9911796707
TMI Blog2019 (2) TMI 2033X X X X Extracts X X X X X X X X Extracts X X X X ..... greed to buy iron ore fines of indicated specifications from the respondent herein. Clause 14 of the agreement recognised the contract to be governed by English law and any dispute arising out of such agreement to be referred to arbitration in London in accordance with the English statute and the arbitration to be conducted by the London Maritime Arbitrators' Association (LMAA). There may or may not have been subsequent addenda to the original agreement, but nothing turns on such dispute between the parties. The facts narrated are as they appear from the pleadings and the disagreements between the parties on minor matters may not have any bearing in the context of the larger legal issue that has arisen. 4. To continue with the factual narrative, it appears to be the fairly admitted position that the respondent herein was unable to supply the goods to the appellant in terms of the agreement of February 29, 2012 or at any rate, the respondent persuaded the appellant to accept the supply of the goods from another supplier by the name of Muktar Minerals Private Limited of Goa. Supplier Muktar apparently could not arrange the delivery of the goods within the time prescribed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of the arbitration. The substance of the respondent's challenge to the arbitration reference was that the settlement between the parties herein as embodied in the letter of April 24, 2013 issued by the appellant to the respondent was a stand-alone agreement which was not governed by any arbitration clause. 8. On January 11, 2016 the respondent applied in its summary suit in this court for an injunction restraining the continuation of the foreign arbitration proceedings by way of an injunction against the LMAA arbitral reference and also seeking an injunction against the appellant herein from proceeding with such arbitration. On January 14, 2016 an interim order was passed on such application of the respondent herein. 9. In the three-page order of January 14, 2016, the court noticed that the appellant herein had applied under Section 45 of the Act of 1996 for reference of the disputes in the suit to arbitration and the contention of the respondent herein that during the pendency of such application under Section 45 of the Act of 1996 the appellant herein was proceeding with its arbitral reference. In particular, the order recorded that the respondent perceived the foreign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant's application for referring the disputes in the respondent's summary suit here to arbitration was also dismissed. 13. In the order impugned of August 22, 2017 the reasons in support thereof are found in the following solitary paragraph: "During the pendency of the said application (the respondent-plaintiff's application for stay of the foreign arbitral reference) and subsistence of the interim order (of January 14, 2016), the award was published and is now sought to be enforced. There cannot be any doubt that an award passed in violation of an order of injunction which restrains the award-holder from proceeding with the arbitration proceedings in London cannot be enforced in India as it is contrary to the public policy of India as recognized by several decisions of our Court as well as the Hon'ble Supreme Court." 14. In the subsequent order of August 28, 2018, against which neither party has come up in appeal, the interlocutory court observed that the respondent herein had neither denied the execution of the matrix contract of February 29, 2012, which also contained the arbitration agreement, nor questioned the validity of such arbitration agreement; the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the order of injunction that was subsisting on the date of the award, the appellant suggests that the vacating of the injunction issued on January 14, 2016 by the order of August 28, 2018 would relate back to the filing of the relevant application. The legal implication of the appellant's submission in such regard is that upon the injunction of January 14, 2016 being vacated on August 28, 2018, the order of January 14, 2016 should be seen to have been obliterated in the sense that it never existed. 16. The appellant has placed great emphasis on the appellant's conduct after it suffered the injunction in personam on January 14, 2016. It says that in response to the arbitrator's notice for furnishing evidence in support of the appellant's claim in the arbitral reference, the appellant did not furnish any new material. This, the appellant says, was in deference to the order of injunction operating against it, though, in the same breath, the appellant suggests that it had not submitted to the jurisdiction of this court as the appellant is not naturally amenable to this jurisdiction as it is a foreign company. The appellant seeks to demonstrate, by referring to a le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore it to prosecute its action in a foreign land. The appellant accepts that in the rare case such an injunction may issue, but that would be once in a blue moon and not for the mere asking. The appellant reasons that if the grounds for issuance of such an injunction are as strict as the appellant perceives them to be, when an interim injunction is issued and such injunction is vacated at the final stage of the application, the final order would operate retroactively, as if the injunction had not been issued in the first place at all. 19. The appellant first refers to a judgment reported at (2003) 4 SCC 341 (Modi Entertainment Network v. W.S.G. Cricket Pte. Limited). It was held in such case that courts in India, like the courts in England, are courts of both law and equity and the principles governing the grant of injunction, which is an equitable relief, will also cover the grant of an anti-suit injunction, which is but a species of injunction. It was also observed in the case that a court in India had the power to issue an anti-suit injunction against a party over whom it had personal jurisdiction; however, having regard to the rule of comity, such power ought to be exercised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he parties are in dispute on the point whether the action should proceed in an English or a foreign court, the English court would be prepared, not merely to decline to adjudicate by granting a stay of proceedings on the ground that the English court was forum non conveniens, but, if it concluded that England was the natural forum, to restrain a party from proceeding in the foreign court on that ground alone. ... In a case where there is simply a difference of view between the English court and the foreign court as to which is the natural forum, the English court can arrogate to itself, by the grant of an injunction, the power to resolve that dispute. ... But, ... such a conclusion appears to their Lordships to be inconsistent with comity, and, indeed, to disregard the fundamental requirement that an injunction will only be granted where the ends of justice so require." 