9911796707
TMI Blog2003 (12) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... ordance with the terms of the charterparty agreement, dated November, 1994, between the petitioner and the respondent an amount of US $ 47,506.42 fell due as demurrage which was claimed and, since it was not paid, the dispute was referred to arbitration and that on 26 September, 2000, the arbitrator considering the various claims and counter-claims raised by the parties, passed an award in respect of the voyage performance of the vessel together with interest at the rate of 7% p.a. It was also stated in the said notice that the said award was final and, therefore, a sum of US $ 68,843.91, which constitutes the awarded sum and the interest and a further sum of US $ 3477.13 is owed by the respondent to the petitioner. By the aforesaid notice, the petitioner called upon the respondent to make the aforesaid payment of US $ 72,321.04 with further interest till the date of payment failing which it was stated that the petitioner would commence appropriate winding up proceeding. No reply to the aforesaid notice was sent by the respondent and, accordingly, the present petition is filed by the petitioner. 2. It is, therefore, established from the records that the present winding up petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P.) Ltd. [1978] 48 Comp. Cas. 231 wherein the Gujarat High Court, after referring to various decisions of the Supreme Court, has held that the word debt under sections 433 and 434 of the Companies Act means that the amount must be then due and payable and therefore, refers to the present obligation. In other words, it is a liability to pay a sum of money in praesenti. However, as far as clause ( a ) is concerned, the debt must then be due and payable, i.e., payable on the date of issuance of the notice under section 434( a ) of the Companies Act. Clause ( c ) of section 434 of the Act envisages a case where the company is unable to pay its debt, and in determining whether a company is unable to pay its debt, the court shall take into account contingent and prospective liability of the company. The case of Union of India v. Raman Iron Foundry [1974] 2 SCC 231 is a case in point. In paragraph 9 of the said judgment, the Supreme Court observed that a sum would be due to the purchaser when there is existing obligation to pay it in praesenti. It clearly laid down that it would be profitable to refer to the concept of a debt , for a sum due is the same having as a debt due. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961. One of the requirements of the foreign award in the aforesaid section is that the award should have been made in pursuance of an agreement in writing, for arbitration to which the Convention set forth in the Schedule applies. Clause (2) of article-II of the First Schedule as mentioned in section 44 of the Act provides that the term agreement in writing shall include an arbitration clause in a contract or an arbitration agreement signed by the parties or contained in exchange of letters or telegrams. 8. Sub-section (4) of section 7 also provides that an agreement is in writing, if it is contained in the documents signed by the parties or by exchange of letters, telex, telegrams or other means of telecommunication, which provide a record of the agreement or exchange of statements of claims and defence in which existence of the agreement is alleged by the one party and not denied by the other. In Smita Conductors Ltd. v. Euro Alloys Ltd. [2001) 7 SCC 728 1 - the Supreme Court considered the aforesaid expression agreement in writing as appearing in clause 2 of article II, and held that the said clause consists of following parts: (1)a contract containing an arbitra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difference between the two expressions recognition and enforcement . The substantive provisions of the Arbitration Act make a mention of the expression enforcement only and does not use the expression recogni-tion . However, in the schedule annexed, both the aforesaid expressions find mention. The aforesaid decision of the Supreme Court in Brace Transport Corpn s case ( supra ) clearly mentions that the two terms, namely, recognition and enforcement are distinct and connote sepa- rate meanings as because an award may be recognised without being enforced, though when it is enforced, it is necessarily recognised by the court, which orders its enforcement. As set out and noticed in the aforesaid decision, the expression recognition has been held to be a defensive process as it is used as a shield against an attempt to raise in a fresh proceeding same issues that have already been adjudicated upon and decided in an earlier arbitration proceeding. A party, who receives a favourable award in an arbitration, is entitled to object to the subsequent arbitration with respect to the dispute which was the subject-matter of the earlier arbitration. As opposed to the expression r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... party seeking enforcement of a foreign award, and not by a party which is resisting enforcement of the foreign award. Such an application also can only be filed before a Civil Court as defined in the Explanation, i.e., the principal Civil Court in the district or the High Court exercising ordinary civil jurisdiction. The party as against whom a foreign award is sought to be enforced has a right to contest the enforcement on one or some of the defences as mentioned in clauses ( a ) to ( e ) of sub-section 1 of section 48 of the Act. The said party has to satisfy the court by furnishing proof to the court that one or more of the five conditions is attracted calling for refusal to enforce the foreign award. Under sub-section (2) of section 48, the court can also and on its own refuse to enforce a foreign award, if any of the pre-conditions is not satisfied. Merely because a foreign award has not been set aside by a competent court/authority, it does not mean that the foreign award becomes automatically and immediately enforceable. The requirements as set out in sections 47 and 48 of the Act are mandatory and are required to be complied with irrespective of the fact that an award has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment of Andhra Pradesh [1990] 1 SCC 328, the Supreme Court had occasion to deal with the meaning of the word enforcement . The said decision stated that the word enforcement has not been defined by the Constitution but light could be had from the meaning given in the various English dictionaries. The Supreme Court referred to Collins English Dictionary wherein it is stated that the word enforce means to ensure observance of or obedience of law , decision , etc. In the context thereof, and after considering other dictionary meanings, it was held by the Supreme Court that the word enforcement means to impose or to compel an obedience of law . 