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TMI Blog2024 (11) TMI 835X X X X Extracts X X X X X X X X Extracts X X X X ..... eed to take effective steps for its execution as a deemed decree and then would take recourse to the provision of Order 21 of the Code of Civil Procedure. The reliefs sought in the present Petition has been bifurcated, as prayer clause (a), seek a declaration that the awards in favour of the petitioner are enforceable under part II of the Act of 1996 and a direction is sought to enforce and execute the awards as decree in its favour and against all the Respondents. Prayer clauses (c) and (d) are the reliefs sought under Order XXI of the Code and needless to state that while these reliefs are to be considered, it is open for the judgment debtors to raise the possible objections permissible, while executing the decree. In any case, the Execution Application which is filed will be decided subsequent to the declaration in the petition in terms of prayer clause (a) thereof, as prayers (b), (c) and (d) will be a part of the execution stage. In the wake of the above, Issue No.A is answered by holding that a common petition seeking enforcement and execution as a deemed decree is maintainable in the wake of the law laid down in case of Vedanta Limited (supra) and the issue is answered in fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition for enforcement of the foreign award is held to be governed by Article 137 of Schedule to the Limitation Act, the petition filed under Section 48 of the Act of 1996 in March/ April 2018 is hit by the bar of limitation. Since the period consumed from the day of passing of the last award on 27/03/2008, despite filing of petition under Section 34 of the Act of 1996 in India and since it did not amount to an automatic stay on the enforcement/ execution of the award, it was open to the petitioner to file the enforcement petition within time period of 3 years from the expiry of 28 days from each of the award, as under the English Arbitration Act, 1996, time period to challenge the award is 28 days, and the time to enforce the award began to run on expiry of 28 days from passing of the awards. As a sequel to the above, the present petition in my view is barred by limitation and the argument of Mr. Seksaria on behalf of Respondent No. 1, and entertaining the petition would also be hit by the public policy of India, being not to entertain the proceedings barred by the law of limitation. Whether the transaction contemplated under the Master Agreement is violative of public policy of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on a broad premise that they have participated in the fraud, so as to divest the Respondent No. 1, a party to the award, of its assets, with an intention to avoid its liability under the awards, is very difficult proposition to be accepted. Respondent Nos. 2 to 4 were never party to the agreement, nor they were part of any transaction, nor they had any opportunity to meet the case against them during the arbitral proceedings. Merely alleging that they had played a fraud is insufficient, as fraud is not to be pleaded and in absence of any evidence tendered to that effect, the bare and unsubstantiated averment cannot be entertained and hence, according to me, no case is made out by the petitioner against the Respondent Nos. 2 to 4, in seeking the relief in the present petition. On the other hand, Chamber Summons taken out by Respondent Nos. 2 to 4 to delete them from the proceedings deserve to be made absolute. Objection of E-City that IMAX Ltd. had merged into IMAX Corporation in January 2002 and, hence, invocation of arbitration by IMAX Ltd. was invalid under the laws of Singapore - As the subject contract entered between the Petitioner and the Respondent No. 1, was a contract con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and they cannot be re-opened. Though it is sought to be argued on behalf of Respondent No. 1 that there was no valid invocation for the reference to the Arbitral Tribunal and an objection is also raised to the composition of the Tribunal, coupled with non-compliance of ICC rules and the ground that proper authority to file claim was not determined is also pressed into service on behalf of E-City, as some of the points on which, the enforcement of the awards is opposed by it, in the wake of the finding rendered above, I have already formed an opinion that the awards do not deserve enforcement and execution in light of the scheme contained in Part II, Chapter I of the Act of 1996 under the New York Convention awards, I have refrained myself from considering the said issues. From the awards passed against Respondent No. 1 and in favour of IMAX, a foreign party, who has not even supplied the goods under the agreement, but which is held entitled for a huge sum of money under the awards and the money will be taken out of this country, without the stipulation of the agreement being complied with and since, this shock the conscious of the Court, the enforcement and execution of awards, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tures, bonds, securities etc. alongwith the debts due and payable by any third party as well as the details of bank accounts, stock in trade, cash in hand etc. 2. IMAX has filed the present proceedings in the backdrop that it is almost more than a decade, E-City has been attempting to avoid confirmation of Arbitral Awards in India, though the Awards have already received confirmation in Canada and its primary concern is, the interim period, is in fact adding an advantage to the Respondent Nos. 2 to 4, who are alleged to have fraudulently stripped assets from E-city Entertainment, in an attempt to prevent IMAX from recovering the amount due to it under the Awards and the premise on which the Petition rest is, there is no valid reason not to recognize the three Awards in its favour. It is a stand adopted that, since the grounds to challenge a foreign Arbitration Award under Section 48 of the Act of 1996 are limited and none of the factor could evade the recognition and enforcement of the Awards in India, as they have been already declared to be fair and proper, after full court hearing in the Superior Court of Ontario, Canada, which has confirmed them, through a valid Judgment. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ective offices and place of business as indicated in the title clause and it is the specific contention of IMAX that the Respondents are the Companies within the Essel Group, which is a conglomerate, which owns and controls many companies and assets, including the E-City Entertainment. It is alleged that the conglomerate referring its companies as our companies organizes them into 8 categories viz. Media, Technology, Entertainment, Packaging, Infrastructure, Education, Precious Metals and Healthy Lifestyles and Wellness. The Essel Group controls media companies under the brand name of ZEE through ZEE TV as well as other group companies including E-City Entertainment. Respondent No. 1-E-City Entertainment Pvt. Ltd. is alleged to be a Company of the Essel Group, whose shares are held and controlled by one Dr. Subhash Chandra, Promoter of the Group alongwith his brothers and the family members. 5. With the introduction of the Parties, I shall now refer to the subject Agreement, entered in form of Master Agreement on 28/09/2000 for lease of 6 (six) IMAX systems by IMAX and the Final Letter Agreement reflecting the arrangement worked out, to open and develop upto 20 IMAX systems, as it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... renegotiate the Master Agreement, but abruptly E-City Entertainment informed IMAX that it no longer intended to perform its obligations under the Master Agreement and an Email from the Assistant of Dr. Chandra informed IMAX that Essel Group unilaterally decided to breach the Agreement by communicating as below :- With time passing by and certain external forces taking toll, investment priorities for the Essel Group underwent a massive restructuring process and unfortunately, IMAX theatre investments was something that we could not prioritize, especially in light of its uncertainty for return on investment. [A]t this point in time, E-City is not in a position to make investments in IMAX theatres in India as priorities lie in building multiplex theatres, which is a part of the larger strategy of the Essel Group of getting into film products, distribution and then exhibition through E-City, thereby tapping all areas in the entire value chain related to films in the Indian market. In the wake of aforesaid breach, IMAX invoked the dispute resolution provision of the Master Agreement, which provided for all disputes to be decided by arbitration, as per the International Chamber of Comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Petition (L) No.525/2008 under Section 34 of the Act of 1996, raising a challenge to all the three Awards before this Court under Part I of the Act of 1996. It also took out an Application seeking condonation of delay of 20 days and sought permission to institute the proceedings for setting aside of the Awards. On 10/06/2013, the Notice of Motion was allowed and the learned Single Judge of this Court, concluded that Part I of the Act of 1996 is applicable to the case and it is permissible to challenge the Foreign Award, by invoking Section 34 of the Act of 1996 and hence all the provisions of Part I of the Act are applicable and the Petition under Section 34, is maintainable in India. 9. IMAX challenged this interim order dated 10/06/2023 before the Apex Court by filing Civil Appeal No. 3885/2017 , when the finding rendered by the learned Single Judge came to be reversed, thereby dismissing the Petition filed by E-City Entertainment under Section 34 of the Act of 1996. The Apex Court recorded its finding as below : 31. The significant determinant in each case is the agreement of the parties as to the place of arbitration and where in fact the arbitration took place. If in pursu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Petition under Section 47, 48, 49 of the Act of 1996, seeking enforcement of the three Awards in its favour under the provisions of Part II of the Act of 1996 and also praying for its execution in form of decrees. I shall now briefly refer to the arguments advanced on behalf of the respective counsel for the contesting parties. COUNTER ARGUMENTS ADVANCED ON BEHALF OF THE RESPECTIVE PARTIES. ARGUMENTS ADVANCED ON BEHALF OF IMAX CORPORATION 11. Learned senior Counsel Mr. Aspi Chinoy has specifically impressed on the fact that the Arbitral Awards have already been confirmed by the Canadian Court and the resulting Canadian Judgment has been accepted as a New York Judgment, as he would submit that on 24/06/2011 IMAX had instituted proceedings in Superior Court of Ontario (Canadian Court) seeking recognition of the Awards and declaring them to be enforceable as Ontario Judgment under the applicable laws of Canada. According to him, the request was opposed by E-City Entertainment by marking its appearance before the Canadian Court and upon an extensive briefing, pre-trial discovery and a Court hearing before superior Court in Toranto, Canada, on 02/12/2011, the Canadian Court declare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gn award has different stages; in first stage the Court would decide about enforceability of the Award having regard to the requirement of Section 47 and 48 of the Act of 1996, but once it is so decided, it would proceed to take further effective steps for execution of the Award and if the desired object and purpose can be served in the same proceedings, there is no need to take two separate proceedings, as it would result in multiplicity of the proceedings. Relying upon the said decision, it is the submission of Mr. Chinoy that recognition of Award is required to be first decided as against E-City Corporation i.e. Respondent No. 1 and once the Court decides that it is enforceable, it shall be deemed to be a decree of the Court against Respondent No. 1 and the Court shall take effective steps for its execution. At this juncture, Mr. Chinoy clarify that Respondent Nos. 2 to 4 are not joined in the Petition as Judgment-Debtors under Award, but they are impleaded as Respondents for execution/effective enforcement of the Award/Decree against Respondent No. 1, who is accused of transferring the assets and properties in favour of Respondent Nos. 2 and 3 in a systematic manner, so as to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receive damages. It is also alleged that the E-City Entertainment being a group company belonging to Essel Group is under common control and management of its promoters who control all the companies and have been successful in fraudulently siphoning the assets and funds from E-City Entertainment to defeat satisfaction of the Arbitral Awards. According to Mr. Chinoy the group of companies should be treated as one concern, especially when a parent Company owns all the shares of the subsidiaries and exercise control over it and in the present case, the Respondent/E-City Real Estate and E-City Project Construction are the companies owned by the Essel Group Promoters and each of them should be treated as an alter ego of E-City Entertainment and shall receive a treatment as single entity . The Demerger process from E-City Entertainment to E-City Real Estate and E-City Projects Construction, without giving notice to IMAX as the largest contingent creditor was a sham, according to Mr. Chinoy, as it was done with a fraudulent intention to place the assets of E-City Entertainment beyond the reach of IMAX. According to the learned senior counsel, the sole reason for carrying out the purported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner should be enabled to claim on that basis. In order to safeguard the interest of IMAX, it is requested to pass order and/or a declaration that the three Arbitral Awards the Liability Award dated 09.02.2016, the Quantum Award dated 24.08.2007 and the Final Award dated 27.03.2008 are enforceable under the provisions of the Part II of the Arbitration Act and directions to be issued to enforce and execute the said Arbitral Awards as a decree in favor of the Petitioner and against all the Respondents. Mr. Chinoy, on behalf of the Petitioner, has thus justified the recognition and enforcement of the three foreign awards as deemed decrees against Respondent No. 1, under which an amount in excess of US $ 25.80 million is payable to the Petitioner. SUBMISSIONS ADVANCED ON BEHALF OF RESPONDENT NO. 1-E-CITY ENTERTAINMENT 16. The learned senior counsel Mr. Prateek Seksaria representing E-City Entertainment, Respondent No. 1, has raised three prominent points in opposing the relief sought in the Petition and for countering the submission advanced by Mr. Chinoy and his submissions can be disintegrated as below :- a] The Petition is ex-facie barred by the Law of Limitation under Article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in Ontario for recognition of the Foreign Award. 