Kerala High Court
M/S. Peniel Cashew Company vs M/S. Ahcom Sarl on 30 October, 2018
Equivalent citations: AIRONLINE 2018 KER 1056
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE K.P.JYOTHINDRANATH
TUESDAY ,THE 30TH DAY OF OCTOBER 2018 / 8TH KARTHIKA, 1940
OP(C).No. 1877 of 2018
AGAINST THE ORDER IN EP 97/2013 of II ADDL.DISTRICT COURT,
KOLLAM
PETITIONERS/RESPONDENTS/AWARD DEBTORS:
1 M/S. PENIEL CASHEW COMPANY
PUTHOOR P.O., KOLLAM - 691507, REPRESENTED BY
ITS PROPRIETOR JOB G. OOMMEN.
2 JOB G. OOMMEN
VARUR MADATHILAZHIKATHU VEEDU, PUTHOOR P.O.,
KOLLAM - 691507.
BY ADVS.
SRI.N.D.PREMACHANDRAN
SRI.D.AJITHKUMAR
RESPONDENT/PETITIONER/AWARD HOLDER:
M/S. AHCOM SARL
GALERIE DU GRAND LARGE, 42 QUAL JEAN-CHARLES
REY 9800 MONACO REPRESENTED BY ITS AUTHORIZED
SIGNATORY ANILKUMAR S., 237, 13TH STREET,
GIRINAGAR, KOCHI - 682020.
BY ADV. SRI.T.R.ASWAS
OTHER PRESENT:
SRI T KRISHNANUNNI -SR
THIS OP (CIVIL) HAVING COME UP FOR ADMISSION ON 30.10.2018,
THE COURT ON THE SAME DAY PASSED THE FOLLOWING:
O.P.(C)No.1877/2018 2
JUDGMENT
This is a petition filed under Article 227 of the Constitution of India. A foreign arbitration award is the subject matter. A foreign award was passed by a Trade Association Combined Edible Nut Trade Association (CENTA) in London. Now, that award was sought to be enforced under Section 48 of the Arbitration and Conciliation Act ( hereinafter referred to as the 'Act'). The application was numbered as E.P.97/2013 on the file of the II Addl. District Court, Kollam. The court below by its order dated 15.3.2018 found that the said award is enforceable. The said order was passed by the court, after finding that the court is having jurisdiction by its order dated 13.03.2018. Both these orders were challenged before this court in O.P. (C)No.1005/2018. This court remanded back the case by setting aside the order dated 13.3.2018 in E.P.No.97/2013 and directed to pass fresh orders on the question of jurisdiction, after hearing both sides. As O.P.(C)No.1877/2018 3 regards order dated 15.3.2018 in E.P.No.97/2013 this court left open the right of the petitioners to challenge the said order afresh in the event the court below finds that the said court has jurisdiction. After remand,the matter was again considered by the lower court and by its order dated 17.7.2018, the court found that enforcement petition is maintainable before the court. The said order is under challenge in this original petition along with the grounds left open to be considered while disposing O.P.(C) No.1005/2018 of this court.
2. When the matter came up for hearing, the learned counsel for the petitioners raised the following grounds :
Firstly the maintainability of the petition before the court below.
Secondly the grounds under Section 48 (1) (b) and (2) of the Act.
A specific ground is also raised as that the making of the award was induced and affected by fraud. O.P.(C)No.1877/2018 4 Award is a product of fraud. It is also the contention that there was novation of the agreement and there is no arbitration agreement.
