Judgment:
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED:
21. 04.2014 CORAM THE HONOURABLE MR. JUSTICE P.R.SHIVAKUMAR C.R.P (NPD) (MD) No.763 of 2013 and C.R.P (NPD) (MD) No.764 of 2013 C.R.P (NPD) (MD) No.763 of 2013 Dreymoor Fertilizers Overseas Pvt. Ltd., 10, Anson Road #09-06, International Plaza Singapore-079903 Rep. by its Vice President (Asia) Mr.Sandeep Relan .. Petitioner vs Sterlite Industries (India) Ltd., Registered Office SIPCOT Industrial Complex Madurai Bypass Road T.V.Puram P.O Thoothukudi ...Respondent Civil Revision Petition filed under Article 227 of the Constitution of India to revise the order of the Hon'ble Principal District Judge, Thoothukudi dated 13.12.2012 made in E.A.No.110 of 2012 in E.A.No.75 of 2012 in E.P.No.81 of 2012. C.R.P (PD) (MD) No.764 of 2013 Dreymoor Fertilizers Overseas Pvt. Ltd., 10, Anson Road #09-06, International Plaza Singapore-079903 Rep. by its Vice President (Asia) Mr.Sandeep Relan .. Petitioner vs. Sterlite Industries (India) Ltd., Registered Office SIPCOT Industrial Complex Madurai Bypass Road T.V.Puram P.O Thoothukudi ...Respondent Civil Revision Petition filed under Article 227 of the Constitution of India to revise the order of the Hon'ble Principal District Judge, Thoothukudi dated 13.12.2012 made in E.A.No.109 of 2012 in E.A.No.75 of 2012 in E.P.No.81 of 2012. !For Petitioner :Mr.T.K.Seshadri for Ram & Rajan Associates & Mr.T.K.Ram Kumar ^For Respondents :Mr.P.S.Raman Senior Counsel for Mr.G.Anbusaravanan :COMMON
ORDERDreymoor Fertilizers Overseas Pvt. Ltd, who has got a foreign arbitral award against Sterlite Industries (India) Ltd., is the petitioner in the present revision petitions C.R.P.No.763 of 2013 and C.R.P.No.764 of 2013. The Sterlite Industries (India) Ltd., the respondent in the Civil Revision Petitions is the judgment debtor under the above said foreign artbitral award. As the award is a foreign arbitral award, the decree holder under the award, namely the revision petitioner moved a petition E.P.No.81 of 2012 on the file of the learned District Judge, Thoothukudi for executing the award by attaching the properties of the judgment debtor/respondent herein and sale of the same for the recovery of the award amount. The execution petition was sought to be filed citing various provisions in the Civil Procedure Code (under Order XXI Rules 43,43-A and 46(1)(c)(iii) of CPC) and Rule 139 of the Civil Rules of Practice and Sections 47 and 48 of the Arbitration and Conciliation Act, 1996. The Chairman, Tuticorin Port Trust had been arrayed as Garnishee as the property sought to be attached were Copper concentrate to be discharged from the vessels at the V.O.Chidambaram Port, Tuticorin.
2. On receipt of notice in the execution petition, Sterlite Industries (India) Ltd., the judgment debtor under the arbitral award, raised objection for the enforcement of the arbitral award by filing a counter containing objections in the above said execution petition. In addition it chose to file an application on the file of the said Court under Section 48 of the Arbitration and Conciliation Act, 1996 r/w. Section 47 of the Code of Civil Procedure, praying for an order declaring the arbitral award dated 22.03.2011 passed by the Arbitrator Roger Rookes to be unenforceable and inexecutable in India. The said application was taken on file by the learned Principal District Judge, Thoothukudi as E.A.No.75 of 2012 in E.P.No.81 of 2012, filed for the enforcement of the Arbitration Award dated 22.03.2011. Soon after the receipt of notice on the said application E.A.No.75 of 2012 filed by the judgment debtor, namely Sterlite Industries (India) Ltd., the decree holder under the award, namely Dreymoor Fertilizers Overseas Pvt. Ltd., chose to file a counter affidavit in the above said execution application, namely E.A.No.75 of 2012 and also filed two more applications as E.A.No.109 of 2012 and E.A.No.110 of 2012 in E.A.No.75 of 2012 in E.P.No.81 of 2012, the first one seeking a direction against the respondent herein/judgment debtor to furnish security to the extent of the value of the award and the second one seeking dismissal of the execution application (E.A.No.75 of 2012) field by judgment debtor as not maintainable.