17. In support of his submission that the Petition is barred under Article 137 of Schedule 1 of the Limitation Act, Mr. Seksaria has urged, that the Declaratory Award was passed by the ICC Tribunal on 09/02/2006 and the partial Final Award on jurisdiction and quantum is dated 24/08/2007, whereas the Final Award is passed on 27/03/2008. By submitting that in Para 37 of the Petition it is asserted that the Award must be challenged within 28 days of its declaration and hence, according to him, the foundational fact as stated in the Petition for determining the starting point of the limitation is not in dispute. According to him, E-City filed a Petition challenging the Award under Section 34 of the Act of 1996, after the prescribed period and a Notice of Motion was filed seeking condonation of delay, with an emphasis being laid on the fact that filing of Petition under Section 34 does not amount to stay of the Award, either prior to 2015 amendment in the Arbitration Act, or thereafter. By virtue of Article 137 of the Schedule to the Limitation Act, 1963, the period of limitation for seeking recognition and enforcement of the Award ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C 448 as well as decision in the case of Manindra Land Building Corporation Ltd. Vs. Bhutnath Banerjee Ors. AIR 1964 SC 1336. It is his specific contention that the issue of limitation goes to the root of the matter and if an Application is barred by Law of Limitation, the Court do not have any authority or jurisdiction to entertain such an Application and since the issue of limitation is an issue affecting jurisdiction, an erroneous decision of the court would not operate as res judicata, at a subsequent stage between the parties, because it is considered to be conclusive, as it will assume status of a special rule of law. In support of his contention that no erroneous decision on a pure question of law which has been expressly overruled, and set at naught by the Supreme Court can be argued, as being binding inter party, he would place reliance upon the decision in case of Mathura Prasasd Bajoo Jaiswal Ors. Vs. Dossibai N.B. Jeejeebhoy (1970) 1 SCC 613, and in the case of Canara Bank Vs. N.G. Subbaraya Setty Anr. (2018) 16 SCC 228. It is also the contention of Mr. Seksaria that the Court in any case has an inherent power, coupled with the duty to recall an erroneous order and or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Being deemed to be Decree of this Court . Reliance is placed upon the decision of the Bombay High Court in case of TOEPFER International Asia Pvt. Ltd. Vs. Thapar Ispat Limited 2000 (2) Mh.L.J. 331. Urging that though an Execution Application is not continuation of a Suit, but is separate and independent of a Suit, it is argued that the procedure contemplated under Section 47-49 of the Act 1996 cannot be used as Execution Proceedings. According to E-City, the Petitioner is seeking attachment of properties by the present Application to which an objection under Order 21 Rule 58 can be raised and it would be tried as if it was an independent Suit and in any case, no prejudice is caused to the Petitioner if it is relegated to the execution being availed in the previously filed proceedings, if the Court recognize the Award and permit enforcement. 21. While advancing his submission about the Master Agreement being violative of RBI Notification, Foreign Exchange Management Act, 1999 as well as the Foreign Exchange Management Rules, 2000, Mr. Seksaria has elaborated that the Agreement contemplated entering into an execution of Lease Agreements post negotiations in good faith on or before 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble as a matter of Singapore Law being the law applicable. 22. My attention is also invited to the evidence that has come before the Tribunal though it is the grievance of Mr. Seksaria that the partial Final Award on jurisdiction and quantum passed by the ICC, Tribunal on 24/08/2007 did not take into consideration the material issue raised i.e. without RBI approval the Agreement was unenforceable and illegal in India. The stand of the E-city is very specific, being the Agreement to be void, since it is prohibited under FEMA and thus the Awards in favour of the Petitioner and against E-City are unenforceable under Section 48 (2) of the Act of 1996, being violative of public policy of India. 23. I have been taken through the provisions of FEMA, its object being to protect Indian economy from loss of foreign exchange and in not permitting foreign exchange to be repatriated outside India, in until certain mandatory conditions are satisfied and it is in the scheme of the statute, it is submitted that unless permission was accorded by RBI, the subject Agreement did not constitute lawful contract under the Indian Contract Act, 1872, as despite applying for permissions, such permissions we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hance of being tested and corroborated. SUBMISSIONS ADVANCED ON BEHALF OF RESPONDENT NOS. 2 AND 3 25. Mr. Seervai, the learned senior counsel representing Respondent Nos. 2 and 3, has assertively raised a preliminary objection about the impleadment of Respondent No. 2, E-City Real Estates Private Limited and Respondent No. 3, E-City Projects Construction Pvt. Ltd., on the ground that they are neither party to the contract nor they were party to the arbitration proceedings and finally on the ground that they are not even party to the award. In the wake of the scheme of Part II of the Arbitration and Conciliation Act, 1996 and, in particular, Sections 44 and 45 and Sections 47 and 48, it is his specific submission that the proceedings for recognition and enforcement of Award cannot lie against Respondent Nos. 2 and 3. Emphasising upon the cardinal principle underlying the aforesaid provisions, it is his contention that the award is against Respondent No. 1 and a bare look at Section 48, which has set out the conditions for enforcement of foreign awards, the emphasis is on the words, party against whom it is invoked and the enforcement of a foreign award may be refused, at the request ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s fraudulent. It is also clarified that in the wake of the demerger orders, the assets that stood transferred to the Respondents also carried with it respective liabilities and this submission is the heart of his case. Despite conceding to the fact that the Company Court is a Court of competent jurisdiction, still inviting this Court to unravel the demerger process and effectively invalidate the orders on the ground of alleged fraud, which is also hanging in air, according to Mr. Seervai, the Petition alongwith the grounds set out, is untenable. It is also his submission that though the pleadings in the Petition are based on Group Company Doctrine, but during the course of argument, the said stand is given up, in the wake of the prevailing situation. Mr. Seervai would place reliance upon the decision of the Madras High Court in the case of Union of India Ors. Vs. Ponni Sugars (Erode) Limited (2015) 5 MLJ 434 and, according to him, when a similar position emerged before the Madras High Court, it has categorically held that, in absence of any challenge to the scheme sanctioned by the competent Company Court, the appellants cannot take a stand in the appeal that the scheme of arrangem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rring the Respondents as a Group of Companies and pleading that it should be treated as one concern, since the Respondents, E-City Real Estate and E-City Projects Construction are companies controlled by the Essel Group Promoters and were used to transfer assets from E-City Entertainment to defeat IMAX s liability, under the arbitral awards, with a specific pleading that they should be treated as an alter-ego of E-City Entertainment, he would place reliance upon the decision of the Apex Court in the case of Cox and Kings Limited Vs. SAP India Private Limited Anr. (2024) 4 SCC 1. Probably realizing this position, according to Mr. Seervai, Mr. Chinoy has now orally argued before the Court that it is chasing Respondent Nos. 2 and 3 only, since it finds the assets of E-City Entertainment in the hands of E-City Real Estates and E-City Projects Construction. 28. In the course of his arguments, Mr. Seervai has taken us through several pronouncements from the Apex Court and the High Courts in support of his submission that IMAX s allegations of fraud are without merits and it is not open for it to now allege that the order of demerger of the competent Court shall be ignored and overreached ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me 2 , when Respondent No. 3 was de-merged from Respondent No. 1, Respondent No. 4 was a shareholder in Respondent No. 1 and it became a shareholder in the resultant entities i.e. Respondent Nos. 2 and 3. Mr. Jagtiani has placed before the Court the shareholding pattern of Respondent No. 1 pursuant to the demerger, which reflect that Respondent No. 2 possessed 62.875% of shareholding, whereas Respondent No. 4 had 37.121% shareholding in Respondent No. 1, whereas one Amit Goenka had the shareholding of 0.004%. 30. It is the specific stand of Respondent No. 4 that is not a party to the arbitral proceedings and its impleadment in the Petition is only founded on the claim of IMAX in paragraph 41 of the Petition. In addition, in paragraph 55, with reference to E-City Investments, it is the pleaded case of the Petitioner that Respondent No. 4-E-City Investments is the ultimate holding company of all the three companies viz. E-City Entertainment, E-City Real Estates and E-City Projects Construction and Respondent No. 4, E-City Investments is in turn controlled and owned by the promoters of the Essel Group, Mr. Laxmi Goel, Mr. Atul Goel, Dr. Chandra, Mr. Arpit Goel, Mr. Ankit Goel and Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative intent, to recognise the foreign award as binding only on the parties between whom it is made, by comparing the language of Section 46 (Part II) and Section 35 (Part I) of the Act of 1996 and he would submit that whilst the finality ascribed to the foreign award under Section 46 is only between the parties to the arbitration proceeding, the finality ascribed to awards under Part I is significantly wider, as the awards made thereunder are held to be final and binding on not only the parties to the arbitration proceedings, but also on the parties claiming under them. Mr. Jagtiani would also place reliance upon the decision of the Apex Court in the case of Gemini Bay Transcription Private Limited (supra), where the issue of enforceability of the foreign award against the parties, though non-signatories to the arbitration agreement but parties to the arbitration proceedings were analysed threadbare and he has drawn my attention to the relevant paragraphs of the said law report, with special emphasis on paragraphs 43 and 50. A decision of the learned Single Judge (Coram : R. I. Chagla, J.) in the case of Mitsui OSK Lines Ltd. (Japan) Vs. Orient Ship Agency Pvt. Ltd. Anr. 2020 SCC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed reliance upon the decisions of the Apex Court in Indowind Energy Ltd. Vs. Wescare (India) Limited Anr. (2010) 5 SCC 306 and Vodafone International Holdings BV Vs. Union of India Ors. (2012) 6 SCC 613, where the parameters of piercing the corporate veil are set out. Even Mr. Jagtiani has reiterated the argument that fraud is not the magic mantra to vitiate any transaction, as fraud must be pleaded in detail, with material particulars being divulged as Order VI Rule 4 of the Code of Civil Procedure, 1098 requires a party to give material particulars in cases, where misrepresentation, fraud is alleged and in fact, several courts from time to time have held that the threshold for meeting a case of fraud is extremely high, as in any proceedings, not only the plea of fraud is required to be specifically pleaded, but also proved. The principle laid down in Bishnudeo Narain Anr.. Vs. Seogeni Rai Anr. AIR 1951 SC 280, followed the decision in the case of Union of India Vs. Chaturbhai M. Patel Co. (1976) 1 SCC 747, is invoked by Mr. Jagtiani. 