3. Thus, the question to be considered first is regarding the competency or the jurisdiction of the court.
4. As per the Arbitration and Conciliation (Amendment) Act, 2015 ( Act 3 of 2016) an amendment came into force on 23.10.2015. As per the amendment, in 'court' defined in Section 2(e), is amended as follows :
" 2(e) "Court" means -
(I) in the case of an arbitration
other than international commercial
arbitration, the principal Civil Court of original jurisdiction in a district, and includes the High Court in existence of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matte of a suit, but does not include any Civil Court of a grade O.P.(C)No.1877/2018 5 inferior to such principal Civil Court, or any Court of Small Causes;
(ii) in the case of international commercial arbitration, the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject- matter of the arbitration if the same had been the subject-matter of a suit, and in other cases, a High Court having jurisdiction to hear appeals from decrees of courts subordinate to that High Court"
5. As per the very same amendment, in Section 47 of the Arbitration and Conciliation Act, the Explanation is substituted as follows :
" Explanation - In this section and in the sections following in this Chapter, "Court" means the High Court having original jurisdiction to decide the questions forming the subject-matter of the arbitral award if the same had been the subject-matter of a suit on its original civil jurisdiction and in other cases, in the High Court having jurisdiction to hear appeals from decrees of courts subordinate to such High Court."O.P.(C)No.1877/2018 6
6. Now let us examine the legal position. It is held by the Hon'ble Apex Court in Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd. And etc. (2018 (4) SCALE 502) that the Act will come immediately i.e. on 23.10.2015. It is the submission that from the date onwards, the execution of the foreign award can be only before Hon'ble High Court. In support of the contention, the learned Senior Counsel highlighted that in the above referred decision, it is categorically held that it will act prospectively. The learned counsel also highlighted the operation of Section 6 of the General Clauses Act. It is the submission that as per Section 6 of the General Clauses Act, it is to be remembered that after the amendment, the earlier amended provision will not be in the statue and as such if there is no provision regarding the transition, all the district courts will lose its jurisdiction to continue with the matter.
7. Legislature in its wisdom, by bringing Section 26 of the amendment Act, categorically stated that Act not to apply to pending arbitral proceedings. Thus, O.P.(C)No.1877/2018 7 the sum and substance of the argument is that the district court which passed the impugned orders are not having inherent jurisdiction to proceed with after the amendment referred above brought in.
8. Section 26 of the Amendment Act states as follows :
" 26. Act not to apply to pending arbitral proceedings - Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commercial on or after the date of commencement of this Act."
9. Now, in this regard, the decision of the Hon'ble Apex Court in Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd. And etc. (2018 (4) SCALE 502) surely a decision which will be helpful in the process of analysis of the effect of amendment. Therein, it is held that it is prospective in nature. But the question is to what extent ? Paragraph 25 of O.P.(C)No.1877/2018 8 the said decision is relevant to be quoted. It is as follows :
"25. That the expression "the arbitral proceedings" refers to proceedings before an arbitral tribunal is clear from the heading of Chapter V of the 1996 Act, which reads as follows :
"Conduct of Arbitral Proceedings "
The entire chapter consists of Sections 18 to 27 dealing with the conduct of arbitral proceedings before an arbitral tribunal. What is also important to notice is that these proceedings alone are referred to, the expression " to" as contrasted with the expression " relation to" making it clear.
Also, the reference to Section 21 of the 1996 Act, which appears in Chapter V, and which speaks of the arbitral proceedings commencing on the date on which a request for a dispute to the referred to arbitration is received by the respondent, would also make it clear O.P.(C)No.1877/2018 9 that it is these proceedings, and no others, that form the subject matter of the first part of Section 26.
Also, since the conduct of arbital proceedings is largely procedural in nature, parties may "otherwise agree" and apply the Amendment Act to arbitral proceedings that have commenced before the Amendment Act came into force. In stark contrast to the first part of Section 26 is the second part, where the Amendment Act is made applicable - " in relation to" arbitral proceedings which commenced on or after the date of commencement of the Amendment Act. What is conspicuous by its absence in the second part is any reference to Section 21 of the 1996 Act. Whereas the first part refers only to arbitral proceedings before an arbitral tribunal, the second part refers to Court proceedings "
in relation to" arbitral
proceedings, and it is the
commencement of these Court
proceedings that is referred to in the second part of Section 26, as O.P.(C)No.1877/2018 10 the words " in relation to the arbitral proceedings" in the second part are not controlled by the application of Section 21 of the 1996 Act. Section 26, therefore, bifurcates proceedings, as has been stated above, with a great degree of clarity, into two sets of proceedings- arbitral proceedings themselves, and Court-proceedings in relation thereto. The reason why the first part of Section 26 is couched in negative form is only to state that the Amendment Act will apply even to arbitral proceedings commenced before the amendment if parties otherwise agree. If the first part of Section 26 were couched in positive language ( like the second part), it would have been necessary to add a proviso stating that the Amendment Act would apply even to arbitral proceedings commenced before the amendment if the parties agree. In either case, the intention of the legislature remains the same, the negative form conveying exactly what could have O.P.(C)No.1877/2018 11 been stated positively, with the necessary proviso. Obviously, "
arbitral proceedings" having been subsumed in the first part cannot re-appear in the second part, and the expression " in relation to arbitral proceedings" would, therefore, apply only to Court proceedings which relate to the arbitral proceedings. The scheme of Section 26 is thus clear: that the Amendment Act is prospective in nature, and will apply to those arbitral proceedings that are commenced, as understood by Section 21 of the principal Act, on or after the Amendment Act, and to Court proceedings which have commenced on or after the Amendment Act came into force."