3. The learned Principal District Judge, without making an attempt to dispose of the said applications E.A.No.109 of 2012 and E.P.No.110 of 2012, allowed the judgment debtor under the award, namely Sterlite Industries (India) Ltd./ the respondent herein to lead evidence in proof of its case made in application E.A.No.75 of 2012 and recorded the evidence by receiving the proof affidavit of one Satyapriya, Son of Late Arvind Shanker Singh on behalf of the Sterlite Industries (India) Ltd. Aggrieved by and challenging the said procedure adopted by the learned Principal District Judge, the revision petitioner herein/ the decree holder under the award , namely Dreymoor Fertilizers Overseas Pvt. Ltd approached this Court by filing a revision as C.R.P (PD) (MD) No.1886 of 2012 invoking the supervisory powers of the High Court under Article 227 of the Constitution of India to revise the order of the Principal District Judge, Thoothukudi dated 07.08.2012 made in E.A.No.75 of 2012 in E.P.No.81 of 2012 by which the respondent herein was allowed to lead evidence in the said Execution Application by producing proof affidavit. Hon'ble Justice G.Rajasuria, who heard the Civil Revision Petition, expressed a view that resisting an application was not confined to filing a counter and seeking an order of dismissal on merit and on the other hand, the same would include a resistance offered to the maintainability of such an application. It was further observed that when an application for dismissal of the execution application filed by the Sterlite Industries (India) Ltd., namely the judgment debtor under the award came to be filed by the revision petitioner herein, namely the decree holder under the award, the learned Executing Judge ought not to have proceeded with the enquiry in the main application, namely E.A.No.75 of 2012 without rendering a finding in and disposing of the application filed by the judgment debtor as E.A.Nos.109 of 2012 for the dismissal of the application E.A.No.75 of 2012 filed by the judgment debtor under Section 48(2) of the Arbitration and Conciliation Act, 1996 r/w. 47 of CPC and the application E.A.No.110 of 2012 filed for directing the judgment debtor to furnish security to the extent of the value of the award which was sought to be executed. Following are the observations made by the learned Single Judge in the above said Civil Revision Petition: ".
13. The respondent in the E.P.No.81 of 2012 is having right to be heard fully and in commensurate with that, he filed E.A.No.75 of 2012 as per Section 48 of the Arbitration and Conciliation Act, 1996, whereof he is having the right to adduce oral evidence also in addition to documentary evidence.
14. A balance has to be struck. Whenever any application is filed before the Court, the Court is enjoined to look into the prima facie maintainability of the same. To put it in words of single syllable, a preliminary objection can be raised, which right also cannot be throttled. Here, by way of raising such preliminary objection to E.A.No.75 of 2012 only, E.A.Nos.109 and 110 of 2012 were sought to be filed by the revision petitioners. De hors the merits involved in the matter, when the revision petitioner herein called upon the Court to give its verdict by filing proper applications concerning the maintainability of the main petition (here, E.A.No.75 of 2012), then the Court is enjoined to pass orders on the E.A.Nos.109 and 110 of 2012 after hearing both sides.". Making such an observation, the learned Single Judge passed an order disposing of the said Civil Revision Petition with the following direction: ".16.Wherefore, I am of the considered view that this Court at this stage need not go into the merits of the matter, but on procedural aspects, I would like to highlight and spotlight that the learned District Judge before whom E.P.No.81 of 2012 and other applications are pending, is enjoined to hear both sides concerning E.A.Nos.109 and 110 of 2012 and pass orders on merits, untrammelled and uninfluenced by any of the observations made by this Court, within a time frame of two weeks from the date of receipt of a copy of this order.".
4. Pursuant to the receipt of a copy of the said order, the learned Principal District Judge, Thoothukudi, took up the applications E.A.Nos.109 and 110 of 2012, heard the same and passed a common order dated 13.12.2012 dismissing both the applications without costs. As against the dismissal of E.A.No.110 of 2012, C.R.P.No.763 of 2013 has been filed and as against the order dismissing E.A.No.109 of 2012, C.R.P.No.764 of 2013 has been filed. Both the Civil Revision Petitions have been preferred invoking the supervisory powers of this Court under Article 227 of the Constitution of India on various grounds set out in the grounds of revision.