34. Referring to the observations of the Apex Court in the case of Chloro Controls India Pvt. Ltd. Vs. Severn Trent Water Purification Inc. Ors. (20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecution Application No. 49 of 2017, but it is for the first time, Respondent No. 4 is impleaded in the proceedings on the pretext that Respondent No. 4 hold shares in Respondent Nos.1 to 3 and the overlapping identity of the Directors of Respondent No. 1 and Respondent No. 4 by holding it responsible for the alleged fraudulent act of moving assets from the Respondent No. 1 to Respondent Nos. 2 and 3, by way of scheme of demerger and by piercing the corporate veil of Respondent No. 1 and Respondent No. 4, an attempt is made to make it liable for debts of Respondent No. 1. By inviting my attention to the pleadings in the Petition pertaining to the purported fraud attributed to Respondent No. 4, Mr. Jagtiani has submitted that the case of the Petitioner merely rest on bare statement that there was fraud and there is reference to the commonality of the shareholding and Directorship and, therefore, Respondent No. 4 should be made liable. But, since the Petitioner has failed to discharge the burden of establishing fraud, against the shareholders of Respondent No. 4 s promoters, which is more essential in post-award proceedings, the Court shall not oblige it by piercing the veil only on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim was made in damages in US Dollars expressed to be simply the amount that would have been paid to IMAX by E-City, had E-City fully performed its obligations under the contract , and the breakdown of the net owed was set out in paragraph No. 36 of the Statement of Claim. IMAX supported its claim with the following pleading :- 36 Accordingly, had E-City fully performed its rental obligations under the Master Agreement, IMAX would have realised at least $21,222,920 in revenue over the 20 year term of the leases called for under the Master Agreement, obligations which would, by now, have been largely performed. E-city should be directed to make payment of this amount to IMAX in order to make IMAX fully whole for its breach of its obligations. In contract, IMAX fully performed and complied with its exclusivity obligations. An Award of damages was sought in this amount, together with contractually agreed interest at the prime commercial rate of interest in Canada plus 2% per annum from the date of the Award. 37. E-City, which was the only Respondent before the Arbitral Tribunal, in its Statement of Defence, defended its stand by pleading as below :- (a) not a legally binding contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into the first award captioned Partial final award on jurisdiction and quantum which flagged the issue of jurisdiction raised by the respondent E-City and the claim for damages made by the claimant on which oral submissions and evidence was presented before the Tribunal. The objection to the jurisdiction of the Tribunal was raised by way of reservation of possible rights of the respondents, by submitting that there was a merger between IMAX Limited (claimant in the arbitration) and IMAX Corporation on 1/1/2001 and the question was raised about the maintainability of the arbitration at the instance of IMAX Limited, since the issue arose as to which Company had incurred the losses claimed and it may have impact on the validity of award on liability. The above jurisdictional issue was concluded by accepting the opinion of Mr. Farley Q.C, with reference to the Canada Business Corporation Act and in particular, Section 186 thereof, and the Tribunal accepted the view that having regard to the substantive law on continuance and amalgamation, the Ontario Courts would regard the amendment of the title of action as a matter of form, not substance, and the Court would allow amendments to plea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partial final award of ICC on jurisdiction and quantum of 24/8/2007 in the matter of IMAX Limited Vs. E-City Entertainment (L) Pvt. Ltd and declared it to be an enforceable judgment of the Court with full force in effect. Pursuant thereto, IMAX Corporation sought to domesticate the judgment which it obtained against E-City Entertainment Pvt Ltd from the Superior Court of Justice, Ontario Canada, Essel Group, Subhash Chandra, Atul Goel, Amit Goenka, Laxmi Goel, Zee TV USA, Asia TV USA Ltd and Natural Wellness USA, INC. (collectively, the respondents). In addition, IMAX sought a turnover order directing the respondents to deliver sufficient funds to justify the judgment or to deliver their personal property to the Sheriff of the country of New York to satisfy the judgment pursuant to the CPLR 5225(b). The Supreme Court of State of New York, County of New York by its decision dated 9/10/2015, however, denied the prayer of IMAX, to the effect that the judgment be recognized against the respondents by treating them as alter-ego or as a single personality as E-City. Recording that IMAX have failed to show that the respondents have one and the same entity as E-City, its request for an ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme of demerger was approved by a competent Company Court? (F) The necessity and validity for impleadment of Respondent Nos. 2 to 4 in the present Petition, seeking enforcement and execution of the foreign awards? (G) Whether the invocation of arbitration by IMAX Limited, which has merged into IMAX Corporation, was invalid? I shall deal with the above issues sequentially. ANALYSIS OF THE COUNTER SUBMISSIONS ADVANCED WITH REFERENCE TO THE ISSUES THAT FALL FOR CONSIDERATION :- ISSUE NO. A Whether a common petition filed by the Petitioner seeking recognition/enforcement and execution can be entertained. 45. Mr. Chinoy, by relying upon the decision of the Apex Court in the case of Vendanta Limited (supra), has justified the maintainability of the petition which seek recognition and enforcement of the three awards passed in its favour and has submitted that once the enforceability of the award is tested on the parameters of Section 47 and 48 of the Act of 1996, the Court would proceed to take further effective steps for execution of the award. This submission is strongly contested by Mr. Seksaria who has opposed the petition on the ground that is not entitled to seek the relief of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of GAFTA Rules and is fit one to be enforced as a Foreign Award under Chapter II of the Arbitration and Conciliation Act, 1996. 19. By prayer (a) in the petition, it is prayed that this Court be pleased to enforce the award dated 30th September, 1997 Exh. O to the petition. In my view, such a prayer cannot be granted under the provisions of the Act 1996. In my opinion, Section 49 of the Act merely empowers the Court to declare that the Foreign Award is enforceable under the provisions of Chapter II of the Act. The moment such a declaration is granted, an award shall be deemed to be a decree of the Court. Once its deemed to be a decree of the Court, it is open to the parties to seek its execution in accordance with the provisions of the Civil Procedure Code. 48. In Fuerst Day Lawson Ltd. Vs. Jindal Exports Ltd. (2001) 6 SCC 356, the Apex Court has held that a proceeding seeking recognition and enforcement of a foreign award has different stages; in the first stage, the Court would decide about the enforceability of the award on having regard to the requirements of Section 47 and 48 of the Act of 1996. Once the enforceability is decided, then necessary steps would be required to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e steps for the execution of the award has to proceed in accordance with Sections 47 to 49. In one proceeding there may be different stages. In the first stage the Court may have to decide about the enforceability of the award having regard to the requirement of the said provisions. Once the court decides that foreign award is enforceable, it can proceed to take further effective steps for execution of the same. There arises no question of making foreign award as a rule of court/decree again. If the object and purpose can be served in the same proceedings, in our view, there is no need to take two separate proceedings resulting in multiplicity of litigation. It is also clear from objectives contained in para 4 of the Statement of Objects and Reasons, Sections 47 to 49 and Scheme of the Act that every final arbitral award is to be enforced as if it were a decree of the court. The submission that the execution petition could not be permitted to convert as an application under Section 47 is technical and is of no consequence in the view we have taken. In our opinion, for enforcement of foreign award there is no need to take separate proceedings, one for deciding the enforceability of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for refusal to enforce a foreign award. Sub-section (1) contains five grounds which may be raised by the losing party for refusal of enforcement of the foreign award, while sub-section (2) contains two grounds which the court may ex officio invoke to refuse enforcement of the award,31 i.e. non-arbitrability of the subject-matter of the dispute under the laws of India; and second, the award is in conflict with the public policy of India. 83.11 The enforcement Court cannot set aside a foreign award, even if the conditions under Section 48 are made out. The power to set aside a foreign award vests only with the court at the seat of arbitration, since the supervisory or primary jurisdiction is exercised by the curial courts at the seat of arbitration. The enforcement court may refuse enforcement of a foreign award, if the conditions contained in Section 48 are made out. This would be evident from the language of the Section itself, which provides that enforcement of a foreign award may be refused only if the applicant furnishes proof of any of the conditions contained in Section 48 of the Act. 83.13 The grounds for refusing enforcement of foreign awards contained in Section 48 are ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeding for execution of the deemed decree thereafter, and it is open for the award holder to apply for recognition and execution of a foreign award by common petition. In stage 1, the Court would decide the enforceability of the award as a deemed decree, on satisfying the requirement of Section 47 and 48. Once the Court decides that a foreign award is enforceable as a decree of that Court, it shall proceed to take effective steps for its execution as a deemed decree and then would take recourse to the provision of Order 21 of the Code of Civil Procedure. 52. The reliefs sought in the present Petition has been bifurcated, as prayer clause (a), seek a declaration that the awards in favour of the petitioner are enforceable under part II of the Act of 1996 and a direction is sought to enforce and execute the awards as decree in its favour and against all the Respondents. Prayer clauses (c) and (d) are the reliefs sought under Order XXI of the Code and needless to state that while these reliefs are to be considered, it is open for the judgment debtors to raise the possible objections permissible, while executing the decree. In any case, the Execution Application which is filed will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k Convention applies and be in one of such territories; (f) It must be made in one of such territories which the Central Government by notification declares to be territories to which the New York Convention applies. Though the term legal relationship is not defined in the Act, it is intended to be convey a relationship, which gave rise to legal obligations and duties. The expression commercial is construed to be broadly having regard to the manifold activities which are integral part of international trade. 55. Section 47 of the Act contemplates the evidence to be produced by a party seeking enforcement of a foreign award and the requirement stipulated under sub-section (1) are procedural in nature, introduced in the statute with an object that the Court from whom the enforcement is sought, must be satisfied that the award produced before it for enforcement, is a foreign award, as defined and that it is enforceable against persons, who are bound by the award. 56. Coming to the most significant provision in the scheme, in form of Section 48, which contemplate that when the enforcement of foreign award is resisted by a party against whom it is made, the burden is on the party to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch more simple and effective method of obtaining recognition and enforcement of foreign awards. Under the New York Convention the party against whom the award is sought to be enforced can object to recognition and enforcement of the foreign award on grounds set out in sub-clauses (a) to (e) of Clause (1) of Article V and the court can, on its own motion, refuse recognition and enforcement of a foreign award for two additional reasons set out in sub-clauses (a) and (b) of Clause (2) of Article V. None of the grounds set out in sub-clauses (a) to (e) of Clause (1) and sub-clauses (a) and (b) of Clause (2) of Article V postulates a challenge to the award on merits. 