10. After stated so, in paragraph 39 of the said decision, the court held as follows :
"39. From a reading of Section 26 as interpreted by us, it thus becomes clear that in all cases where the Section 34 petition is filed after the commencement of the Amendment Act, and an application O.P.(C)No.1877/2018 12 for stay having been made under Section 36 therein, will be governed by Section 34, as amended and Section 36 as substituted. But, what is to happen to Section 34 petitions that have been filed before the commencement of the Amendment Act, which were governed by Section 36 of the old Act ? Would Section 36, as substituted, apply to such petitions ? To answer this question, we have necessarily to decide on what is meant by "enforcement" in Section 36. On the one hand, it has been argued that "enforcement" is nothing but "execution", and on the other hand, it has been argued that "enforcement" and "execution" are different concepts, "enforcement" being substantive and "execution" being procedural in nature."
11. Then, again on the last portion of paragraph 42, it is held as follows :
" Since it is clear that execution of a decree pertains to the realm of procedure, and that there is not substantive vested right in a judgment debtor to resist execution, Section 36, O.P.(C)No.1877/2018 13 as substituted, would apply even to pending Section 34 applications on the date of commencement of the Amendment Act."
12. Thereafter, the matter was again viewed in an another slightly different angle by the Hon'ble Apex Court and came to a conclusion in paragraph 46 as follows :
" It would be clear that looking at the practical aspect and the nature of rights presently involved, and the sheer unfairness of the unamended provision, which granted an automatic stay to execution of an award before the enforcement process of Section 34 was over ( and which stay could last for a number of years ) without having to look at the facts of each case, it is clear that Section 36 as amended should apply to Section 34 applications filed before the commencement of the Amendment Act also for the aforesaid reasons."
13. On going through the said decision, it is evident and clear that the amendment will not affect the substantial rights already accrued and started O.P.(C)No.1877/2018 14 proceedings thereon. The corollary is that the amendment will not affect the proceeding herein and the court below rightly found that it is maintainable before the said court. There is nothing to interfere with the said finding of the court below. It is made clear that this court kept it open regarding the application of the amendment in respect of Section 49 as it is not a matter under consideration of this court in this original petition. Thus, there is no merit in the challenge against the order dated 17.7.2018 in E.P.No.97/2013 on the files of the II Addl. District Court, Kollam.
14. The next point is regarding the resistance under Section 48 of the Act. The main argument advanced before this court is under Section 48 (1) (b) and 48(2) of the Act. The learned Senior Counsel appearing for the petitioners submitted that prima facie on facts of the case it can be seen that a fraud committed on the petitioners herein. An award for an exorbitant amount obtained by suppression of subsequent agreement arrived at, the claimant O.P.(C)No.1877/2018 15 admitting the low quality of the product actually delivered to the petitioners herein. In support of the submission, attention is drawn to Exts.P7 and P10 e-mails from the respondents. Suppressing Ext.P2, novation agreement and subsequent admission and reduction allowed, an award obtained. It is nothing but fraud. It is the stand of the petitioners that as per the calculation, the amount to be paid will come to 73326.57 US Dollars, out of which the petitioners have already paid 37121.18 US Dollars on 31.10.2012. The balance to be paid was 36205 Dollar only. Out of that amount, subsequently 32918.32 US Dollar was paid on 10.12.2012. The balance will come only to 3287.07 US Dollar. It is for that amount an award for 288125.02 US Dollar obtained. Injustice is apparent. An apparent fraud.
