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2022 (6) TMI 1170 - HC - Indian LawsEnforceability of part of the Foreign Award - Seeking declaration of enforceability under Sections 47 and 49 of the Arbitration and Conciliation Act,1996 (the Arbitration Act) of a final award - seeking declaration that the Foreign Award be deemed to be a decree of this Court - HELD THAT - One part of the Foreign Award grants the claims made by the Company. By the other part of the Foreign Award, the counter claim of NCCIHL towards part consideration for the Subsequent Sale Shares was directed to be paid by TAQA/the Respondent herein. In addition, the Foreign Award provided for the payment of costs by both the claimants to NCC. By these petitions, the respective Petitioner seeks enforcement of the part of the Foreign Award which is in favour of the respective Petitioner against TAQA. TAQA/ the Respondent is a company based in Cuddalore, and the respective Petitioner pleads that the assets of TAQA/the Respondent are situated within the civil appellate jurisdiction of this Court. This contention is not disputed by TAQA. Therefore, there is no doubt that this Court qualifies as a High Court with jurisdiction in terms of the Explanation to Section 47 of the Arbitration Act in an action for recognition and enforcement against TAQA. Whether these proceedings are liable to be rejected on account of the NCLT order? - HELD THAT - The NCLT is empowered to admit an action for corporate insolvency resolution at the instance of a financial creditor or operational creditor, as defined in the IBC, or the company concerned. As regards these proceedings, the grounds in Section 48 of the Arbitration Act have been held to be exhaustive in cases such as VIJAY KARIA ORS. VERSUS PRYSMIAN CAVI E SISTEMI SRL ORS. 2020 (2) TMI 628 - SUPREME COURT . Indeed, the Supreme Court held that the court concerned has the discretion to reject the resistance to enforcement if made on grounds which only affect party interest even if one of the grounds under Section 48 are made out. Therefore, the objection on this ground is rejected. In view of the judgment of the Hon'ble Supreme Court in FUERST DAY LAWSON LTD. VERSUS JINDAL EXPORTS LTD. AND VICE-VERSA AND ITE INDIA P. LTD. VERSUS MUKESH SHARMA ORS. AND SHIVNATH RAI HARNARAIN INDIA COMPANY VERSUS GLENCORE GRAIN ROTTERDAM AND TINNA FINEX LTD. VERSUS NATIONAL ABILITY S.A. ANR. AND SEA STREAM NAVIGATION LTD. VERSUS LMJ INTERNATIONAL LTD. , 2011 (7) TMI 1275 - SUPREME COURT , a composite petition is maintainable to fulfil dual purposes (i) recognise and declare a foreign award as enforceable, in the first stage; and (ii) enforce/execute in the second stage. The Arbitration Act, however, only deals with the above mentioned first stage and recourse is necessary, in the Indian context, to Sections 36 to 74 of the Code of Civil Procedure, 1908, read with Order XXI thereof in the second stage. Non-joinder of the Company - HELD THAT - As regards non-joinder, the Foreign Award did not grant any relief to NCCIHL against the Company. Therefore, there is no question of any enforcement action against the Company by NCCIHL. As a corollary, the Company is not a necessary party to the petition by NCCIHL. As regards the petition by NCC, costs were directed to be paid by both the Company and TAQA to NCC; therefore, the Company could have been made a party to that petition. However, in an action for recognition and enforcement, the award holder can choose to proceed against one of the award debtors subject to the condition that it cannot recover more than the amount awarded if separate proceedings are subsequently instituted against the other award debtor. Whether the proceedings may be instituted in more than one high court in India? - HELD THAT - The Explanation to Section 47 clearly does not expressly prevent the institution of proceedings under Chapter -1 of Part II in more than one high court. Section 49, no doubt, uses the expression ''deemed to be a decree of that Court''. Since the expression decree of that court is used, can it have said that only one court in India should be approached for such purpose? There can be no doubt at all that an award holder may seek to enforce the relevant award or a part thereof in more than one country especially if the award debtor has assets in more than one country. As regards enforcement of a foreign award in India, given the Explanation to Section 47 of the Arbitration Act, the jurisdictional high court should be determined by raising the question as to which high court may exercise jurisdiction over the questions forming the subject matter of the award, either in exercise of original or appellate civil jurisdiction. In turn, the answer to this question would depend on the location of the (i) person or entity; or (ii) assets of such person or entity against whom/which the award is sought to be enforced. Whether the recognition and enforcement of a part of the Foreign Award is contrary to public