35. Albert Jan van den Berg in his treatise The New York Arbitration Convention of 1958: Towards a Uniform Judicial Interpretation, has expressed the view: It is a generally accepted interpretation of the Convention that the court before which the enforcement of the foreign award is sought may not review the merits of the award. The main reason is that the exhaustive list of grounds for refusal of enforcement enumerated in Article V does not include a mistake in fact or law by the arbitrator. Furthermore, under the Convent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the party against whom it is invoked and, since, the grounds on which the objection can be raised, are clearly stipulated by the legislature, and speak of incapacity of parties and the agreement to be invalid under the law to which the parties have subjected it, an attempt to bring non-parties within this ground has been described to be trying to fit a square peg in a round hole. 59. The scope of Section 48 of the Act is also exhaustively dealt with in case of Vijay Karia Ors. Vs. Prysmian Cavi E Sistemi SRL Ors. (2020) 11 SCC 1, with specific reference to one of the ground stipulated therein being the enforcement of the award to be contrary to the public policy in India and as to what would mean by public policy and though I would be referring to the relevant observations to that effect, when I deal with the contention of Mr. Seksaria that the agreement was unenforceable, being not in accordance with the public policy in India, for the present, the relevant observations as regards the scope of Section 48 from the decision, deserve a reproduction :- 50. The US cases show that given the pro-enforcement bias of the New York Convention, which has been adopted in Section 48 of the Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inable, by holding that Petition filed by IMAX is within the prescribed period of limitation. A careful reading of the order dated 13/11/2019 passed by the learned Single Judge of this Court (Coram : G.S. Kulkarni, J.) would disclose that the learned Judge has taken into consideration the wholesole background facts, including the Petition filed by E-City Entertainment (I) Pvt. Ltd. under Section 34 of the Act of 1996, calling in question the awards, coupled with the application for condonation of delay, when an objection was raised about the maintainability of the Petition. The Apex Court finally decided the Petition on 10/03/2017, inter alia, holding that the High Court had no jurisdiction to entertain the Petition under Section 34, as the challenge was to the foreign awards and, this step resulted in institution of the present petition, by invoking Sections 47, 48 and 49 of the Act of 1996 on 02/04/2018, seeking enforcement and execution of the awards in question. Respondent No. 1 invoked the provision of Article 137 under the Schedule to the Limitation Act, while it raised an objection about it being time barred. Referring to Article 137, a residuary clause, which was captioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided and while the learned Single Judge clearly accepted that the enforcement and execution can form part of the same proceedings and, therefore, found it appropriate to invoke Article 136 under the Limitation Act and concluded thus :- 26. It is thus beyond a pale of doubt that enforcement and execution can form part of the same proceedings. If this be so then certainly Article 136 under the Limitation Act becomes relevant. If the argument of non-applicability of Article 136 as urged on behalf of the respondent is accepted, it would be contrary to the principle of law as laid down by the Supreme Court in Fuerst Day Lawson Ltd. Vs. Jindal Exports Ltd. (supra) apart from deeply damaging the decreetal interest of the award creditors apart from being contrary to the object of Section 47 to 49 of the Arbitration Act. 27. In fact the above legal position now stands reinforced as seen from a recent decision of the Supreme Court in M/s. Shriram EPC Ltd. Vs. Rioglass Solar SA, the Supreme Court taking note of the decisions in Fuerst Day Lawson Ltd. Vs. Jindal Exports Ltd. (supra) and Thyssen Stahlunion GMBH Vs. Steel Authority of India Ltd. (supra) has held that the observations of the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of the Arbitration Act and not a hard technical approach as urged by the respondents that the petition be held as time barred, by applying Article 137 of the Limitation Act in the absence of a delay condonation application and the delay being condoned. This contention of the respondents militates against from what the Supreme Court has now further clarified in M /S. Shriram EPC Ltd. Vs. Rioglass Solar SA (supra ) that when it was observed in Furest Day Lawson Ltd. Vs. Jindal Exports Ltd (supra) that the Foreign award is already stamped as a decree, it means that the foreign award is to be regarded as a decree. In view of this clear position in law there is no manner of doubt and more particularly as seen the prayers as made in the petition that this petition cannot be held to be time barred, as contended on behalf of the respondents. 64. The order dated 13/11/2019 to the above effect was challenged by IMAX and during its pendency, a three-Judge Bench of the Supreme Court in Vedanta Limited (supra), by taking note of this order passed by the learned Single Judge on 13/11/2019, reached a conclusion that a foreign award was a decree and, therefore, Article 136 of the Limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory fiction for the limited purpose of enforcement of a domestic award as a decree of the court, even though it is otherwise an award in an arbitral proceeding. By this deeming fiction, a domestic award is deemed to be a decree of the court, even though it is as such not a decree passed by a civil court. The Arbitral Tribunal cannot be considered to be a court , and the arbitral proceedings are not civil proceedings. The deeming fiction is restricted to treat the award as a decree of the court for the purposes of execution, even though it is, as a matter of fact, only an award in arbitral proceeding. In Paramjeet Singh Patheja V. ICDS Ltd., this Court in the context of a domestic award, held that the fiction is not intended to make an award a decree for all purposes, or under all statutes, whether State or Central. It is a legal fiction which must be limited to the purpose for which it was created. Paras 39 and 42 of the judgment in Paramjeet Singh Patheja read as : (SCC pp.345-46) 39. Section 15 of the Arbitration Act, 1899 provides for enforcing the award as if it were a decree. Thus a final award, without actually being followed by a decree (as was later provided by Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limitation Act, which includes a petition. Article 137 stands in isolation from all other Articles in Part I of the Third Division of the Limitation Act, 1963. 74. The exclusion of an application filed under any of the provisions of Order 21 CPC from the purview of Section 5 of the Limitation Act, was brought in by the present Limitation Act, 1963. Under the previous Limitation Act, 1908 there were varying periods of limitation prescribed by Articles 182 and 183 of the said Act, as well as Section 48 of CPC, 1908. Article 182 provided that the period of limitation for execution of a decree or order of any civil court was 3 years, and in case where a certified copy of the decree or order was registered, the period of limitation was 6 years. Article 183 provided that the period of limitation to enforce a decree or order of a High Court was 6 years. Section 48 CPC (which has since been repealed by Section 28 of the Limitation Act of 1963) provided that the period of limitation for execution a decree was 12 years. 75. The Law Commission in its 3rd Report dated 21-7-1956 noted that different time-limits were prescribed for filing an application for execution of decrees or orders of civi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for condonation of delay. 70. Dealing with the objection that the Petition having been filed after five years, is barred by law of limitation, Mr. Chinoy has urged that once a point of limitation as a preliminary issue in the very same proceedings is decided by an order of this Court on 13/11/2019, holding that the Petition was within limitation, it is not open to E-City to once again raise the same contention. In any case, Mr. Chinoy has urged that the learned Single Judge has accepted the principal submission of the Petitioner that the limitation would be governed by Article 136 and he also accepted the alternative submission on behalf of IMAX that even Article 137 is applied, which has prescribed three years as period of limitation, from the point of time, when the right to apply accrues, it was still within limitation, by recording that as per the law laid down by the Supreme Court in Fiza Developers and Inter-Trade Private Limited Vs. AMCI (India) Private Limited Anr. (2009) 17 SCC 796, the filing of Petition under Section 34 by E-City, operated as a stay on the enforcement of the award and it was only on 10/03/2017, when the Hon ble Supreme Court dismissed the Section 34 Pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 72. Another angle to the law of limitation is also to be kept in mind, being on expiration of period of limitation prescribed for instituting the proceedings or making an Appeal, a right accrues in favour of other party, on account of the lapse of time and this right shall not be light heartedly disturbed. The proof of sufficient cause is a condition precedent for exercise of power vested in the Court under Section 5 of the Limitation Act and the significant consideration would be the diligence of the party and its bona fide. 73. The bar of limitation, as set out in Section 3 of the Limitation Act, 1963, goes to the root of the matter and irrespective of whether the objection has been raised or not, the Court is cast with an independent duty to look into the aspect of limitation. In Noharlal Verma Vs. District Co-Operative Central Bank Limited, Jagdalpur (2008) 14 SCC 445, the said principle has been succinctly set out in the following words :- 32. Now, limitation goes to the root of the matter. If a suit, appeal or application is barred by limitation, a court or an adjudicating authority has no jurisdiction, power or authority to entertain such suit, appeal or application and to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Parthasardhi Ayyangar v. Chinnakrishna Ayyangar; Chamanlal v. Bapubhai; and Kanta Devi v. Kalawati. On the other hand Aikman, J., in Chandi Prasad v. Maharaja Mahendra Singh, held that a decision on a question of law is always res judicata. But as observed by Rankin, C.J., in Tarini Charan Bhattacharjee v. Kedar Nath Haldar : Question of law are of all kinds and cannot be dealt with a though they were all the same. Questions of procedure, questions affecting jurisdiction, questions of limitation, may all be questions of law. In such questions the rights of parties are not the only matter for consideration. We may analyse the illustrative cases relating to questions of law, decisions on which may be deemed res judicata in subsequent proceedings .. 7. Where the law is altered since the earlier decision, the earlier decision will not operate as res judicata between the same parties : Tarini Charan Bhattacharjee s case (supra). It is obvious that the matter in issue in a subsequent proceeding is not the same as in the previous proceeding, because the law interpreted is different. 76. Holding that the question of jurisdiction of the Court, or of procedure, or a pure question of law unre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w expressed by the High Court of Bombay in Mrs. Dossibai N.B. Jeejeebhoy Vs. Hingoo Manohar Missar was overruled in Mrs. Dossibai N.B.Jeejeebhoy Vs. Khemchand Gorumal Ors. and it is for the same reason, the Court held that the earlier decision of the Bombay High Court between the same parties relating to the same land is res judicata and it is in this background, the above exposition of law emanated. The question relating to limitation thus cannot be deemed to have been determined by an erroneous decision of the Court and such decision shall not operate as res judicata at a subsequent stage between the same parties because if it is considered to be conclusive, it will assume the status of a special rule that is applicable to the Petitioner and the Respondent No. 1, relating to the jurisdiction of the Court to entertain the application in derogation of the rule declared by the legislature that Article 137 of the Schedule of the Limitation Act and Section 3 of the Limitation Act and, particularly, this is what the law laid down by the Apex Court in Vedanta Limited (supra), concluding that the foreign awards are not decrees of the Indian Civil Court and the application for its executi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the form prescribed, so that once the Court proceeds to hold that the award is enforceable, it can thereafter proceed to execute the decree without further procedural requirements. It is in these circumstances, while concluding that enforcement and execution can form part of the same proceedings, Article 136 under the Limitation Act is invoked. 