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2019 (2) TMI 1288 - SC - Indian LawsArbitration proceedings - petitioner refused to participate in the arbitration proceedings - Enforceability of a foreign award - sale of Non Basmati Parboiled Rice, Thailand origin - whether it was open to the petitioner to raise grounds regarding enforceability of the foreign awards despite the judgment of the High Court in SLEEPWELL INDUSTRIES CO. LTD. VERSUS LMJ INTERNATIONAL LTD. 2014 (12) TMI 1339 - CALCUTTA HIGH COURT rejecting the objections in the context of maintainability of the execution petition and which decision had attained finality consequent to rejection of the special leave petitions by this Court and including the review petition by the High Court? Held that - The grounds urged by the petitioner in the earlier round regarding the maintainability of the execution case could not have been considered in isolation and de hors the issue of enforceability of the subject foreign awards. For, the same was intrinsically linked to the question of enforceability of the subject foreign awards. In any case, all contentions available to the petitioner in that regard could and ought to have been raised specifically and, if raised, could have been examined by the Court at that stage itself. We are of the considered opinion that the scheme of Section 48 of the Act does not envisage piecemeal consideration of the issue of maintainability of the execution case concerning the foreign awards, in the first place; and then the issue of enforceability thereof. Whereas, keeping in mind the legislative intent of speedy disposal of arbitration proceedings and limited interference by the courts, the Court is expected to consider both these aspects simultaneously at the threshold. Taking any other view would result in encouraging successive and multiple round of proceedings for the execution of foreign awards. We cannot countenance such a situation keeping in mind the avowed object of the Arbitration and Conciliation Act, 1996, in particular, while dealing with the enforcement of foreign awards. For, the scope of interference has been consciously constricted by the legislature in relation to the execution of foreign awards. Therefore, the subject application filed by the petitioner deserves to be rejected, being barred by constructive res judicata, as has been justly observed by the High Court in the impugned judgment. The special leave petitions are dismissed with exemplary costs, quantified at an aggregate amount of ₹ 20,00,000/-.
Issues Involved:
1. Maintainability of execution petitions. 2. Enforceability of foreign arbitral awards. 3. Invocation and adherence to arbitration clauses. 4. Allegations of fraud and procedural irregularities. 5. Applicability of GAFTA rules. 6. Jurisdiction and role of the executing court. Detailed Analysis: 1. Maintainability of Execution Petitions: The petitioner challenged the maintainability of the execution petitions filed under Part II of the Arbitration and Conciliation Act, 1996. The High Court had previously rejected these objections, and the Supreme Court concurred, noting that the objections were intrinsically linked to the enforceability of the foreign awards. The Court emphasized that the legislative intent was to ensure limited interference and speedy disposal of arbitration proceedings, thereby rejecting the piecemeal consideration of maintainability and enforceability. 2. Enforceability of Foreign Arbitral Awards: The petitioner raised multiple objections regarding the enforceability of the foreign awards under Section 48 of the Act, including allegations of fraud and procedural irregularities. The High Court and Supreme Court both found that the objections did not fall within the purview of conflict with the public policy of India. The Supreme Court upheld the High Court's view that the objections were an attempt to have a second look at the awards, which is not permissible under the narrow scope of Section 48. The awards were deemed enforceable as they had attained finality. 3. Invocation and Adherence to Arbitration Clauses: The petitioner argued that the arbitration clause was not properly invoked, as it required an attempt to settle disputes amicably before arbitration. The Court found that the arbitration was invoked according to the agreed terms and that GAFTA had appointed the arbitrators following the rules. The Supreme Court noted that the petitioner had notice of the arbitration proceedings but chose not to participate, thus waiving the right to contest the invocation process. 4. Allegations of Fraud and Procedural Irregularities: The petitioner alleged that the awards were vitiated by fraud and procedural irregularities, including the concealment of relevant documents and improper appointment of arbitrators. The High Court and Supreme Court both rejected these claims, noting that the petitioner had failed to substantiate the allegations with concrete evidence. The Supreme Court emphasized that the grounds urged by the petitioner were not within the purview of Section 48 and were an attempt to delay the execution. 5. Applicability of GAFTA Rules: The petitioner contended that the arbitral procedure was not in accordance with the agreement, particularly concerning the application of GAFTA rules. The Supreme Court upheld the High Court's finding that the arbitral tribunal had correctly applied the GAFTA rules and that the awards were based on the interpretation of the contract and the documents presented. The Court noted that any error in the application of GAFTA rules could be a matter for correction under English law, not under Section 48 of the Act. 6. Jurisdiction and Role of the Executing Court: The Supreme Court reiterated the limited jurisdiction of the executing court under Section 48, which does not allow for a re-evaluation of the merits of the award. The Court emphasized that the role of the executing court is to determine whether the award is enforceable under the narrow grounds specified in Section 48, not to act as an appellate court. The High Court had correctly limited its interference and rejected the petitioner's objections. Conclusion: The Supreme Court dismissed the special leave petitions with exemplary costs, emphasizing the limited scope of interference under Section 48 of the Arbitration and Conciliation Act, 1996. The Court directed the Registrar of the Calcutta High Court to encash the fixed deposits and remit the amount to the respondent, underscoring the enforceability of the foreign awards and rejecting the petitioner's attempts to delay execution.
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