Ltd. vs. Thapar Ispat Limited (2000 (2) Mh. LJ 331 = 2000 (1) Arb. LR 230 (Bom)). The learned single Judge has held that Section 49 empowers the Court to declare the foreign award as enforceable under the provisions of Chapter I of Part II of the Act. On such declaration, the Award shall be deemed to be the decree of the Court. The Award itself attracts payment of interest on the principle sum and it is no longer open to the Court to make an order for payment of interest from the date of the Award. Section 31 would apply insofar as the Awards covered by Part I i.e. domestic arbitration is concerned. That was therefore, not applicable insofar as Part II is concerned. The question is whether on the perusal of the Award and considering the language of Section 49, whether the Court would have power to grant interest considering English law as set out in the affidavit in support filed by Anthony Robert. The English Arbitration Act, 1996 which is now in force in that country provides for interest under Section 49. Under Section 49 Tribunal may award simple or compound interest from the date of the Award until payment at such rates having such rates as it considers looking to the aspects of the case on the outstanding amount of any Award. Sub-section (6) sets out that the other provisions of the section does not affect any other power of the Tribunal to award interest. Section 49 would be applicable to domestic arbitrations in England. The Award sought to be enforced is a foreign award in this country but a domestic award insofar as England is concerned. In the course of passing the Award, there was power under Section 49 in the Arbitrator to grant interest. The Award shows that the learned Arbitrator has not awarded interest after the Award. It was in his discretion as the language used in the section is “may” and not “shall”. Apart from this fact. Section 6 reserves powers to award interest apart from sub-section (4) of Section 49. No interest for the period after the award is set out in the award. Under Section 49 of the Arbitration and Conciliation Act, 1996, once the Court is satisfied that the Award can be enforced, it is deemed to be decree. Insofar as an Award is concerned, as long as it is sought to be executed as foreign award in this country, it is that Award which the Court will consider if can be enforced. The Award to be enforced does not contain any interest from the date of the Award. Section 49 only confers power on the Court to satisfy itself whether the Award should be enforced. Those are the limited powers conferred. The nature of this power apart from other aspects is a matter of national sovereignty considering the test as laid down in Renusagar (supra) which while respecting awards passed under the laws in force in the country when it was passed ensures that such awards are not contrary to fundamental policy of Indian Law; interests of India or justice or morality. In the instant case none of these circumstances arise. The award can be allowed to be enforced in term of the award and not reading into the award something not provided in the award. Whether while enforcing the award in England interest is payable after the date of the award is another matter. Under Section 49 when the Court comes to the conclusion that the award is enforceable, it becomes a deemed decree. Considering that the objection as raised by the respondent insofar as interest after the award will have to be upheld. The interest will have to be restricted for the purpose of enforcement in India to what is contained in the Award. The last objection was in the matter of costs. Considering the judgment of the Apex Court in the case of M/s. Koch Navigation Inc. vs. Hindustan Petroleum Corpn. Ltd. , even though at the time when enforcement of the award was applied for, the award in respect of costs was not filed, to my mind, that would not stand in the way of the petitioners recovering the costs. It was no doubt, contended on behalf of the respondents that its execution is barred by limitation. That contention has to be rejected as the application for enforcement of the Award was filed within limitation. That provided for costs. In the absence of the parties agreeing to the cost, cost had to be taxed. The costs taxed in terms of the Award are now sought to be enforced. They relate back to the date when this Court was moved for the enforcement of the Award. In these circumstances, that contention must be rejected assuming it is available. In the light of that following order :

The Award Exh. A to the petition is allowed to be enforced. It will be open to the petitioner to take steps for the enforcement of the Award as decree in terms of the rules framed by this Court.
5. In the circumstances of the case, there shall be no order as to costs.

6. P.A. to issue authenticated copy of this order.