5. This Court heard the arguments advanced by Mr.T.K.Seshadri, learned senior counsel representing the counsel on record for the revision petitioner in both the revisions and by Mr.P.S.Raman, learned senior counsel representing the counsel on record for the respondent in both the revisions. The materials produced by both the parties in the form of typed-set of papers and the copy of the common order passed by the learned Principal District Judge, Thoothukudi in E.A.Nos.109 and 110 of 2012 were also perused.
6. Thiru.T.K.Seshadri, learned senior counsel arguing on behalf of M/s.Ram & Rajan Associates, counsel on record for the revision petitioner in both the Civil Revision Petitions, besides stating the circumstances leading to the passing of the award, argued that the learned Principal District Judge committed an error in dismissing E.A.No.109 of 2012 seeking a direction to the respondent/judgment debtor to furnish security and in dismissing E.A.No.110 of 2012 praying for the dismissal of the application filed by the judgment debtor, namely E.A.No.75 of 2012 as not maintainable. It is the further submission made by the learned senior counsel for the revision petitioner that the enquiry contemplated under Section 48(2) of the Arbitration and Conciliation Act is summary in nature and restricted to the question whether the enforcement of the award would be contrary to the public policy of India; that the procedure adopted by the learned Principal District Judge in receiving proof affidavit on behalf of the judgment debtor would virtually have the effect of reopening the entire dispute and converting the enquiry under Section 48(2)(b) of the Arbitration and Conciliation Act, 1996 into a trial not contemplated under the provisions of the said Act and that the said procedure adopted by the learned Principal District Judge would amount to grossly exceeding his jurisdiction and exercising a jurisdiction not vested in him under Section 48 of the Arbitration and Conciliation Act, 1996. It is the further contention of the learned senior counsel that the portion of the arbitral award, which had become final, could not be challenged on merits by adducing evidence regarding the alleged fraud.
7. In addition, the learned senior counsel for the revision petitioner wanted to submit his arguments in extenso which were not confined to the maintainability of the application E.A.No.75 of 2012 and on the other hand, dealing with the merits of the said application in detail. When this Court intervened by pointing out that only in accordance with the direction issued by this Court in the earlier Civil Revision Petition , learned Principal District Judge chose to consider the question, ".whether the application filed under Section 48(2)(b) of the Arbitration and Conciliation Act, which was numbered as E.A.No.75 of 2012 should be dismissed at the threshold on the question of maintainability?.". and that the learned Principal District Judge has also considered the application E.A.No.109 of 2012 seeking an order directing the judgment debtor to furnish security as an interim measure of protection contemplated under Section 48(5) of the Arbitration and Conciliation Act, 1996, the learned senior counsel continued with the arguments undeterred by such intervention and chose to submit his written submissions. The learned senior counsel for the revision petitioner also pointed out the fact that the award passed by the arbitrator came to be challenged before a competent Court of law in the country in which the award was passed, namely in the High Court of Justice, Queens Bench Division, Commercial Court, London, United Kingdom and that the application to set aside the award in accordance with the provisions of the law dealing with arbitration in the said country came to be dismissed by the said Court in the said country; that the said award has thus become final and that therefore, there shall be no question of making a challenge to the said award when it is sought to be executed in a Court in India as a foreign award.
8. Per contra, Mr.P.S.Raman, learned Senior counsel appearing on behalf of Mr.G.Anbusaravanan, counsel on record for the respondent/judgment debtor submitted that the learned Principal District Judge could not be found fault with for passing an order dismissing the application E.A.No.110 of 2012 by which the maintainability of E.A.No.75 of 2012 had been challenged and also dismissing the application E.A.No.109 of 2012 seeking a direction for furnishing security to the extent of the value of the award as an interim measure of protection. The learned senior counsel for the respondent also submitted that the present Civil Revision Petitions invoking the supervisory powers of this Court under Article 227 of the Constitution of India should be dismissed since the learned Principal District Judge acted very well within his jurisdiction in dismissing the application E.A.No.110 of 2012 assigning valid reasons for holding that the application filed under Section 48(2)(b) claiming that the foreign award is unenforceable and is inexecutable in India and it would be against the public policy to execute it as it was contended that the said award had been obtained by playing a fraud by the revision petitioner / decree holder on the arbitrator.