22. The appellant next refers to a judgment reported at (2017) 14 SCC 722 (Roger Shashoua v. Mukesh Sharma). Again, in such case the issue was as to whether courts in India or courts in England had the jurisdiction over the matter, which is not really relevant for the present purpose. The respondent's suit in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t he was unable to continue on the arbitral tribunal in view of the interim order passed by the Bombay High Court. The ICC decided to replace such member on the arbitral tribunal and the arbitral tribunal passed a final award thereafter. Thus, at the time that the final arbitral award was passed by the ICC arbitral tribunal in Paris, the earlier petition of the Italian party for the implementation of the partial order and the pre-final award petition of the Indian party seeking an injunction on the arbitral tribunal from proceeding with the foreign arbitral reference were pending and an injunction was subsisting in respect of the further conduct of the foreign arbitral reference. The court held, in the Indian party's challenge to the partial foreign award, that such a challenge was not maintainable in this county or under Section 34 of the Act of 1996. The Indian party's petition challenging the further continuation of the arbitral proceedings was also disposed of without any further relief by a common order. An appeal against such order was filed by the Indian party. 24. During the pendency of such appeal, the Italian party applied for enforcement of the partial award and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the arbitral tribunal." The judgment in Bhatia International has since been overruled by a Constitution Bench in a judgment reported at (2012) 9 SCC 552 (Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc.) on the ground that Bhatia International applied Part-I of the Act of 1996 to an international commercial arbitration where the seat of the arbitration was outside India. In Kaiser Aluminium it was categorically held that Part-I of the Act of 1996 would not apply to any international commercial arbitration where the seat of arbitration was outside India. 26. The second limb of reasoning in Noy Vallesina proceeded on the nature of injunction that was sought and obtained. Since such injunction was sought against members of a foreign arbitral tribunal, two of whom were not in India, it was held that "this Court had no jurisdiction to make the order (of injunction restraining the foreign arbitral reference) ... and therefore for this reason also the order ... is a nullity." 27. Neither line of reasoning appeals, as more fully indicated hereinafter. 28. The appellant has next carried a judgment reported at (2012) 4 SCC 307 (Kanwar Singh Saini v. High Court of Delhi) fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against a request for arbitration by the appellant. Paragraph 21 of the report sets out the legal questions addressed by the Supreme Court. At paragraph 33 of the report, the Supreme Court held on facts that the arbitration agreement invoked by the appellant was valid and the appellant was entitled to invoke the same. Having answered the principal issue in favour of the appellant, the Supreme Court observed at paragraph 38 of the report that Section 5 of the Act of 1996, even though it was in Part-I of the Act, it "will be applicable to Part-II of the Act as well." At paragraphs 40 and 41 of the report, the Supreme Court noticed the entire gamut of the suit: it was filed for a declaration that the relevant arbitration clause was void and unenforceable and for a consequential permanent injunction restraining the appellant from initiating or proceeding with the arbitral reference. Since it was already held that the arbitration agreement was valid, the suit had to be held to be not maintainable. Instructive as the judgment is, it does not appear that it comes to be aid of the appellant in the present case. 31. A judgment reported at (1974) 2 SCC 121 (Nawabkhan Abbaskhan v. The State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... injunction on the award-holder from proceeding with the reference cannot be rewarded with the implementation of such award and such an arbitral award has to fail the test under Section 48 of the Act of 1996. 34. The respondent reasons that any contrary view would lead to judicial anarchy and render all interim orders ineffective and subject to the mercy of the parties suffering the same, since all of them can say that they reasonably believed that the orders would finally not be sustained. Such a situation, according to the respondent, would make a mockery of the justice delivery system and render interim orders as a class to be irrelevant, not capable of implementation and not amenable to the contempt jurisdiction. The respondent submits that since the provisions in the Contempt of Courts Act, 1971 and even in Order XXXIX Rule 2-A of the Code make no distinction between final orders and interim orders, if the legitimacy of an interim order remains in suspended animation till a final order is pronounced, the authority to pass interim orders would be rendered futile and the entire system in such regard may be done away with. 35. Several examples have cited on behalf of the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s called upon to appoint its arbitrator within the next 14 days but the respondent did not do so, that the arbitrator nominated by the appellant would become the sole arbitrator. 