15. It is the submission that fraud will vitiate everything. When fraud is apparent the dictum laid down by the Hon'ble Apex Court in Ram Preethi Yadev v. UP Board of High School and Intermediate Examination and other reported in [(2003) 8 SCC 311] will be O.P.(C)No.1877/2018 16 applicable. It is submitted that once fraud is proved, it will deprive the person of all advantages or benefits obtained thereby. It is against the public policy. It is also submitted that there was no notice as contemplated under Section 48(1)(b) of the Act.
16. Both sides heard on these points in detail. On a perusal of Section 48 and Section 34 of the Act it can be seen that it is like two sides of a coin. In the case of a domestic award, the party suffered the award can move a petition under Section 34 of the Act to get it set aside on the grounds enumerated therein, whereas in the case of a foreign award, when it is sought to be enforced in India, enforcement can be resisted under Section 48 of the Act by the party suffered the award, praying the court to refuse enforcement. In both the sections, there are some common grounds and features. In both cases, the burden of proof is on the party who suffered the award to get a favourable order from the court.
17. Even though under both sections there are some similarly worded grounds, the Honourable Apex court O.P.(C)No.1877/2018 17 held in Shrilal Mahanlal Limited v. Progetto Grano [(2014) 2 SCC 433) as follows :
" Although the same expression "public policy of India" is used both in Section 34(2)(b)(ii) and Section 48(2)(b) and the concept of "public policy in India" is same in nature in both the sections but, in our view, its application differs in degree insofar as these two sections are concerned. The application of "public policy of India" doctrine for the purposes of Section 48(2)(b) is more limited than the application of the same expression in respect of the domestic arbitral award."
18. Thereafter it is further held in paragraph 29 as follows :
" 29. We accordingly hold that enforcement of foreign award would be refused under Section 48(2)(b) only if such enforcement would be contrary to (1) fundamental policy of Indian law; or (2) the interests of India: or (3) justice or morality. The wider meaning given to the expression "public policy of India"
occurring in Section 34(2)(b)(ii) in ONGC Ltd. v. Saw Pipes Ltd. [(2003) 5 SCC 705] O.P.(C)No.1877/2018 18 is not applicable where objection is raised to the enforcement of the foreign award under Section 48(2)(b)."
19. Thus, Act 3 of 2016 is brought. Explanation 1 and 2 to Section 48(2) of the Act introduced, limiting the interpretation of the word 'public policy of India'.
20. Now, let us examine some of the decisions of the Hon'ble Apex Court and High Courts to have a picture regarding the legal position in respect of refusal to enforce a Foreign award.
21. The Apex Court in paragraph 22 of the decision in Emkay Global Financial Services Ltd. v. Girdhar Sondhi ( 2018 (10) SCALE 15 ) held as follows :
"22. It will thus be seen that speedy resolution of arbitral disputes has been the reason for enacting the 1996 Act, and continues to be the reason for adding amendments to the said Act to strengthen the aforesaid object. Quite obviously, if issues are to be framed and oral evidence taken in a summary proceeding. Under O.P.(C)No.1877/2018 19 Section 34, this object will be defeated. It is also on the cards that if Bill No.100 of 2018 is passed, then evidence at the stage of a Section 34 application will be dispensed with altogether. Given the current state of the law, we are of the view that the two early Delhi High Court judgments, cited by us hereinabove, correctly reflect the position in law as to furnishing proof under Section 34(2)
(a). So does the Calcutta High Court judgment (supra). We may hasten to add that if the procedure followed by the Punjab and Haryana High Court judgment (supra) is to be adhered to, the time limit of one year would only be observed in most cases in the breach. We therefore overrule the said decision. We are constrained to observe that Fiza Developers (supra) was a step in the right direction as its ultimate ratio is that issues need not be struck at the stage of hearing a Section 34 application, which is a summary procedure. However, this judgment must now be read in the light of the amendment made in Section 34(5) and 34(6). So read, we clarify the legal position by stating that an application O.P.(C)No.1877/2018 20 for setting aside an arbitral award will not ordinarily require anything beyond the record that was before the arbitrator. However, if there are matters not contained in such records, and are relevant to the determination of issues arising under Section 34, they may be brought to the notice of the court by way of affidavits filed by both parties. Cross examination of persons swearing to the affidavits should not be allowed unless absolutely necessary, as the truth will emerge on a reading of the affidavits filed by both parties. We, therefore, set aside the judgment of the Delhi High Court and reinstate that of the learned Additional District Judge dated 22.09.2016. The appeal is accordingly allowed with no order as to costs."