9. As a reply to the above said contention of the learned senior counsel for the respondent, Mr.T.K.Seshadri, learned senior counsel appearing for the revision petitioner argued that while challenging the executability of the foreign award under Section 48(2)(b) of the Arbitration and Conciliation Act, 1996, the fraud played by one of the parties to the award on the other party could not be projected as a ground for avoidance of the award and as a ground for contending that award is unenforceable and inexecutable in India. The learned senior counsel for the revision petitioner contended further that unless the award would fall within any one of the clauses (a) to (e) found under Section 48(1) of the Arbitration and Conciliation Act, or under Section 48(2)(a) and (b) of the said Act, the enforceability and executability of the foreign award in India could not be successfully challenged. The further contention of the learned senior counsel for the revision petitioner is that the fraud or corruption contemplated under the explanation to sub-clause (b) to Section 48(2) of the Arbitration and Conciliation Act, 1996 would mean fraud or corruption inducing or affecting the making of the award to make the award inexecutable in India and that therefore, the learned Principal District Judge ought to have allowed the application E.A.No.110 of 2012 and rejected the application filed by the judgment debtor under the award, namely E.A.No.75 of 2012. It is the further contention raised by the learned senior counsel for the revision petitioners that, in any event, since the execution of the award is sought to be put on hold, pending disposal of E.A.No.75 of 2012, filed by the judgment debtor under the award, invoking Section 48(2)(b) of the Arbitration and Conciliation Act, the learned Principal District Judge ought to have atleast allowed the application E.A.No.109 of 2012 and directed the respondent herein (judgment debtor) to furnish security to the extent of the value of the award.
10. On the other hand, Mr.P.S.Raman, learned senior counsel for the respondent has submitted that the executability of the award is the matter in issue in the application filed by the judgment debtor, namely E.A.No.75 of 2012; that so long as the said application E.A.No.75 of 2012 is not disposed of on merits, there shall be no scope for the revision petitioner to challenge the order passed by the Executing Court dismissing the application E.A.No.110 of 2012 praying for the rejection of the application filed under 48 (2)(b) of the Arbitration and Conciliation Act, namely E.A.No.75 of 2012 as not maintainable. It is the further contention of the learned senior counsel for the respondent that the order sought to be impugned in the present revisions came to be passed by the learned Executing Judge fully in compliance with the direction issued by this Court in the previous civil Revision Petition, namely C.R.P (PD) (MD) No.1886 of 2012 and that, therefore, the present Civil Revision petitions are liable to be dismissed because they have been filed under a misconception. The learned senior counsel for the respondent also pointed out the fact that the main controversy between the parties is the executability or otherwise of the foreign award passed against the respondent herein and the said question is yet to be decided as the same has been relegated to an enquiry in E.A.No.75 of 2012.
11. According to the learned senior counsel for the respondent, the contention raised on behalf of the revision petitioner that the judgment debtor ought not to have been allowed to adduce evidence by receiving the proof affidavit is nothing but an argument which goes contrary to the discussions made by this Court in the earlier revision petition in which it had been clearly stated that a judgment debtor seeking an order setting aside the foreign award and declaring it to be unenforceable was entitled to lead oral evidence in addition to producing documentary evidence.