79. The point of limitation is also tested in the order dated 13/11/2019, by pitching it against the applicability of the provisions of Article 137 and it is concluded that the petition is not barred by limitation, as by filing of the Section 34 petition by the respondents, the order passed by the learned Single Judge, condoning the delay and holding the petition to be maintainable, was set aside by the Apex Court only on 10/03/2017 and, thereafter, the proceedings under Section 47-49 for enforcement under execution filed on 2/04/2018, even by applying Article 137 of the Limitation Act, is not barred by limitation. The observations in relation to Article 137, on reading of the entire order dated 13/11/2019, are only incidental and non-essential observations as, the objection raised by E-City was specifically premised on the ground that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing effect: 32. When this Court speaks of the mandatory language of Section 34 of the Arbitration Act, 1996 obviously what is meant is the language of Section 36 of the Arbitration Act, 1996, as noted by National Buildings Construction Corporation Ltd. vs. Lloyds Insulation India Ltd. (2005) 2 SCC 367 (in paragraph 6). In Fiza Developers and Inter-Trade (P) Ltd. v. AMCI (Budia) (P) Ltd., this Court held: [Fiza Developers Inter-Trade case, SCC p. 801, para 201 20. Section 36 provides that an award shall be enforced in the same manner as if it were a decree of the court, but only on the expiry of the time for making an application to set aside the arbitral award under Section 34 or such application having been made, only after it has been refused. Thus until the disposal of the application under Section 34 of the Act, there is an implied prohibition of enforcement of the arbitral award. The very filing and pendency of an application under Section 34, in effect, operates as a stay of the enforcement of the award. 33. To state that an award when challenged under Section 34 becomes unexecutable merely by virtue of such challenge being made because of the language of Section 36 is plain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ata between the parties as Hindustan Construction Company Ltd. (Supra) has declared the law that there was never an automatic stay on enforcement of an award, upon filing of a petition under Section 34 of the Act and the incidental observation in relation to Article 137 of the Schedule to the Limitation Act, in the order dated 13/11/2019, has also lost its grounds, though I am of the firm view that the reference to Article 137, and its applicability was only a non-incidental discussion. The observations in the order dated 13/11/2019, in so far as Article 137 of the Schedule of the Limitation Act is concerned being only incidental observations, as the objection raised by the Respondent No. 1 and the determination was focused upon the applicability of the Article 136 and therefore, I find substance in the submission of Mr. Seksaria, that the order dated 13/11/2019, cannot operate as res judicata or issue estoppel. 82. Though limitation is a mixed question of law and facts, it will shed the said character and would get itself converted into a pure question of law when the foundational fact(s) determining the starting point of limitation is specifically pleaded in the plaint. In such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same as a preliminary issue and may deal with the suit only in accordance with the decision on that issue. It cannot be said that such an approach is impermissible in law and in fact, it is perfectly permissible under Order XIV, Rule 2(2)(b), CPC and legal in such circumstances. In short, in view of the decisions and the provisions, referred above, it is clear that the issue limitation can be framed and determined as a preliminary issue under Order XIV, Rule 2(2)(b), CPC in a case where it can be decided on admitted facts. 84. The order dated 13/11/2019, has conclusively held that Article 136 apply to a foreign award, since it is stamped as a decree, by referring to the decision of the Apex Court in Fuerst Day Lawson Ltd. (supra) and M/s. Compania Naviera sodnoc vs. Bharat Refinaries Ltd, with respect to limitation being 12 years and the objection raised by E-City that the petition is barred by limitation, by applying Article 137 was rejected. In the wake of the above, since the awards, which are sought to be enforced through the present petition are dated 5/04/2006, 24/08/2007 and 27/03/2008, and as per the law laid down in Vedanta Limited (supra) the limitation period to file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from time to time. (See: Central Inland Water Transport Corpn. Ltd. v. Brojo Nath Ganguly.) 47. The need for applying the touchstone of public policy has been thus explained by Sir William Holdsworth: In fact, a body of law like the common law, which has grown up gradually with the growth of the nation, necessarily acquires some fixed principles, and if it is to maintain these principles it must be able, on the ground of public policy or some other like ground, to suppress practices which, under ever new disguises, seek to weaken or negative them. (History of English Law, Vol. III, p. 55) 48. Since the doctrine of public policy is somewhat open-textured and flexible, Judges in England have shown certain degree of reluctance to invoke it in domestic law. There are two conflicting positions which are referred as the 'narrow view' and the 'broad view. According to the narrow view courts cannot create new heads of public policy whereas the broad view countenances judicial law making in this areas. (See: Chitty on Contracts, 26th Edn., Vol. I, a para 1133, pp. 685-686). Similar is the trend of the decision in India. In Gherulal Parakh v. Mahadeodas Maiya this Court favoure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Management Act, 1999 and the Foreign Exchange Management (Current Account Transactions) Rules, 2000 and, hence, it amounts to breach of the public policy of India. The aforesaid objection is to be tested by a careful reading of the Final Letter Agreement/Master Agreement dated 28/09/2000 entered between IMAX and E-City, which contemplated opening and developing 20 theaters in India, with E-City s initial commitment to lease six IMAX systems from IMAX. The agreement contemplated entering into an execution of Lease Agreement, post negotiations under good faith on or before 30/11/2000. Clause 14 of the said agreement acknowledged that the structure of the transaction was contingent upon the approval of the Reserve Bank of India and both the parties agreed for reasonable structuring requested by Reserve Bank of India, as long as it do not negatively impact them in a material fashion. The subject agreement inter alia contemplated payment of the following :- a) That E-city has paid to Imax a non-refundable deposit of USD 300,000 towards initial rent. b) Execution of individual lease agreements post negotiations in good faith on or before 30.11.2000. Upon execution of individual lease ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foreign exchange, without the approval of RBI/Government of India would impact the enforcement of the Award. In light of Section 5 of FEMA, which empowers the Central Government, in consultation with RBI and in public interest to impose reasonable restrictions for Current Account Transactions, the power available has been exercised by RBI on various Current Account Transactions, including the transaction under the agreement and what is relied upon is the RBI Circular dated 24/08/2000 and the FEMA (Current Account Transaction Rules), 2000. Section 13 of the FEMA has prescribed penalty for contravening any rule, regulation, notification, direction or order issued in exercise of the powers under the Act or if it result in contravention of any condition, subject to which an authorisation is issued by Reserve Bank. RBI Circular of 24/08/2000, issued under FEMA with reference to the Government of India Notification dated 03/05/2000, notifying the Rules of 2000, which has prohibited certain Current Account Transactions and restrictions being imposed in other transactions, has set out that the transactions specified in Schedule II of the notification require prior approval of the Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that in the event of non-import of goods, the amount of advance remittance is repatriated to India or is utilised for any other purposes for which release of exchange is permissible under the Act, Rules or Regulations made thereunder, to the satisfaction of the authorised dealer. 89. In respect of the transaction contemplated in the LOI (Clause 5 of the agreement) relating to deferred payment of USD 19,00,000 to be paid in several installments over 5 years, including installment worth USD 3,80,000 every year E-City perceived that any remittance over a period of 6 months require approval of RBI/Government of India in accordance with Regulation 5(3) of Reserve Bank Notification dated 03/05/2000. Clause A.12 of Circular NO.9 dated 24/08/2000, which set the time-limit for Import Payments, provided thus :- A.12 Time Limit for Settlement of Import Payments (i) In terms of the extant Rules, remittances against imports should be completed not later than six months from the date of shipment. Accordingly, deferred payment arrangements involving payments beyond a period of six months form the date of shipment are treated as external commercial borrowings which require prior approval of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it the following amount for the aforesaid services; Maintenance services/Training Assistance/Marketing and Programming In total an amount of USD 2,20,000 payable for the entire project. 92. The aforesaid clauses in the agreement necessarily contemplated provision of consultancy services procured from outside India and, therefore, required approval of RBI, as remittances of royalty and payment of lumpsum fee under the technical collaboration agreement, not registered with RBI as well as remittances exceeding US$ 100,000 for consultancy services procured from abroad were covered under Rule 5, which required prior approval from RBI for every drawal of foreign exchange transactions covered under Schedule III. 93. FEMA 1999 replacing the Foreign Exchange Regulation Act, (for short FERA ) is enacted with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India. The earlier enactment FERA, which had become incompatible with pro-liberalization policies of the Government of India was substituted by a new regime, in form of a regulatory mechanism that enable the Reserve Bank of India to pass regula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from something to be done and if a thing is prohibited, doing of that thing is void. If a Contract is entered to undertake a prohibited act, it would be void ab-initio and would become unenforceable.. If the contract, express or implied, is forbidden by law, definitely no Court shall render assistance to such a Contract. The expression public policy concerning the agreement relates to the public policy of the country where award is being enforced. Section 23 of the Contract Act, 1872 deals with what consideration and objects are lawful and what not. If the court regards it as immoral or opposed to public policy, in that event, the consideration or object of agreement is said to be unlawful, and any agreement of which the object or consideration is unlawful, is void. The Contract Act does not define the expression public policy or opposed to public policy . The principles governing public policy are capable of expansion or modification. Enforcement of the foreign award would be refused on the ground that it was contrary to public policy if such enforcement would be contrary to (1) fundamental policy of Indian Law, (2) interest of India, and (3) justice or morality. The expression ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Apex Court arrived at a conclusion that even if a particular act violates any provision of FEMA or the Rules framed thereunder, permission of Reserve Bank of India may be obtained post facto if such violation can be condoned and neither the Award nor the Agreement being enforced by the Award can be held to be having no effect in law, since a rectifiable breach under FEMA can never be held to be violation of fundamental policy of Indian law. 97. Mr. Seksaria has distinguished the said Judgment and observations in Vijay Karia (supra) by submitting that the Reserve Bank of India in reference to the subject Agreement never granted permission and he would submit that Section 47 which was the thrust of the submission, was a case of prior approval and it was in the facts of the case, the following observations came from the Apex Court :- 88. This reasoning commends itself to us. First and foremost, FEMA -unlike FERA - refers to the nation s policy of managing foreign exchange instead of policing foreign exchange, the policeman being the Reserve Bank of India under FERA. It is important to remember that Section 47 of FERA no longer exists in FEMA, so that transactions that violate FEMA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of principle objective of New York Convention, being to ensure enforcement of Awards, notwithstanding that the Awards are not rendered in conformity to the national laws, the Delhi High Court held that that the objections to enforcement on the ground of public policy must be such that it offend the core values of a member state s national policy which it cannot be expected to compromise . The Delhi High Court, inter alia, relied on the Judgment of Bombay High Court in POL India Projects Limited vs. Aurelia Reederei Eugen Friederich GmbH Schiffahrtsgesellschaft Company KG (2015) SCC OnLine Bom 1109, which held that the contention that violation of FEMA was to be treated as equivalent to the earlier violation of FERA was not correct and the conclusion was supported by the following observation : 104. With the liberalization of our economy, it was felt that FERA must be repealed and new legislation must be enacted. The Statement of Objects and Reasons of FEMA indicate that FEMA was enacted in view of significant developments that had taken place since 1993: there was substantial increase in the foreign exchange reserves, growth in foreign trade, rationalisation of tariffs, current ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r FEMA and regulations made thereunder without any further permissions; other transactions may require express permission from the RBI. However, these considerations can be addressed by ensuring that no funds are remitted outside the country in enforcement of a foreign award, without the necessary permissions from the Reserve Bank of India. This would adequately address the issue of public interest and the concerns relating to foreign exchange management, which FEMA seeks to address. 