policy, in the peculiar facts and circumstances of this case, is a separate and distinct matter? - HELD THAT - A significant aspect of the Foreign Award is that it does not provide for a setoff. The reasons for not doing so are not difficult to discern the monetary claim of the Company was granted but not that of TAQA. On the other hand, the monetary counter claim of NCCIHL was granted against TAQA but not against the Company. The only exception is with regard to the grant of the claim of costs by the claimants, including TAQA, against NCCIHL - If a set-off that enured to the benefit of TAQA had been provided for in the Foreign Award and recognition or enforcement was sought without reckoning such set-off, such petition may have fallen foul of public policy. While the Company has affirmed an affidavit indicating that amounts awarded to it under the Foreign Award are for the benefit of TAQA, such arrangements between the Company and TAQA cannot be recognised and given effect to in these proceedings. As regards NCC, no part of the Foreign Award is enforceable against it and, therefore, its petition cannot be objected to at all on the ground that the petition before the Delhi High Court is pending. The respective Petitioner is entitled to an order declaring that the Foreign Award is recognised and is, consequently, enforceable as a decree of this Court - Petition allowed.
Issues Involved:
1. Jurisdiction of the Court. 2. Recognition and enforcement of the Foreign Award under the Arbitration and Conciliation Act, 1996. 3. Non-joinder of the Company as a necessary party. 4. Impact of the pending proceedings before the Delhi High Court and NCLT. 5. Public policy considerations in enforcement of the Foreign Award. Detailed Analysis: 1. Jurisdiction of the Court: The court examined whether it had jurisdiction over the matter under the Explanation to Section 47 of the Arbitration Act. The test was whether the court would have original civil jurisdiction over the questions forming the subject matter of the Foreign Award if those questions were the subject matter of a suit, or whether it would have civil appellate jurisdiction over decrees of subordinate courts. The court concluded that it had jurisdiction as the assets of the Respondent were situated within its civil appellate jurisdiction. 2. Recognition and Enforcement of the Foreign Award: The petitions sought recognition and enforcement of a final award dated January 24, 2018, from the SIAC. The court noted that the grounds for refusing enforcement under Section 48 of the Arbitration Act are exhaustive. The court found that the Foreign Award was not challenged before the courts in Singapore and was not vitiated by any circumstances set out in Section 48. Therefore, the court concluded that the Foreign Award should be recognized and enforced. 3. Non-joinder of the Company as a Necessary Party: The court addressed the contention that the Company was not a necessary party to the petition. It concluded that the Company was not a necessary party to the petition by NCCIHL as the Foreign Award did not grant any relief to NCCIHL against the Company. However, in the petition by NCC, the Company could have been made a party since costs were directed to be paid by both the Company and TAQA to NCC. 4. Impact of Pending Proceedings Before the Delhi High Court and NCLT: The court considered whether the pending proceedings before the Delhi High Court and NCLT precluded the institution of the present proceedings. It concluded that the NCLT's order did not preclude the present proceedings as the NCLT was only concerned with whether the amounts due to NCCIHL qualified as an operational debt under the IBC. The court also concluded that the pending proceedings before the Delhi High Court did not constitute a bar to the exercise of jurisdiction by this Court. 5. Public Policy Considerations: The court examined whether recognizing and enforcing a part of the Foreign Award would be contrary to the public policy of India. It concluded that the institution of petitions for recognition and enforcement of a foreign award in more than one High Court is not per se contrary to public policy. The court also considered whether the recognition and enforcement of a part of the Foreign Award, without considering the part in favor of the Company, would be contrary to public policy. It concluded that it would not be contrary to public policy as the proceedings do not act as a deterrent to the continued prosecution of the petition before the Delhi High Court. Conclusion: The court allowed the petitions, declaring that the Foreign Award is recognized and enforceable as a decree of this Court. The respective Petitioner is entitled to enforce the Foreign Award by taking recourse to measures in accordance with applicable provisions of the Code of Civil Procedure, 1908. Arbitration O.P.Nos.410 and 412 of 2021 were allowed on these terms without any order as to costs.
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