12. This Court paid its anxious considerations to the above said submissions made on both sides. C.R.P (NPD) (MD) No.763 of 2013 13. Sterlite Industries India Limited, the respondent herein entered into a contract with the revision petitioner, namely Dreymoor Fertilizers Overseas Pvt. Ltd for the supply of 10000 MTs (q10%) of Phosphoric Acid solution for the shipment in January 2010. It was mutually agreed that the exact quantity of shipment would be as per the vessel nomination and its acceptance and that the price to be paid by the revision petitioner would be at US $ 522 Per MT FOB, Tuticorin. On 13.01.2010, the revision petitioners (buyers) sent an e-mail to the respondent (sellers) advising a new laycan for M.V. GEM OF DAHEJ as 1-5 February asking the sellers' confirmation and the confirmation was given by the sellers, according to the revision petitioners, on 15.01.2010. On 18.01.2010, the revision petitioners notified the respondent that the said vessel was fully fixed and gave the ETA of 2-3 February 2010. However, on 26.01.2010, the revision petitioners notified the respondent that the ETA had slipped to 3-4 February 2010 because of the delay in the previous port, Kandla. On 01.02.2010, the revision petitioners informed the respondent of a longer delay in the arrival of the said ship due to unprecedented and unforeseen congestion at Kandla Port, because of which the vessel M.V.Gem of Dahej was not able to berth at Kandla to discharge the existing tonnage, for a turnaround to reach Truticorin within the earlier mentioned 'Lay Can' and indicated a new 'Lay Can' between 10th to 12th February 2010 by M.V.Gem of Dahej. For the said communication made by the revision petitioner, the respondent sent a reply on 02.02.2010 that they were forced to divert the quantity assigned for the shipment of the revision petitioner elsewhere because of the fact that the shipment had been delayed considerably and surpassed its 'Lay Can' and the respondent would not be in a position to perform the said shipment. On the same day, one Mr.J.S.Smid, the advisor of the revision petitioner, wrote to the respondent that the message sent by the respondent was an unjustified repudiation of the contract and that such a repudiation was accepted by the revision petitioner (buyer) as an act of default bringing the contract to an end. On 03.02.2010, the respondent made a request to the revision petitioner to nominate some other /substitute vessel in the earlier 'Lay Can' of Gem of Dahej i.e., 1st to 5th February 2010 expressing their willingness to load the shipment as per the other contractual terms. On the same day, Mr.Smid, on behalf of the revision petitioner, replied that the acceptance of the respondent's premature repudiation of the contract by the revision petitioner had brought an end to the contract, except for the purpose of the revision petitioner's claim for damages. The same gave raise to a difference and the said difference and dispute came to be referred to Roger Rookes for arbitration as per the arbitration agreement incorporated in the contract between the parties.
14. The Arbitrator conducted Arbitration and passed an award holding that the respondent herein (seller) had prematurely terminated the contract on 02.02.2010 and thereby the revision petitioner (buyer) became entitled to accept the repudiation and claim damages based on the difference between the market price and the contract price. By the said award, the Arbitrator held the respondent herein liable to pay a total sum of US $ 1,026,000 equivalent to Rs.10,26,000/- as the difference between the market price and the contract price and the Arbitrator also awarded compound interest on the said amount at the rate of 3.75% per annum from 05.02.2010 till the date of payment with quarterly rests. In the award, the respondent was also held liable to bear the costs of the revision petitioner.
15. As against the award, the respondent herein/judgment debtor under the award chose to file an application before the High Court of Justice, Queens Bench Division, Commercial Court, London. The said Court before which the award was challenged, refused permission to appeal observing as follows: ".The Buyers message of 1 Feb indicated a potential new laycan of 10-12 Feb, which was not in itself a breach. The Buyers did not state that they were unable to load within the agreed delivery date. There is no finding by the Arbitrator that the nominated vessel could not have arrived in time for delivery to take place by 10 Feb, though it probably could not have loaded in one day, had it arrived on 10 Feb, regardless of any right to nominate a substitute on 2nd Feb, which he found could have arrived and loaded in time (para 340. There was therefore no evidence of any repudiation by the Buyers prior to the Sellers' own permature concellation. As to the argument on mitigation, there can be no point of law arising out of the Award, since the Arbitrator did not deal expressly with the point. The Award does not suggest that he considered that the Buyers acted unreasonably in refusing to accept the Sellers' fresh offer to load if the Buyers would, on 3rd Feb nominate another vessel. The Arbitrator did not find that the Buyers could nominate a vessel on 3rd Feb to meet that offer which required an adherence to laycan dates of 1-5 Feb. The putative argument of law therefore founders on the absence of any wrong decision of law or any facts in the Award or Reasons to support it.".
16. After the respondent herein unsuccessfully made a challenge to the award before the High Court of Justice, Queens Bench Division, Commercial Court, London, the revision petitioner herein/decree holder under the award chose to prefer E.P.No.81 of 2012 on the file of the Principal District Judge, Tuticorin for the enforcement of the above said foreign award. Besides resisting the attempted enforcement of the award, the respondent herein/judgment debtor under the award chose to file an application E.A.No.75 of 2012 under Section 48 of the Arbitration and Conciliation Act, 1996 r/w. Section 47 CPC praying for an order declaring that the Arbitration Award dated 22.03.2011 passed by the Arbitrator Roger Rookes as unenforceable and inexecutable in India.