37. The respondent refers to the letter of appointment apparently issued on behalf of the appellant and demonstrates that such letter was issued directly to the appellant's nominee as arbitrator, without even a copy of such letter of appointment being marked to the respondent. The respondent says that in such a scenario, the respondent was not obliged to make any appointment and the constitution of the arbitral tribunal with the appellant's nominee as the sole arbitrator has to be seen to be not in accordance with the agreement of the parties and, as such, covered by Section 48(1)(d) of the Act of 1996. 38. The respondent also contends that the arbitration agreement between the parties had worked itself out and did not survive to cover the disputes pertaining to the settlement of April 24, 2013. Thus, the respondent submits, that the arbitration agreement was not valid under English law and, as a consequence, the respondent was entitled to resist the enforcement of the resultant award under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the settlement of April 24, 2013 was acted upon and honoured in part by the appellant and payments totaling about US $ 300,000/- were made by the appellant to the respondent in terms thereof. The appellant submits that in such circumstances, the appellant's assertion of the pre-settlement claim of US $ 1.27 million on account of demurrage, dead freight and deficient goods was unconscionable, dishonest and immoral and should shock the conscience of the court. Further, the respondent says that the other reliefs in the arbitral reference may not have been pursued by the appellant here because it suffered the injunction of January 14, 2016; but such other reliefs in the arbitral reference, the respondent points out, were mischievously made to render the summary suit pending in this court irrelevant despite the appellant being aware of such summary suit long prior to the appellant making its claim in the arbitral reference. 40. On the legal issues addressed by the respondent, it has referred to several judgments; the first of them being the one reported at (2008) 1 LLR 1 (Albon v. Naza Motor Trading Sdn Bhd). In that case an English gentleman entered into an agreement with a M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs to suggest that both the judgments in Tayabbhai and in Sachindra Nath Chatterjee instruct that only if the court lacks jurisdiction over the subject-matter before it, would such objection as to jurisdiction go to the root of the matter and make the exercise of the jurisdiction, and any consequential order, a nullity. 43. The respondent has also placed strong reliance on the principle that orders of injunction issued by civil courts must not only be adhered to, but its enforcement is a duty of the court. From the judgment reported at (1996) 4 SCC 622 (Delhi Development Authority v. Skipper Construction Co. (P) Limited), the respondent has referred to paragraphs 18 to 20 of the report where the Supreme Court has referred to judgments of the Madras High Court and this court in addition to judgments of the English courts to hold that "where an act is done in violation of an order of stay or injunction, it is the duty of the court, as a policy, to set the wrong right and not allow the perpetuation of the wrongdoing." 44. Before the principal legal question which has arisen here is addressed, some of the contentions of the respondent in assailing the award or seeking to resist the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent or which matters were beyond the scope of submission to arbitration but had been included by the appellant in the arbitral reference or how the composition of the arbitral tribunal may not have been in accordance with the agreement between the parties. It cannot be lost sight of that Section 48(1) of the Act of 1996 puts the burden of furnishing proof on the party seeking to resist the enforcement of a foreign award and in the context of the expression "only if that party furnishes to the Court proof", the onus that had to be discharged by the party seeking to resist the enforcement of a foreign award was not met by the bald denials in the respondent's affidavit in the court of the first instance. 46. More importantly, the grounds of prejudice that have been cited in course of the present appeal were matters that ought to have been carried by the respondent to the arbitral reference or by way of a challenge to the arbitral award in England. After all, the existence of the arbitration agreement is not in dispute and it is only the unilateral assertion of the respondent that the arbitration agreement had worked itself out and did not govern the settlement agreement of April ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gn arbitral award or every act of perceived illegality or injustice or wrongful prejudice. Section 48 of the Act of 1996 has to be seen in its context. Most countries which are signatories to the New York Convention have arbitration statutes on similar lines as the Indian Act of 1996. At any rate, the parts of such statutes in New York Convention countries that deal with the enforcement of New York Convention awards passed beyond the shores or boundaries of the country in which the enforcing court is situate, have similar provisions as in Chapter-I of Part-II of the Indian Act of 1996. Part-II of the Act is intituled "Enforcement of Certain Foreign Awards" and Chapter-I thereunder deals with New York Convention Awards. The underlying philosophy of Chapter-I under Part-II of the Act of 1996 is designed to be the same in all New York Convention countries and such provisions are similar in such countries which adhere to the international norm. International law requires not only international conventions to be respected but also the sovereignty of the signatory nations to any convention to be acknowledged and not undermined. Thus, certain broad parameters have been set out in Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anti-arbitration