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Issues Involved:
1. Can a foreign award be made a subject-matter of a winding-up petition under the present laws of the land? Detailed Analysis: Facts of the Case: The petitioning creditor entered into an agreement with the company for the sale of 3000MT of oil. The company failed to open a Letter of Credit, resulting in the petitioner suffering loss and damages. The petitioner invoked the arbitration clause and obtained an award from London. The company filed a suit involving the petitioner. The petitioner filed a winding-up proceeding based on the unpaid foreign award. Principal Controversy: The main question is whether it is permissible to enforce a foreign award through a winding-up petition under current laws. Basic Concept of a Winding-up Proceeding Brought by Creditors: Under section 433, a creditor can bring an action if there is a just debt payable by the company, which the company failed to pay despite statutory notice. The Court only examines the defense of the company prima facie. The winding-up Court does not adjudicate the rights of the parties or enforce the debt directly. Arbitration Law: Laws Before: - The Arbitration Act, 1940 required a domestic award to be made a rule of Court before enforcement. - The Arbitration (Protocol and Convention) Act, 1937, and Foreign Awards (Recognition & Enforce) Act, 1961 dealt with foreign awards, requiring them to be made a rule of Court before enforcement. Law at Present: - The Arbitration and Conciliation Act, 1996, brought domestic and foreign awards under one Act, repealing the 1940 and 1961 Acts. Foreign awards are dealt with in Part II, sections 44 to 49, providing a complete procedure for enforcement. Section 49 states that if the conditions of section 48 are fulfilled, the award shall be deemed a decree of the Indian Court. Interpretation of Part II of the 1996 Act by Indian Courts: - Fuerest Day Lawson Ltd. v. Jindal Exports Ltd. (AIR 2001 SC 2293): The Supreme Court held that enforceability and execution of a foreign award can be decided in one proceeding. - Jindal Drugs Ltd. v. Nay Vallesina Engg. SPA (2002): The Bombay High Court held that the person against whom the award is made can challenge its enforcement only when the awardee applies for enforcement. Cases Cited: - Birtley Distt. Co-operative Society Ltd. v. Windy Nook & Distt. Industrial Co-operative Society Ltd. (1959): Misconduct of the arbitrator cannot be raised by way of counter-claim. - Harinagar Sugar Mills Co. Ltd. v. M.W. Pradhan (AIR 1966 SC 1707): Winding-up petition is a proper remedy for enforcing a just debt. - Dalhousie Jute Co. Ltd. v. Mulchand Lakshmi Chand (1983): An unfiled domestic award is a good piece of evidence of debt. - Renusagar Power Co. Ltd. v. General Electric Co. (AIR 1994 SC 860): The scope of enquiry for enforcing a foreign award is limited to grounds mentioned in the Act of 1961. - Other cases discussed various aspects of enforceability and public policy considerations. Enforcement Award in a Winding-up Proceeding: - Dalhousie Jute Co. Ltd. (supra): An unfiled award is a good piece of evidence of debt and can be made a subject-matter of winding-up proceeding. - Marina World Shipping Corpn. Ltd. (supra): The Delhi High Court refused admission of winding-up petition based on a foreign award without exhausting remedies under sections 44 to 48 of the Act of 1996. My View: - For enforceability and execution of a foreign award, one need not multiply proceedings. The Court, upon being satisfied under sections 47 and 48, would proceed to execute the award. - Winding-up proceedings should not be used to enforce foreign awards as it could lead to protracted litigation. The present law is a complete code by itself, aiming to minimize litigation. Result: The winding-up petition is dismissed. The petitioner is granted liberty to approach the Arbitration Court under Chapter II of the Act of 1996. No order as to costs. The dismissal does not preclude the petitioner from taking recourse under section 14 of the Limitation Act if action is brought within six weeks. The merits and public policy issues are left open to be decided by the Arbitration Court.
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