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TMI Blog2025 (3) TMI 785X X X X Extracts X X X X X X X X Extracts X X X X ..... fundamental policy of law' would cover the principal objection of the JD that they did not have visibility of the 'Bilgery Settlement' and therefore, could not ascertain whether there was a 'double dip' by the DH (i.e. recovery both from the Liquidator of Minda Germany and also from Minda India), or if there was a waiver in the 'Bilgery Settlement.' - Needless to state, both these aspects become a non-issue since the Consent Award was passed with the JD having full knowledge of what was before them. The Settlement Agreement itself, would show that the agreement was the 'entire agreement' between the parties, superseded and extinguished all previous agreements, promises, assurances, warranties, and parties has agreed that no other claim shall lie between them with respect to the matters being settled. Firstly, the parties have unconditionally and irrevocably waived any or all claims against each other existing prior to the date of the settlement; secondly, the request for 'Bilgery Settlement' had been made prior to the settlement with Minda India and a motion was filed before a court in Germany for disclosure, which had been rejected by the courts in Germany. This would obviously ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r; and Mr. Arsh Rampal, Advs. For the Judgment Debtor Through: Mr. Sandeep Sethi, Sr Adv.; Mr. Manu Krishnan, Adv.; and Ms. Shruti Arora, Adv. JUDGMENT ANISH DAYAL, J. 1. This petition has been filed under Sections 44-49 of the Arbitration and Conciliation Act, 1996 ('A&C Act') and Order XXI of Code of Civil Procedure, 1908 ('CPC') for enforcement of Foreign Award dated 29th November 2021 passed by the Arbitral tribunal comprising of Dr. Fabian Von Schlabrendorff, Dr. Ulrich Trost, And Mr. Arne Fuchs in Stuttgart, Germany under the Rules of Arbitration of the International Chambers of Commerce, 2012 ('ICC Rules') in ICC Case No. 22523/FS. 2. The Award by the Arbitral Tribunal was a Consent Award arising out of differences and disputes between the parties from the Letter of Comfort dated 12th June/21st August 2013 ('LoC'). 3. The Award Amount along with LoC has been duly authenticated in accordance with Section 47 of A&C Act. 4. Mr. Rajshekhar Rao, Senior Counsel for the Decree Holder, in support of enforcement of the foreign Arbitral Award, places the following facts before the Court. 5. In a contractual dispute between Mercedes-Benz Group AG ('MBAG')/Decree Holder ('DH') a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lion by Minda Corporation to MBAG, pursuant to the Consent Award passed; secondly, that the issuance of Letter of Comfort was not in consonance with FEMA and is a contravention under Section 13 of FEMA; thirdly, RBI granted their post facto approval for the transaction subject to compounding of the said contravention. 12. Mr. Rao, therefore, contended that neither any regulatory issue subsisted for remittance of EUR 5.5 million to DH nor the objection by JD, noted above, relating to a 'double dip', was tenable. 13. Mr. Sethi, Senior Counsel for JD did not deny that DH had in fact admitted in affidavit filed before this Court that the Award Amount per the Consent Award, did not overlap with any amounts received by DH for MBAG on account of insolvency of Minda Germany. He submitted that in June 2013, Minda Germany had financial trouble and the DH requested Minda India (the JD herein), to place an LoC. 14. On 29th November 2013, Minda Germany went into insolvency. On 29th December 2016, DH filed a request for arbitration for claims against Minda Germany and on that basis the Consent Award was finally passed on 29th November 2021. 15. On 5th January 2022, JD filed for RBI permissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion of disclosing the settlement will not arise since this issue had been raised before the Courts at Germany and a ruling had been delivered that the said Settlement Agreement was not liable to be disclosed. The question of waiver also would not arise because it is an admitted position before the Arbitral Tribunal that this amount had to be paid by Minda India and these aspects had been already accounted for in the Award itself. 18. In this regard he pointed out to various portions of the Award, in particular para 52 (extracted below), where a communication was sent to Minda India setting out a deadline to comply with the obligations under the Settlement Agreement: 52. On 7 May 2021, Counsel for Claimant sent the following message to the Tribunal and Counsel for Respondent: "Dear Members of the Tribunal, Counsels for the parties have liaised yesterday. Considering the Corona-situation in India, Claimant is amenable to grant Respondent more time to revert to the Tribunal's draft consent award respectively Claimant's editorial comments thereto. Claimant therefore requests that the Tribunal extend the deadline for Respondent to comment until 31 May 2021. Dear Mr. Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach of the settlement agreement ("Minda-Settlement"). Respondent knew prior to its conclusion that Claimant had concluded a settlement with Mr Bilgery ("Bilgery-Settlement"), the insolvency administrator. Respondent even knew that the insolvency administrator had agreed to pay Claimant at least EUR 11 million. Respondent had requested Claimant to produce that Bilgery-Settlement prior to the conclusion of the Minda-Settlement, which Claimant refused. Nevertheless, Respondent and Claimant consciously concluded the Minda-Settlement (+ ancillary documents), which provided for a settlement to be implemented by Consent Award. It is now quite plain that Respondent's ability to comply with its obligations arising from the Minda-Settlement was not at all prevented by the second Corona-wave in India, but by its parallel attempts to get access to the Bilgery-Settlement by means of an access to file-motion to the AG Esslingen (see the attached motion for access to the file dated 2 March 2021)." Claimant does not appreciate Respondent's conduct and objects to the requested time-extension for another two months. Respondent does not need another two months to comment on the draft Consen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claims of claimant against Minda India under the LoC. Essentially the claimant was pressing on knowledge of Minda India on all these issues even prior to the settlement. Mr. Rajshekhar Rao, Senior Counsel for DH, therefore, stressed these issues are being raised yet again despite that they were taken care of, in the Arbitral Award itself. 22. Most importantly, paras 68 and 69 of the Award were pressed, where it is noted that settlement had been concluded between claimant and Minda India and the preamble of the settlement stated that Daimler AG and MBAG confirm that Daimler AG and/or MBAG will not be benefited from any 'double dip' by virtue of the payments agreed by Minda India under the settlement. 23. Further in para 75 (extracted below), a communication of 28th September 2021 by Minda India clearly recorded the confirmation asking the Tribunal to render an Award by consent: "75. Later on 28 September 2021, Counsel for Respondent informed the Tribunal as follows: "On behalf of Respondent, I hereby confirm [sic] that (i) it asks the Tribunal to render an Award by Consent as reflected in the draft circulated by the Tribunal, (ii) subject to and with incorporation of the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices Pvt. Ltd. & Anr. SLP (C) No. 6856/2023 decision dated 12th December 2023, where the counsel for RBI had stated that payment under an Award is treated as a current account payment and does not require any specifical approval or permission. He, therefore, submits that there is absolutely no impediment for enforcement of Arbitral Award. Analysis 30. It may be useful to advert to background facts briefly to establish the context of assessment before this Court. 31. It may be useful to advert to background facts briefly to establish the context of assessment before this Court. 32. MBAG/Award Holder is a company incorporated and existing under the laws of the Federal Republic of Germany. It is a multinational automotive manufacturer, headquartered in Stuttgart, Germany. It's previous name was 'Daimler AG'. On 1st February 2022, its name was changed to 'Mercedes-Benz Group AG' (DH herein). 33. JD/Award Debtor is a company incorporated under the laws of India and is a part of the Ashok Minda Group of Companies engaged in the manufacture of machines and equipment used in the automobile industry. This group of companies was a supplier of automotive parts to the petitioner. The su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r payment was a period of 195 days from the date of notification of the Consent Award. 40. Relevant extracts from the Settlement Agreement are as under, for ease of reference. "The Parties have by mutual discussions, keeping in view their commercial interests and their long-standing business relationship as well as in the interest of strengthening such relationship, agreed to resolve the business dispute and terminate the ICC Arbitration. As part of such resolution, Minda Corporation has agreed to make a payment of EUR 5,500,000.00 (in words: Euro Five Million and Five Hundred Thousand) to MBAG in the manner and subject to the terms and conditions stated in this agreement ("Settlement Agreement"). Daimler and MBAG confirm that Daimler and/or MBAG will not be benefited from any double dip by virtue of the payments agreed by Minda Corporation Limited under this Agreement. Therefore, the Parties agree as follows: 1. Minda Corporation agrees to pay to MBAG an amount of EUR 5,500,000.00 (in words: Euro Five Million and Five Hundred Thousand) ("Settlement Amount"), inclusive of Taxes as may be applicable, in accordance with this Settlement Agreement. ... 3.