17. In case of domestic arbtiral award, the judgment debtor shall avail the liberty of filing an application before the Principal Civil Court of original jurisdiction to set aside the arbitral award by invoking Section 34 of the Arbitration and Conciliation Act, 1996, which is in Part I - Chapter VII of the said Act. So far as the foreign awards are concerned, they are dealt with in Part II of the Act. A foreign award is defined as an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India, made on or after the 11th Day of October 1960: a) in pursuance of an agreement in writing for arbitration to which the Convention set forth in the First Schedule to the Act applies; and b) in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made may, by notification in the official Gazette, declare to be territories to which the said Convention applies. Such a definition is found in Section 44 of the Act.
18. Section 46 of the Act states that any foreign award which would be enforceable under the Chapter, namely Part II Chapter I, shall be treated as binding for all purposes on the persons as between whom it was made, and may accordingly be relied on by any of those persons by way of defence, set off or otherwise in any legal proceedings in India . Section 47 provides the evidence by which a foreign award can be proved. It states that at the time of application for execution before a Court, the original award or a copy duly authenticated in the manner required by law of the Court in which the award was passed, the original agreement for arbitration or a duly certified copy of the agreement and such evidence as may be necessary to prove that the award is a foreign award, shall be produced.
19. Section 48 (1) of the Arbitration and Conciliation Act, 1996 states the conditions for enforcement of foreign award. It states that the enforcement of the foreign award may be refused at the request of the judgment debtor, if the judgment debtor furnishes proof of one of the facts stipulated therein. It also states that the enforcement of an arbitral award may be refused if the Court finds that the subject matter of the difference is not capable of settlement by arbitration under the law of India and the enforcement of the award would be contrary to the public policy of India. In the explanation it has been stated that the award shall be in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption. For better appreciation the entire Section 48 is reproduced hereunder: ".48. Conditions for enforcement of foreign awards. - (1) Enforcement of a foreign award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the court proof that- (a) The parties to the agreement referred to in section 44 were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or (b) The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (c) The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be enforced; or (d) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or (e) The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made. (2) Enforcement of an arbitral award may also be refused if the court finds that- (a) The subject-matter of the difference is not capable of settlement by arbitration under the law of India; or (b) The enforcement of the award would be contrary to the public policy of India. Explanation. -Without prejudice to the generality of clause (b) of this section, it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption. (3) If an application for the setting aside or suspension of the award has been made to a competent authority referred to in clause (e) of sub-section (1) the court may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security.
20. Keeping the law dealing with the enforcement of foreign awards in mind, we have to consider the question whether the challenge made to the impugned order of the Court below by the revision petitioner invoking the supervisory powers of this Court under Article 227 of the Constitution of India can be sustained. The Act makes it clear that a foreign award can be enforced in a Court in India, unless such award is not affected by any one of the infirmities and conditions found in clauses (a) to (c) of Sub-section (1) of Section 48 or it does not fall under any one of the categories of cases mentioned in clauses (a) and (b) of Sub-section (2) of Section 48. Therefore, when the decree holder under the award seeks enforcement of the award by filing an execution petition in a competent Court in India, the judgment debtor can resist the attempted enforcement by filing a counter raising any one of the pleas available to such judgment debtor which are enumerated in Section 48 of the Arbitration and Conciliation Act, 1996. Whenever the attempted enforcement of the foreign award is sought to be resisted relying on any one of the grounds found in section 48, besides raising such plea in the counter statement that may be filed in the execution petition seeking dismissal of the same, the judgment debtor can also seek adjudication of his claim as a party to the award under Section 47 of the CPC read with Section 48 of the Arbitration and Conciliation Act to get a declaration that the award is unenforceable and inexecutable in India as it suffers from any one of the infirmities found in Clauses (a) to (e) of sub-section (1) of Section 48 or that it falls under any one of the categories of award mentioned in Clause (a) and (b) of Sub-section (2) of Section 48. When such an application is filed as per the scheme provided in the Civil Procedure Code, such claim application has to be tried and decided, unless the claim can be thrown out at the threshold on the ground maintainability. When such a claim is made by a judgment debtor to the award, unless the maintainability of such a claim is affected by any provision of law, then the claim application has to be heard on merits and it has got to be disposed of by pronouncing an order on merits.