109 ... 110. The contention that enforcement of the Award against Unitech must be refused on the ground that it violates any one or the other provision of FEMA, cannot be accepted; but, any remittance of the money recovered from Unitech in enforcement of the Award would necessarily require compliance of regulatory provisions and/or permissions. 100. The fundamental policy of Indian Law is a concept narrower than the policy of Indian Law, which means that a mere violation of law is not enough to make an award vulnerable. The Explanation (1) appended to Section 48 itself provides guidance by clarifying that the Award is in conflict with public policy in India if it is in contravention with the fundamenta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h, following principles of natural justice and absence of perversity or irregularity tested on the touchstone of Wednesbury principles of reasonableness. The Apex Court, thus incorporated the Wednesbury principle of reasonableness as a part of fundamental policy of Indian Law. 103. In Associate Builders Vs. DDA (2015) 3 SCC 49 the Apex Court further fortified this concept of fundamental policy of Indian Law to include violation of FERA and disregard to the orders of the superior Courts and the three juristic principles as expounded in Western GECO, the principles not being exhaustive, but capable of further expansion. Since the Law commission was of the view that the clarification was needed to ensure that the term fundamental policy of Indian law is narrowly construed and if such clarification is not provided all amendments suggested by it, in relation to the term public policy and fundamental policy of Indian Law will be rendered negatory which would permit review of an Arbitral Award on merits, and would be opening for challenges on this ground, the suggestion made by the Law Commission were adopted and the Act was amended with effect from 23/10/2015. In Ssangyong Engg. Construc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the illustrations of the legal principles, which are incapable of being compromised, and in any case, the list may not be exhaustive. 107. A contingent contract, which was capable of being performed in case the Government give the requisite authorisation and which was in contemplation at the time of entering into the contract, and when an arbitration award was passed, without such permission being granted by the Government, in National Agricultural Co-Operative Marketing Federation of India (supra), the award was held to be ex-facie illegal and in contravention of the fundamental law, since no export without permission of the Government was permissible and without the consent of the Government, the quota could not have been forwarded. In this background, the export without permission was in violation of the law and it was conclusively held that enforcement of such award would be violative of the public policy of India. The Appellant NAFED and Respondent-Alimenta had entered into contract for supply of 5000 metric tonnes of Indian HPS groundnuts, but on account of cyclone, only 1900 metric tonnes was shipped and addendum was executed to the agreement, whereby the period of shipme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leases both parties from the performance of the contract. 46. 47. 48. Section 32 of the Contract Act applies in case the agreement itself provides for contingencies upon happening of which contract cannot be carried out and provide the consequences. To this case, provisions of Section 32 of the Contract Act is attracted and not Section 56. In case an act becomes impossible at a future date, and that exigency is not provided in the agreement on the happening of which exigency, impossible or unlawful, the promisor had no control which he could not have prevented, the contract becomes void as provided in Section 56 . 49. In the present case, because of the clear stipulation in Clause 14 of the Agreement, it is apparent that the parties have agreed for a contingent contract. They knew very well that the Government s executive, or legislative actions might come in the way as provided in Clause 14 of the Agreement. Thus, in this case, Section 32 of the Contract Act is attracted and not the provisions of section 56. It was an agreement to do an act impossible in itself without permission, and that is declared to be void by Section 32. The contract was capable of being performed in case th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn GECO (supra), in the wake of clause 14 of the agreement and as per the law applicable in India, it was concluded that no export could have taken place without the permission of the Government and the appellant-NAFED was unable to supply in absence of these permissions. This was held to be a matter pertaining to fundamental policy of India and the conclusion of the Apex Court was worded explicitly as below :- 69. It is apparent from abovementioned decisions as to enforceability of foreign awards, Clause 14 of FOSFA Agreement and as per the law applicable in India, no export could have taken place without the permission of the Government, and NAFED was unable to supply, as it did not have any permission in the season 1980-1981 to effect the supply, it required the permission of the Government. The matter is such which pertains to the fundamental policy of India and parties were aware of it, and contracted that in such an exigency as provided in clause 14, the Agreement shall be cancelled for the supply which could not be made. It became void under Section 32 of the Contract Act on happening of contingency. Thus, it was not open because of the clear terms of the Arbitration Agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 30/10/2000, SBI (the authorised dealer) addressed a letter to General Manager, Exchange Control Department, RBI by bringing the facts regarding the proposed remittances and seeking approval of US$ 300,000 in terms of E-City s request towards first tranche, in token of acceptance in view of arrangement proposed to be entered by E-City with IMAX. Once again, on 15/12/2000, E-City expressed its urgency seeking its approval for acquiring on credit, the System 1 and take delivery of the system in Canada/U.S.A. and to pay the consideration in installment, so that it can execute necessary agreement with IMAX.. Here, E-City was struck as until it received permission from RBI, the proposed transaction would not have been a lawful contract within the meaning of Section 10 read with Section 23 of the Contract Act, 1872 and this resulted in IMAX issuing notice of termination of exclusivity to E-City by asserting that they were at liberty to pursue sale and/or lease of IMAX systems and opening of IMAX theaters around India. On 17/05/2004, IMAX issued a notice of default, in pursuance of the Master Agreement by citing time as its essence. Clarifying that if E-City fails to make arrangements ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he gift deed, she had executed an agreement for sale in favour of Mr. R.P. David, father of the appellant, whereunder the title deed of the schedule property was delivered by her to Mr. David. A suit filed by Mr. David was decreed, declaring that he was the absolute owner of the suit property. The appellant, however, filed an appeal before the High Court of Karnataka against the judgment and decree with reference to the validity of the gift deed and the supplementary gift deed, both executed in favour of respondent No. 1 in respect of the large property. The High Court negatived the challenge and held that lack of permission under Section 31 of FERA did not render the subject gift deed void much less illegal and unenforceable. In the appeal before the Apex Court, the appellant-Asha John urged that the gift deeds are null and void and not binding upon her, as they are unenforceable in light of mandate of Section 31 of the Act of 1973. In support of the submission, reliance was placed upon the decision in the case of Renusagar Power CO. Ltd. (supra) and Vijay Karia (supra). 104. Recording the undisputed fact that Mrs. F was not a citizen of India and she transferred the right, title ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to real estate business to eschew capital repatriation, including the purport of other provisions of the Act, such as Sections 47, 50 and 63. 111. The soul of the decision lies in its observation in paragraph 26, which read as under :- 26. It is well established that a contract is void if prohibited by a statute under a penalty, even without express declaration that the contract is void, because such a penalty implies a prohibition. Further, it is settled that prohibition and negative words can rarely be directory. In the present dispensation provided under Section 31 of the 1973 Act read with Sections 47, 50 and 63 of the same Act, although it may be a case of seeking previous permission it is in the nature of prohibition as observed by a three-Judge Bench of this Court in Mannalal Khetan v. Kedar Nath Khetan. In every case where a statute imposes a penalty for doing an act, though, the act not prohibited, yet the thing is unlawful because it is not intended that a statute would impose a penalty for a lawful act. When penalty is imposed by statute for the purpose of preventing something from being done on some ground of public policy, the thing prohibited, if done, will be treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held to have missed the legislative intent and the spirit of enacting Section 31 and until such permission is accorded in law, the transfer cannot be given effect to and for contravening that requirement, the person may be visited with penalty and consequences provided in 1973 Act. 114. In the wake of the observations made to the above effect, I am convinced to accept the objection raised by E-City about the award not being enforceable, as it is in contravention of the fundamental policy of Indian law, since no permission of RBI was received and, therefore, no remittance was allowed, which resulted into a notice of default issued by the Petitioner on 17/05/2004. 115. I must also take note of the defence adopted by E-City before the ICC, when it filed its submission of defence, when it averred that the terms of agreement contemplated that it was contingent upon E-City receiving RBI s approval. Coming to the awards, the liability award dated 09/02/2006 passed in favour of IMAX, the submission about RBI approval is taken note of and even the correspondence made on behalf of the E-City and the authorised dealer (SBI) to the RBI is also produced, but the Tribunal has observed that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions/circulars issued by RBI, which clearly contemplated a prior approval. 117. Even Mr. David Berman, the witness on behalf of IMAX, gave a clear admission that in respect of additional payments, it is conceded by RBI to be extraordinary commercial borrowings and if it is so then definitely the FEMA and the restrictions imposed by RBI as well as the Central Government are expected to be complied with, having been held to be mandatory. Since the partial final award on jurisdiction and quantum is passed without taking into consideration the material issue raised that without RBI s approval, the agreement was unenforceable, in the place of its performance i.e. India, and since the award failed to take into consideration the imperative mandate of seeking RBI s approval under the law of the country, on the objection of the E-City that the enforcement of the awards would be contrary to the public policy in India, I deem it appropriate to accept the said contention and in the wake of the finding rendered above, decline the enforcement of the arbitral awards in favour of IMAX. 118. It being a well settled principle, right from the decision of the Apex Court in Renusagar (supra) that viola ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Exchange Control Registration if it part of the law in the place of its performance. The Agreement clearly contemplated prior approval of Reserve Bank of India, but the Award proceed on the basis that there is no evidence to prove that Reserve Bank of India would not have given permission, without testing the assertion of E-City that RBI never granted permission. Mr. Chudasma, the witness of E-City has unequivocally stated; Given by, that the Authorized Dealer State Bank of India itself had sought prior Reserve Bank of India approval for remittance of monies under the LOI and it was not possible for E-City to have made the remittances without prior approval of RBI. The Tribunal ought to have, therefore, considered the issue by taking into consideration the above statement surfacing from the evidence of Mr. Chudasama which went un-contraverted. 