(ii) The Consent A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epresentations and understandings between the Parties, whether written or oral, relating to its subject matter." (emphasis added) 41. The Consent Award was passed in accordance with German Code of Civil Procedure ('GCPC'). For ease of reference, the relevant sections as provided under Division 6: "Arbitral Award and termination of proceedings" i.e. Sections 1053, 1054 and 1055 of the GCPC are reproduced below: "Section 1053. Settlement - (1) Where the parties settle the dispute in the course of the arbitral proceedings, the arbitral tribunal will terminate the proceedings. On request by the parties, the arbitral tribunal will record the settlement in the form of an arbitral award on agreed terms, provided that the substance of the settlement does not violate public policy (ordre public). (2) An arbitral award on agreed terms is to be made in accordance with the provisions of section 1054 and must state that it is an arbitral award. Such an arbitral award has the same effect as any other arbitral award on the merits of the case. (3) Insofar as declarations must be recorded by a notary in order to be effective, this requirement is replaced, in the case of an arbitral award on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to refuse the enforcement if the subject matter of the dispute is not capable of settlement by arbitration in India or if the enforcement of the Award would be contrary to public policy of India. It is under section 48 (2) (b), which relates to public policy exception, that the objection has been asserted. 45. Explanation 1 to Section 48 (2) (b) of the A&C Act clarifies that the Award will be in conflict with public policy, inter alia if it is in contravention with fundamental policy of the Indian law. Explanation 2 however, further clarifies that this assessment shall not entail a review on the merits of the dispute. 46. The underlying objective of Section 48 of the A&C Act is well articulated by the Supreme Court in Vijay Karia (supra), the relevant paragraphs, are extracted as under: "81. Given the fact that the object of Section 48 is to enforce foreign awards subject to certain well-defined narrow exceptions, the expression "was otherwise unable to present his case" occurring in Section 48 (1)(b) cannot be given an expansive meaning and would have to be read in the context and colour of the words preceding the said phrase. In short, this expression would be a facet of nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to bear in mind that the present proceedings are for enforcement of inter se rights between Cruz City and Unitech and Cruz City cannot be precluded from enforcing its rights which fall within the ambit of private international law. 115. The only remaining issue now to be addressed is whether enforcement of the Award would violate the provisions of FEMA." (emphasis added) 48. Considering in the instant case, the issue of violation of provisions of FEMA is not germane to the matter anymore considering the post facto approval of the RBI, the only issue would be whether 'fundamental policy of law' would cover the principal objection of the JD that they did not have visibility of the 'Bilgery Settlement' and therefore, could not ascertain whether there was a 'double dip' by the DH (i.e. recovery both from the Liquidator of Minda Germany and also from Minda India), or if there was a waiver in the 'Bilgery Settlement.' Needless to state, both these aspects become a non-issue since the Consent Award was passed with the JD having full knowledge of what was before them. 49. The Settlement Agreement itself, as evident from the extracts in para 35 above, would show that the agreement w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional Chambers of Commerce, 2012 in ICC Case No. 22523/FS, be enforced as a decree of this Court, per section 49 of the A&C Act.
55. As noted by the order of this Court dated 1st March 2024, JD was directed to deposit the entire amount, being EUR 5.5 million, in terms of the Arbitral Award with the Registrar General of this Court in an interest-bearing deposit. The said amount is approximately Rs. 52 Crores and has since been deposited by JD before the Registry of this Court, as noted in the order of this Court dated 20th May 2024.
56. Accordingly, Registry is directed to release the deposited amount with accrued interest to DH, in the following bank account:
Account Holder: Mercedes-Benz AG
Bank: Deutsche Bank AG, Stuttgart
IBAN: DE58 6007 0070 0167 0611 00
BIC: DEUTDESSXXX
Reference: LN 172/41399
57. JD is further directed to remit the balance amounts due, if any, in consonance with the Award within a period of 3 weeks. If JD does not comply, the decree is liable to be executed under Order XXI of CPC to that extent.
58. The objections are accordingly rejected. List for compliance on 14th April 2025.
59. Order be uploaded on the website of this Court. X X X X Extracts X X X X X X X X Extracts X X X X
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