21. The revision petitioner, on receipt of notice in the claim application E.A.No.75 of 2012 filed by the respondent herein (judgment debtor), chose to move for the rejection of the same at the threshold by filing an application E.A.No.110 of 2012 for the said purpose. When the Executing Court chose to proceed with the enquriy in the claim application with the aim of disposing of the application filed by the revision petitioner (E.A.No.110 of 2012) questioning the maintainability of the claim application (E.A.No.75 of 2012) filed by the respondent along with the main claim application, the revision petitioner rushed to this Court by filing C.R.P (NPD) (MD) No.1886 of 2012. This Court felt that that there was a procedural irregularity in relegating a decision in that application (E.A.No.110 of 2012 to be made at the time of disposal of the main Claim Application viz., E.A.No.75 of 2012 filed by the Judgment debtor and hence passed an order dated 19.11.2012, directing the Executing Court to hear the said application E.A.No.110 of 2012 and pass an order disposing of E.A.No.110 of 2012 before taking up E.A.No.75 of 2012 for disposal on merits. While direction the Executing Court to take up the application E.A.No.110 of 2012 praying for the dismissal of the claim application E.A.No.75 of 2012, this Court also made it clear that in an application filed under Section 48(2)(b) of the Arbitration and Conciliation Act r/w. Section 47 of the Civil Procedure, which shall be a claim application, the parties are free to lead oral evidence besides producing documentary evidence.
22. Based on the said direction issued by this Court alone, the learned Principal District Judge took up the application E.A.No.110 of 2012, heard the arguments advanced on both sides and upon such hearing chose to arrive at a conclusion that the said application for rejection of the claim application, namely E.A.No.75 of 2012 could not be sustained; that entering upon a discussion on the merits of the claim application in the enquiry in E.A.No.110 of 2012 would amount to pre-judging the issue in the claim application without affording an opportunity to the claim applicant to lead evidence and that hence the application for rejection of the claim application E.A.No.75 of 2012 as not maintainable should be dismissed without expressing any opinion on the merits of the claim application. Thus the question ".whether the foreign award is unenforceable or inexecutable in India?.". has been relegated to be considered in the claim application, namely E.A.No.75 of 2012. This Court does not find any defect or infirmity in the said order passed by the learned Principal District Judge. The said order of the learned District Judge cannot be termed as one passed without a jurisdiction or one passed refusing to exercise a jurisdiction conferred upon him or an order passed in erroneous / improper exercise of power conferred on him. This Court comes to the conclusion that the main issue regarding the enforceability or otherwise of the foreign award, concerned in this case, in India is yet to be decided based on evidence to be adduced in the claim application. It has been contended on behalf of the judgment debtor that when a plea that the award sought to be executed has been obtained by fraud, the enforcement of such award shall be contrary to public policy of India since fraud would vitiate everything. The proof of fraud and the proof of alleged public policy, which would deter the Court from enforcing the award, according to the judgment debtor, has got to be convassed by the parties decided in the claim application. The learned Principal District Judge has rightly held that the said issue cannot be pre-judged in an application filed by the decree holder for the rejection of the claim application. This Court does not find any defect or infirmity in the order of the learned Principal District Judge dismissing the application field by the revision petitioner in E.A.No.110 of 2012 warranting any interference by this Court in exercise of its power of superintendence under Article 227 of the Constitution of India. Hence, the Civil Revision Petition No.763 of 2012 is bound to be dismissed. C.R.P.(NPD) (MD) No.764 of 2013 23. C.R.P.(NPD) (MD) No.764 of 2013 has been preferred against the dismissal of E.A.No.109 of 2013. The said Execution Application had been filed by the decree holder under the award for an order directing the judgment debtor under the foreign award to furnish security to the extent of the value of the award. Section 48 (3) of the Arbitration and Conciliation Act, 1996 says that if an application for setting aside or suspension of the award has been made to a competent authority referred to in sub-clause (e) of Sub-section (1), the Executing Court may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security. Relying on the said clause alone, the revision petitioner sought an order directing the respondent to furnish security to the extent of the value of the award. A close reading of the said provision will make it clear that the competent authority referred to in clause (e) of Section 48(1) shall not mean the Executing Court in India in which a claim application has been made to declare the foreign award to be unenforceable and inexecutable in India. On the other hand, it will refer to a situation wherein the foreign award has not become binding on the parties as the competent authority of the country in which or under the law of which the award was made had been approached to set aside or suspend the award. In this case, admittedly the venue of Arbitration is London in UK. It is also an admitted fact that the law applicable for the arbitration was the law of the said Country. It is also obvious that after the award came to be passed, the award was challenged and a prayer to set aside the award was made before the High Court of Justice, Queens Bench Division, Commercial Court, London and the said Court declined the relief sought for by the judgment debtor and that thus the award of the arbitrator stands confirmed. In view of the same, there shall be no attraction of sub-section (3) of Section 48 of the Arbitration and Conciliation Act, 1996. Furthermore, Clause 3 of Section 48 of the Arbitration and Conciliation Act, 1996 states that when a case would attract Class (e) of Sub-section (1) of Section, the grant of an order directing the judgment debtor to give suitable security shall be on the Court's decision to adjourned the decisionon the enforcement of the award if an application to that effect is made by the party claiming enforcement of the award. It is also made clear that the grant of such an order directing furnishing of security shall be discretionary as it says that the Court 'may' and not 'shall' do it. In addition, the principles governing grant of attachment before judgment shall stand attracted for issuing a direction to the judgment debtor under the award to furnish security to avoid attachment of the property.