115. In the Judgment of Supreme Court of England in TUI UK Ltd. (supra), delivered on 29/11/2023 , when the Appeal raised the question of fairness of the trial and the question was raised, whether the trial Court was entitled to find that the claimant had not proved his case, the claimants expert had given un-contraverted evidence, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of natural justice were clearly culled out with reference to Browne Vs. Dunn (1863) 6 R 67 to the following effect : 70. In conclusion, the status and application of the rule in Browne v Dunn and the other cases which I have discussed can be summarised in the following propositions: (i) The general rule in civil cases, as stated in Phipson, 20th ed, para 12-12, is that a party is required to challenge by cross-examination the evidence of any witness of the opposing party on a material point which he or she wishes to submit to the court should not be accepted. That rule extends to both witnesses as to fact and expert witnesses. (ii) In an adversarial system of justice, the purpose of the rule is to make sure that the trial is fair. (iii) The rationale of the rule, ie preserving the fairness of the trial, includes fairness to the party who has adduced the evidence of the impugned witness. (iv) Maintaining the fairness of the trial inchides fairness to the witness whose evidence is being impugned, whether on the basis of dishonesty, inaccuracy or other inadequacy. An expert witness, in particular, may have a strong professional interest in maintaining his or her reputation from a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by springing surprise upon the party when he has finished the evidence of his witnesses and when he has no further chance to meet the new case made which was never put and secondly, because such subsequent testimony has no chance of being tested and corroborated. 124. When the admissions coming from the witness of E-City was not controverted by subjecting him to cross-examination, I find that the Tribunal derived an inference contrary to what has been deposed by the witness, without affording a chance to explain or clarify the said statement, has definitely resulted into a loss of fair hearing as Mr. Chudasama had unequivocally stated that it was not possible for E-City to have made the remittances without prior approval of Reserve Bank of India, but without going for the cross-examination, the Tribunal has questioned this testimony, expressed doubt and derived at a finding that it was not a mandatory requirement and it was not refused, which definitely has resulted into perversity in its finding. In Para 16 of the Partial Final Award on jurisdiction and quantum the Tribunal took note of the following :- 16. In the event, Mr. Chudasama was not called to give oral testimony in Lond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o separate Agreement for Lease never received approval from Reserve Bank of India, which IMAX and other Indian Parties had entered in to, had received its approval. Unfortunately, the Arbitral Tribunal has rendered a finding the evidence of Chudasama going uncontrovered and this is clearly in the teeth of Browne (supra). Even on this point, I find the Award which is in violation of principal of natural justice, on the ground of fairness , is contrary to the public policy and hence cannot be enforced. ISSUE NO.E Whether the Petitioner can raise challenge to the de-merger scheme ? 127. Respondent/E-city has specifically opposed the Petition on the ground that the Petitioner has assailed the demerger scheme and a specific stand is adopted in the reply filed by it that the Petition is filed to enforce the foreign award not only against Respondent No. 1, but against Respondent Nos. 2 to 4 on the premise that the demerger scheme by which assets of Respondent No. 1 were validly and legally transferred in favour of Respondent Nos. 2 and 3 are alleged to be fraudulent transfers, in order to defeat the foreign awards in its favour. It is noted that the scheme of de-merger has been sanctioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct to paragraph 42, I say that on November 15, 2006 Respondent No. 1 filed a demerger petition before this Hon'ble Court. The effective date is only a nominal date on which the sanctions, approval or orders specified in Clause 20 of the Scheme are to be obtained. I say that the purpose of the demerger process was to hive off the real estate division of Respondent No. 1 to Respondent No. 2 in order to allow certain assets of Respondent No. 1 to be permitted to receive FDI, as permissible under the relevant Act of Government of India. It is also specifically stated that the process for re-organization of business of E-City i.e. Respondent No. 1 and demerger of real estate business of the Company was in pursuant to the Direct Automatic Root FDI Policy as a business decision and after receipt of advise of experts, such as APMG and ERNST and Young, this process kick started on 07/06/2005 on which date the Board of Directors of E-City passed a resolution to make the Company FDI compliant and this was much prior to the statement of case by IMAX and even much prior to the passing of Partial Final Award on liability on 09/02/2006. The incorporation of Respondent No. 2 was immediately af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... established on the basis of its own annual reports filed before the Securities Exchange Commission, USA for the year 2006-2007 and 2007-2008, which refer to the pendency of arbitration proceedings, the declaratory Award and that the partial quantification and costs were never treated as Assets or Receivables in the Petitioners Book, but they were only reflected as contingencies , making it clear that the Petitioner never treated the Respondent as a Debtor and the amounts which were to be received were contingent on the conclusion of the disputes interse. The Petitioner itself has produced the scheme of arrangement with the Petition, but it is a draft scheme of de-merger and not the scheme which was finally approved. Though Mr. Seksaria has attempted to raise certain objection about its confidentiality, it being a privileged document, which predate the approved scheme presented before its Board of Directors, being placed before the Court at Ontario and some doubt is raised about the manner in which it has been procured, I do not intend to delve deep into this aspect, but at this stage deem it appropriate to only note that the Petitioner was aware of the proposed scheme of demerger, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct challenge to the scheme of demerger as the orders have already attained finality. ISSUE NO.F Necessity of impleading Respondent Nos. 2 to 4 in the petition seeking enforcement and execution of the Arbitral Awards. 130. The liability award dated 9/6/2006 in favour of IMAX has inter alia declared; (i) the Master Agreement dated 28/9/2000 give rise to legal binding obligation and (ii) E-City Entertainment (I) Pvt Ltd had breached its obligations under the Master Agreement. The Quantum Award dated 24/8/2007 awarded damages along with the interest, whereas the final award dated 27/6/2008 computed the actual amount payable to the petitioner by segregating it as per the timelines of payment of interest. 131. Mr. Chinoy, who seek recognition and enforcement of the deemed decrees of the three foreign awards made in the ICC Arbitration held in London, U.K., concede to the fact that Respondent Nos. 2 to 4 were not the parties to the arbitration proceedings and are also not award/judgment debtors. He would candidly submit that the Respondent Nos. 2 to 4 have been joined at the execution stage of the awards as the respondents have, during the pendency of the arbitration proceedings, divested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f holding subsidiary companies or case of tax evasion, but is equally applicable in execution proceedings. 133. The legal scenario flowing from the decision, has acknowledged that the doctrine of piercing the corporate veil, is also applicable in execution proceedings, when the Company is a creature of the group and it has masked itself in an attempt to avoid recognition by the eye of equity or when it is a mere cloak or sham and in truth, the business was being carried out by one person and not by a company as a separate entity, or when the Companies are intricably interlinked corporate entities. The Corporate veil can be lifted in cases where the Court from the material on record derive an inference that the judgment debtor is trying to defeat the execution of the award and in such a situation, if Respondent Nos. 2 and 3 are only the cloaks and mask behind which the Respondent No. 1 attempted to operate, so as to avoid its liability under the awards and the entire assets were transferred only with this intention, then, in such exceptional circumstances, it is permissible to pierce the corporate veil and the law in this regard is, by this time, well settled. It is necessary to not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 136. Section 48 of the Act of 1996 which set out the conditions for enforcement of foreign awards, also specifically refer to the party against whom it is invoked , and even sub-clause (b) of sub-section (1) thereof also refer to the same terminology. A reading of the Chapter I in Part II of the Act of 1996, lead to a position that Section 44, which has used the expression persons , which necessarily stipulate that the legal relationship between the parties need not be a contractual one. Further, the power to be exercised under section 45, to refer the parties to arbitration, permit its exercise at the request of one of the parties. Moreso, Section 45 which is the power of judicial authority to refer the parties to arbitration, has used the phrase . parties or any person claiming through or under him, 128. Section 49 casts an obligation upon the Court to satisfy itself that the foreign award in consideration before it is enforceable under Chapter II. This would necessarily mean that the Court would have to satisfy itself that the exceptions to enforcement as set out in Section 48 (1) of the Arbitration Act are not attracted, since then the Court is bound to refuse enforcement. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be no doubt that a non-party to the agreement, alleging that it cannot be bound by an award made under such agreement, is outside the literal construction of Section 48 (1) (a). Also, it must not be forgotten that whereas Section 44 speaks of an arbitral award on differences between persons Section 48 (1) (a) refers only to the parties to the agreement referred to in Section 44 (a). Thus, to include non-parties to the agreement by introducing the word person would run contrary to the express language of Section 48 (1) (a), when read with Section 44. Also, it must not be forgotten that these grounds cannot be expansively interpreted as has been held above. The grounds are in themselves specific, and only speak of incapacity of parties and the agreement being invalid under the law to which the parties have subjected it. To attempt to bring non-parties within this ground is to try and fit a square peg in a round hole. 138. Reliance is placed by Mr. Chinoy upon the decision of learned Single Judge in Mitsui OSK Lines Limited (Japan) (supra), which is distinguished by Mr. Seksaria, where an execution application seeking execution of a foreign award was sought to be amended in order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an opportunity to show cause as to why the Foreign Award should not be enforced against them, as they were not parties as envisaged under Section 48 of the said Act. The Foreign Award was enforceable only against the Judgment Debtor who was the party to the arbitration agreement and against whom the Foreign Award was passed. The Foreign Award cannot be enforced against the Additional Respondents who are neither parties to the arbitration agreement nor to the Award. 73. Various allegations of fraud have been averred in the Chamber Summons which are nothing but bare assertions, allegations, surmises and conjectures and hence, it would not be necessary for this Court to go into the same, without the same being established. These allegations have been made in support of the Applicant's contention that the Corporate Veil is required to be lifted to execute the Foreign Award against the Additional Respondents albeit they are not parties to the Foreign Award and/or the Foreign Award not having been passed against them. Since various submissions have been made with regard to lifting of the Corporate Veil, it would be necessary to deal with these submissions in order to consider whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permissibility of piercing the corporate veil which has relied upon the decision of Delhi High Court in Formosa Plastic Corporation Ltd. vs. Ashok Chauhan 1999 (1) AD (Delhi) 392 , in my considered opinion would not govern the present case as the doctrine of alter ego and the piercing of corporate veil has been exhaustively deliberated upon by the Apex Court in case of Gemini Bay Transcription Private Limited (supra). Bhatia Industries (supra) was a case dealing with execution of foreign award and the issue relating to piercing of the corporate veil arose at the stage of issuance of precepts under Section 46 of the Code of Civil Procedure and the Court was not called upon to consider the enforceability of the Award and, therefore, the entire scheme of Part II including Section 48 which prescribe that foreign awards can only be enforced against parties to the arbitration, was not considered by the learned Single Judge in Bhatia Industries (supra). The decision in Bhatia Industries (supra) was subjected to challenge by way of SLP (c) No. 31066/2016 and by order dated 07.11.2016 the Supreme Court dismissed the SLP by offering a clarification that the question of law set out therein wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o it under Section 48 (1) and in Gemini Bay Transcription Private Limited (supra) the Supreme Court has clearly interpreted that Section 48 (1) (a) speaks only of parties to the Agreement deemed under some capacity, or the Agreement being invalid under the law to which the Parties have subjected it and definitely the non-party to the Agreement is outside its purview. The Apex Court had also distinguished the English case in Dallah Real Estate Tourism Holding Co. vs. Ministry of Religious Affairs (2011) 1 AC 763, by recording a specific finding that :- Given the conclusion on Section 48 (1)(a) when read with Section 44 of the Arbitration Act, we cannot follow what is stated to be International practice and trying to fit a non-signatory s objection to a foreign award being binding upon it under Section 48 (1) (a). We therefore distinguish Dallah case ( Dallah Real Estate Tourism Holding Co. v. Ministry of Religious Affairs of the Govt. of Pakistan, (201) 1 AC 763: (2010) 3 WLR 1472) on facts as well as on law a non-signatory s oibjection cannot possibly fit into Section 48 (1) (a) as has been held by us hereinabove. Without delving deep into this problem, it may perhaps be open in an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company is a legal entity separate and distinct from its shareholders within its own legal rights and obligations. It seeks to disregard the separate personality of the company and attribute the acts of the company to those who are allegedly in direct control of its operation. 