17. A Company Court under section 10 of the Companies Act is a court of limited jurisdiction and adjudicates and decides only those matters in respect of which the Companies Act has specifically conferred jurisdiction upon it. The procedure for winding up a company is also provided in the Companies Act. Such a process is in the nature of a summary proceeding. In a number of decisions, it is held that the Company Court would decline adjudication in a winding up proceeding when the matter agitated involves complicated and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able. Therefore, without first ascertaining and giving a decision as to whether or not the foreign award is enforceable, it cannot be said that the same is a debt presently due and payable. In order to become a subject-matter of winding up, it must be a debt ascertained, and payable in accordance with law, but so long as the debt although ascertained is not payable in accordance with law, the same cannot be a subject-matter of a company petition, for a debt which is barred by limitation, although is ascertained, but is not payable in view of applica-tion of the provisions of the Limitation Act. Similarly, a debt although ascertained, but is held to be not enforceable, cannot be said to be binding between the parties and, therefore, cannot be the subject-matter of a company petition. It is also established that there is distinction between the enforcement of a foreign award and recognition of the same; and that it is mandatory for a party seeking enforcement of an award to move an application before the competent Civil Court wherein the opposite party could raise objections to the enforcement of a foreign award. Even if no such objection is raised, the Court has the obligation to ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resently payable and then to find out whether the dispute raised on behalf of the company in respect of the claim of the creditor is prima facie a bona fide one or not. It was also held that the debt is not finally decided, nor is the defence raising the bona fide dispute finally adjudicated upon by the Company Court except that a prima facie view is taken by the Company Court on the basis of the materials placed before it. 20. The aforesaid decision rendered by the Calcutta High Court is distinguishable on facts, as the same was rendered in the context of Arbitration Act of 1940 which did not contain the provisions similar to that of sections 46 to 48, particularly, section 46 in the Arbitration and Conciliation Act, 1996. Reference, at this stage, could be made to a decision of the Supreme Court in Oil and Natural Gas Commission v. Western Co. of North America [1987] 1 SCC 496. The said decision was also rendered in the context of Arbitration Act of 1940. In the said decision, the Supreme Court had held that an arbitral award is unenforceable until it is made a rule of the court, and a judgment and decree are passed in terms of the award, and that till an award is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... award, and the award is refused to be enforced on one or more of the five conditions set out in section 47 of the Act or on one or more grounds set out in section 48 of the Act, the same would create an anomalous situation for, on the one hand, the award is given effect to, whereas in the other case, the award is refused to be enforced. 21. Reliance was also placed by the counsel appearing for the petitioner in the decision of the Bombay High Court in Silver Shield Construction Trading Ltd. v. Recondo Ltd. [1994] 15 CLA 92. The aforesaid decision was rendered by the Bombay High Court on the basis of a foreign judgment. It was held in the said decision that both the remedies, i.e., for execution of the foreign judgment as also under the Companies Act are available in view of the fact that there is decree which is passed in favour of the petitioners and the company s liability is thus crystallised; and since it is well-settled that a debt is a sum of money which is now payable or will become payable in the future by reason of a present obligation. The debt has become due in the sense that the petitioner is entitled to claim its payment presently, and, therefore, it is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were held in London and a reasoned award has been passed. Another submission was that there was no challenge to the aforesaid award under sections 67, 68 and 69 of the Arbitration Act, 1996 (Indian Arbitration Act) and the time to challenge the said award has also expired and, therefore, the award has become final and binding upon the parties under the Indian Contract Act. 23. The aforesaid submission of the counsel appearing for the petitioner are refuted by the counsel appearing for the respondent by drawing my attention to the various correspondences between the parties, and also to the alleged arbitration agreement between the parties. My attention was drawn to the fact that the copy of the alleged charter party agreement relied upon and signed by the petitioner, was received by the respondent on 29-6-1995, i.e., after six months of the contract had been performed. By making a reference to the same, it was contended by the counsel appearing for the respondent that the clause appearing therein cannot be said to be the arbitration agreement between the parties. It was contended that the terms and conditions mentioned in the said charter party agreement were never agreed an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he arbitrator has accepted his appointment as a sole arbitrator, only court can disturb the same. Therefore, a clear stand was taken by the arbitrator that he was not going to decide any question with regard to existence of arbitration agreement/arbitration clause and also the issue with regard to validity of the arbitration agreement. Therefore, whether or not the respondent company had acquiesced or waived its right to question the existence of an arbitration agreement or competence of the sole arbitrator to adjudicate and decide and also whether or not an arbitration agreement was entered into between the parties through FAX and/or other communications exchanged between the parties are disputes with regard to facts and, therefore, are disputed questions of fact. Adjudication of such issues would necessarily require investigation and enquiry into facts and evidence produced. The respondent had definitely raised an objection with regard to existence and validity of the arbitration agreement at a very initial stage. The aforesaid objection raised by the respondent with regard to the existence and validity of the arbitration clause is also a defence available against enforcement und ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