24. In the case on hand, the revision petitioner has levied execution and has started enforcing the award by filing the execution petition. The revision petitioner has also sought for attachment of the properties of the respondent herein/judgment debtor, namely Copper concentrate to be discharged from the vessels at the V.O.Chidambaram Port, Tuticorin. On the other hand, the judgment debtor has come forward with the claim application praying for a declaration that the award is unenforceable and inexecutable in India as it shall be against the public policy of India, since according to the respondent judgment debtor, the award was procured by playing fraud. The said question has to be decided only in the claim application (E.A.No.75 of 2012). Suppose by filing such claim application the judgment debtor tries to secret its assets, or dispose or encumber its assets so as to make it impossible for the decree holder to realize the award amount from the left out assets of the judgment debtor, then there will be a justification for the Court dealing with the execution application to direct the judgment debtor to produce security. The Executing Court is not powerless to effect attachment pending disposal of the claim petition. In this case, the respondent/judgment debtor has submitted that its annual turn over for the year 2010-2011 and 2011 - 2012 had been Rs.16,266 Crores and Rs.19,951 Crores respectively and that the profit after tax for the respondent company was to the extent of Rs.1419 Crores and Rs.1657 Crores respectively. It has also been contended that it had got resources and surplus to the extent of Rs.24401 Crores as on 31.01.2012. It is also pertinent to note that though a company petition came to be filed before the Principal Bench of the High Court of Madras in C.P.No.88 of 2012 by the revision petitioner itself for the winding up of the respondent/judgment debtor under Section 433 (e) and 434(1)(a) of the Companies Act, 1965, the said Company Petition came to be dismissed by an order dated 12.12.2012. The financial stability of the Company has also been found to be sound. Under such circumstances, the learned Principal District Judge is right in holding that the prayer for a direction to the respondent/judgment debtor to furnish security to the extent of the value of the award had got to be disallowed. The learned Principal District Judge has come to a clear conclusion that the assets are much more than the liability and that hence, there was no need to direct the judgment debtor to furnish security. The learned Principal District Judge has also correctly expressed the view that directing the judgment debtor to furnish security in such cases would not be justified.
25. In view of the foregoing discussions, this Court is of the considered view that the learned Principal District Judge did not commit any error in dismissing the application E.A.No.109 of 2012. No assumption of jurisdiction which is not conferred on the Principal District Judge, Tuticorin and no failure to exercise jurisdiction conferred on him has been demonstrated. The order of the learned Principal District Judge dismissing the application E.A.No.109 of 2012 cannot be termed patently erroneous which would result in miscarriage of justice. No irregularity is found in the order passed by the learned Principal District Judge. The revision petitioner has not made out a case for interference with the order of the Court below by this Court in exercise of its power of superintendence conferred on it under Article 227 of the Constitution of India. Hence, the challenge made to the order of the Court below dismissing the application E.A.No.109 of 2012 fails and the Civil Revision Petition No.764 of 2012 is bound to be dismissed. In the result, both the Civil Revision Petitions (C.R.P (NPD) (MD) No.763 of 2013 & C.R.P (NPD) (MD) No.764 of 2013) are dismissed holding that there is no merit in them. There shall be no order as to costs. However, there shall be a direction to the Court bellow to take up the enquiry in E.A.No.75 of 2012 and dispose of the same as expeditiously as possible, preferably within three months from the date of receipt of a copy of this order. gpa To The Principal District Judge, Thoothukudi