injunction and it also does not appear that any special leave petition has been carried to the Supreme Court from such order, the respondent has made some murmurs to the effect that the conduct of the appellant in instituting the arbitral reference was so vexatious and mala fide that the award obtained should be found to be in conflict with the most basic notions of morality and justice. The respondent insinuates that the arbitral reference was initiated as a counter-blast to the institution of the suit in this court and to virtually render such suit meaningless. Such argument is exceptionable. There is at least one pre-suit letter addressed by the appellant to the respondent claiming the amount ultimately claimed in the arbitral reference on account of demurrage, dead freight and deficient goods. It cannot be accepted, in the circumstances, that the entire purpose of the arbitral reference was to non-suit the respondent or render such suit pending in this court irrelevant. 52. It is now that the only issue of importance in this appeal needs to be concentrated upon: whether an arbitral award obtained by the award-holder, despite a subsisting order of injunction re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orum which may not be subject to the writ of that court. At the same time, despite placing such an onerous burden on a court assessing the propriety of such an injunction, the authority of such a court, unless it is of very limited jurisdiction, cannot be doubted, particularly if it is a High Court in this country exercising its original civil jurisdiction. That is not to suggest that a Civil Judge (Junior Division) may lack the authority, it is only that such an injunction may rarely be sought at that level. 55. The very purpose of law is to right a perceived wrong. In course of a court righting such wrong, at times, something more than adjudicating the immediate lis is also called for. It would be futile for a court to proceed steadfastly towards a decree in a civil suit if, in the mean time, the subject-matter of the decree is wasted or destroyed. In doing justice in accordance with law, the court will also try and preserve the subject-matter of the lis so that the beneficiary of the final verdict can enjoy the fruits thereof. It is the general authority of a sovereign forum as a court - as opposed to a private forum or a forum of limited jurisdiction as a tribunal - that it en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uit or anti-arbitration injunction in personam, but the party suffering the injunction has no choice in not proceeding with the foreign action lest its cause of action gets extinguished on the ground of non-prosecution and when the foreign forum - private or sovereign - may not feel bound by an injunction issued by a foreign court to restrain a party before it to prosecute the action or defend it. 58. The handicapped party or the party on which the anti-suit or anti-arbitration injunction operates must obviously bring such injunction to the notice of the foreign forum in seisin of the action; but if such foreign forum expresses a view that such injunction does not oblige the foreign forum to act in accordance therewith or if such foreign forum does not honour the order of injunction by adjourning the proceedings before it, the party suffering the injunction may have no choice but to act in derogation of the injunction, if only in pursuance of its rights which may otherwise be lost - whether in prosecuting an action or defending it. 59. It follows, therefore, that when a foreign decree or a foreign arbitral award is sought to be enforced and the only or primary ground to resist th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal commercial arbitration even if the seat of such international commercial arbitration is outside India, though the parties to the arbitration agreement may contract to the contrary. 61. A suit may lie merely to restrain the initiation or continuation of an arbitral reference on any of the grounds as indicated above. And the interlocutory orders that may be passed in such a suit would have to meet the strict test as in any anti-suit or anti-arbitration injunction. But it can scarcely be said that such a suit would not lie. Even in Chatterjee Petrochem Company, the Supreme Court first held that the arbitration agreement survived and, in the light of such finding, held the suit not to be maintainable. The dismissal of the suit on such ground is akin to the dismissal of a suit on the ground that the events subsequent to the institution of the suit had overtaken the reliefs claimed as the reliefs could no longer be granted. 62. Similarly, in course of a suit on a contract for substantive reliefs, an application may be made seeking an anti-suit or anti-arbitration injunction on any of the grounds noticed hereinabove; and it cannot be said that since no final relief in the suit cover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rbitrator and the respondent or advocates representing the respondent. Several objections were taken in course of the letters addressed on behalf of the respondent to the arbitrator, primarily as to the scope of the arbitration agreement and whether it covered the claim that was made by the appellant in the reference. But none of the letters alluded to the illegal or erroneous constitution or composition of the arbitral tribunal in the faintest manner. 66. Accordingly, since the respondent's injunction restraining the appellant from proceeding the foreign arbitral reference has been vacated and the appellant's application for vacating such injunction has been allowed, such order - which has now attained finality since no appeal against the same has been preferred - will date back to the time of the institution of the respondent's application for injunction and the legal implication would be that the order of January 14, 2016 was never passed. In the light of such legal implication, the only ground for declining to enforce the foreign arbitral award of January 21, 2016 would no longer be relevant. Since none of the other grounds as sought to be canvassed by the responde ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