71. In recent times, the law has been crystallised around the six principles formulated by Mumby, J. In Ben Hashem v. Ali Shayif [Ben Hashem v. Ali Shayif, 2008 EWHC 2380 (Fam)]. The six principles, as found at paras 159-64 of the case are as follows : i. Ownership and control of a company were not enough to justify piercing the corporate veil; ii. The court cannot pierce the corporate veil, even in the absence of third-party interests in the company, namely, because it is thought to be necessary in the interests of justice; iii. The corporate veil can be pierced only if there is some impropriety; iv. The impropriety in question must be linked to the use of the company structure to avoid or conceal liability; v. To justify piercing the corporate veil, there must be both control of the company by the wrongdoer(s) and impropriety, that is use or misuse of the company by them as a device or facade to conceal the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve some ability to persuade its subsidiary do not make the two entities one and in this background, the doctrine received a further expansion in the following way :- 101. A company is a separate legal persona and the fact that all its shares are owned by one person or by the parent company has nothing to do with its separate legal existence. If the owned company is wound up, the liquidator, and not its parent company, would get hold of the assets of the subsidiary. In none of the authorities have assets of the subsidiary been held to be those of the parent unless it is acting as an agent. Thus, even though a subsidiary may normally comply with the request of a parent company, it is not just a puppet of the parent company. The difference is between having power or having a persuasive position. Though it may be advantageous for parent and subsidiary companies to work as a group, each subsidiary will look to see whether there are separate commercial interests which should be guarded. 102. When there is a parent company with subsidiaries, is it or is it not the law that the parent company has the power over the subsidiary. It depends on the facts of each case. For instance, take the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . There is no contract between petitioner and respondents No. 2, 3 4. Can such a contract be inferred between petitioner and respondents No. 2, 3 4 merely on the ground of economic unity of respondents 1 to 4 ? Every company which is incorporated under the relevant law of a country is a separate legal entity/person having right to enter into contracts with other legal entities of persons independent of the holding company or the parent company of which it is subsidiary. Unless the law provides that all companies having common management or subsidiary companies or holding Companies shall be considered one legal entity for the purpose of contracts, the Court cannot presume that all subsidiary companies and the holding or parent company shall be considered as one legal person and a contract with one company shall be considered as a contract with every other company of that group. If it is so, then the registration of separate companies as subsidiary companies or wholly owned companies would have no meaning and the Court would be effectively merging all subsidiary companies wholly or partly owned companies into one company. That is not the position under company law or any other law th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... garding piercing the veil; that assets or property owned by the company are not the property of the shareholders; that in order to lift the veil it must be shown that the Defendant had used the corporate structure as a device or facade to conceal criminal activities; it has to be shown that either the company was conceived in fraud or that though incorporated for a legitimate purpose, it s character has wholly changed and become essentially a vehicle for money laundering or fraudulent activities. In deciding that the veil could not be pierced on the facts before the court, it was held that :- Whilst it is plain to me that there is a good arguable case that the 200,000.00 advanced to Prolink by G represented criminal monies, the real question is whether there is a good arguable case that the company s assets should be treated as G s realisable property. It plainly cannot be the case that every injection of criminal funds into a business would result in the corporate veil being lifted, and a restraint order made against the company in terms that its assets were to be treated as those of the criminal. A much closer examination of the facts than that is required. In my judgment, the ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement alongwith the subsidiary agreement. However, in the subsequent decision of Cox and Kings Limited (supra), it is specifically held that the principle of piercing the corporate veil cannot be the sole basis for impleading a non-signatory under the Group of Companies doctrine and it would require something more such as the common intention of the parties to participate in the transaction. The recent pronouncement in Cox and Kings Limited revolve around the definition of parties under Section 2 (1) (h) read with Section 7 of the Act of 1996, to include both signatory as well as non-signatory parties, although the conduct of the non-signatory parties was held to be an indicator of their consent to be bound by the arbitration agreement. Drawing a distinction between the concept of party , which is distinct and different from the concept of persons claiming through or under a party to the arbitration agreement , it was held that the underlying basis for the application of Group of Companies doctrine rests on maintaining the corporate separateness of the group companies while determining the common intention of the parties to bind the non-signatory to the arbitration agreement. The C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory to it. When the Petitioner seek to pierce the corporate veil between Respondent No. 1 and Respondent No. 4 and want to hold it liable for the debts of the former, it definitely cannot rest its case on commonality of shareholding and management as it is not sufficient that two entities share a parent and subsidiary relationship. Merely being a group company cannot result in making an independent company liable for its debts, in absence of any material particulars being revealed to prove that respondent No. 4 was responsible for fraud and the Corporate structure is used to perpetrate the fraud. The Respondent No. 4 is a distinct legal entity incorporated in the year 2000 with the purpose of being an 'investment company' having its distinct business from the business of the other respondents, which are engaged in the business of entertaining and real estate. Upon the demerger of Respondent No. 1, into resulting entities, i.e. Respondent Nos. 2 and 3, the Respondent No. 4 did not become the owner of any assets of Respondent No. 1 and even as on date, it is the specific case of Respondent No. 4 that its assets are distinct from that of Respondent Nos.1 to 3. The Respondent N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a fraud is insufficient, as fraud is not to be pleaded and in absence of any evidence tendered to that effect, the bare and unsubstantiated averment cannot be entertained and hence, according to me, no case is made out by the petitioner against the Respondent Nos. 2 to 4, in seeking the relief in the present petition. On the other hand, Chamber Summons taken out by Respondent Nos. 2 to 4 to delete them from the proceedings deserve to be made absolute. ISSUE NO. G Objection of E-City that IMAX Ltd. had merged into IMAX Corporation in January 2002 and, hence, invocation of arbitration by IMAX Ltd. was invalid under the laws of Singapore 151. The partial final award on jurisdiction and quantum by the ICC has exhaustively dealt with the jurisdictional issue in the wake of the objection raised by the Respondent to the effect that IMAX Ltd. had no legal status pursuant to the corporate law to initiate proceedings in that name in 2004, similarly, IMAX had no capacity in 2004 to appoint an attorney to act on its behalf in connection with such proceedings. The award quoted Mr. Lenczner QC s opinion on 30/08/2006 to the following effect:- Imax Limited was first incorporated in Ontario on Dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espectfully submits this application to the Panel pursuant to Article 19 of the ICC Rules to substitute or join Imax Corporation as Claimant and respectfully submits that the Panel should allow this substitutions to make what is essentially a ministerial change in the interest of justice and efficiency. 153. With a specific stand being adopted on behalf of the claimant that Imax Ltd. was the same as Imax Corporation, although as a precaution, it was sought the joinder of the Imax Corporation, which in fact was unnecessary given that both the entities were same and all that was necessary was for the purpose of arbitration to change the word Limited to the word Corporation . Mr. Farley QC had opined in support of Mr. Cooperman s submission, opining that Imax Corporation is possessed of all its predecessor amalgamating corporations rights and privileges, including those under pre-existing contracts and agreements with third parties. If the name of the amalgamating corporation is used, the amalgamated corporation has the rights and obligations entered into under its amalgamating corporation s name. Certainly, to avoid confusion, the name of the amalgamated corporation should be used in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the September 28, 2000 document. The fact that the proceedings were instituted in the name of one of the amalgamating corporations does not in any way affect the validity of those proceedings, the claim, or any findings made to date. The error in the style of cause does not render the proceedings a nullity, and is a mere irregularity that, if brought before the Ontario Courts, would be corrected by way of an amendment to the pleadings. In my opinion, based on my experience, and for all the reasons noted above, it is inconceivable to me that such a change would not be permitted. 37. The Tribunal declines therefore to accept the narrow view of Section 186 for which Mr Coomaraswamy SC contended and prefers the evidence of Mr. Farley QC as to the status of IMAX Limited upon merger to the effect that it is to be regarded as the same company as IMAX Corporation. 38. It was suggested by Mr Coomaraswamy SC, that even if the Tribunal accepted Mr. Farley QC s Opinion, given the ICC procedures for approval of any Award, it was not open to us, as arbitrators, to change the title of the Final Partial Award and of the Arbitration. The Respondent s application under Article 6.2 of the ICC Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so violation of fair hearing rule, which is also a part of the fundamental policy of Indian law and the process followed by the Tribunal in arriving at the awards, being in violation of the same, I also express that it is in contravention of the fundamental policy of Indian law. I must clarify that the test for contravention of fundamental policy of Indian law, which is applied by me, in no way has touched the review of the matter on merits of the dispute between the parties. 156. In addition, I have concluded that the Petition is barred by limitation, since in light of the law laid down by the Apex Court in Vedanta Ltd.(supra), the enforcement and execution of a foreign award shall be governed by Article 137 of the Limitation Act, 1963, and though it is permissible to condone the delay, but in absence of the Petitioner seeking condonation of delay, and rather assertively staking the claim that the Petition is within limitation, I am left with no option, but to dismiss the Petition. Similarly, I have also expressed that the impleadment of Respondent Nos. 2 to 4 in the Petition is unwarranted and specifically when Mr. Chinoy has set out his intention clear and loud, that the Respond ..... X X X X Extracts X X X X X X X X Extracts X X X X
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