22. It is also relevant to note the decision of the Hon'ble Apex court in Union of India v. Varindera Constructions Ltd. and Ors. ( MANU/SC/0439/2018 = AIR 2018 SC 2961). It is held in paragraph 8 of the said decision as follows :
" 8. The primary object of the arbitration is to reach a final disposition O.P.(C)No.1877/2018 21 in a speedy, effective, inexpensive and expeditious manner. In order to regulate the law regarding arbitration, legislature came up with legislation which is known as Arbitration and Conciliation Act, 1996. In order to make arbitration process more effective, legislature restricted the role of courts in case where matter is subject to the arbitration. Section 5 of the Act specifically restricted the interference of the courts to some extent. In other words, it is only in exceptional circumstances, as provided by this Act, the court is entitled to intervene in the dispute which is subject matter of arbitration. Such intervention may be before, at or after the arbitration proceeding, as the case may be. In short, court shall not intervene with the subject matter of arbitration unless injustice is caused to either of the parties."
23. In respect of foreign award, again the Honourable Apex Court held in paragraph 28 of the decision in Kandla Export Corporation and Ors. v. OCI Corporation and Ors. ( MANU/SC/0112/2018 = 2018 (2) SCALE 368) as follows :
O.P.(C)No.1877/2018 22
" 28. The matter can be looked at from a slightly different angle. Given the objects of both the statutes, it is clear that arbitration itself is meant to be a speedy resolution of disputes between parties. Equally, enforcement of foreign awards should take place as soon as possible if India is to remain as an equal partner, commercially speaking, in the international community. In point of fact, the raison d'etre for the enactment of the Commercial Courts Act is that commercial disputes involving high amounts of money should be speedly decided. Given the objects of both the enactments, if we were to provide an additional appeal, when Section 50 does away with an appeal so as to speedly enforce foreign awards, we would be turning the Arbitration Act and the Commercial Courts Act on their heads. Admittedly, if the amount contained in a foreign award to be enforced in India were less than Rs.one crore, and a Single Judge of a High Court were to enforce such award, no appeal would lie, in keeping with the object of speedy O.P.(C)No.1877/2018 23 enforcement of foreign awards. However, if, in the same fact circumstance, a foreign award were to be for Rs.one crore or more, if the Appellants are correct, enforcement of such award would be further delayed by providing an appeal under Section 13(1) of the Commercial Courts Act. Any such interpretation would lead to absurdity, and would be directly contrary to the object sought to be achieved by the Commercial Courts Act, viz., speedy resolution of disputes of a commercial nature involving a sum of Rs. 1 crore and over. For this reason also, we feel that Section 13(1) of the Commercial Courts Act must be construed in accordance with the object sought to be achieved by the Act. Any construction of Section 13 of the Commercial Courts Act, which would lead to further delay, instead of an expeditious enforcement of a foreign award must, therefore, be eschewed. Even on applying the doctrine of harmonious construction of both statutes, it is clear that they are best harmonized by giving effect to the special statute i.e. the Arbitration O.P.(C)No.1877/2018 24 Act, vis-A-vis the more general statute, namely the Commercial Courts Act, being left to operate in spheres other than arbitration."
24. After going through the statement of objects and reasons for bringing the Act by the Parliament and the preamble to the Act, it can be seen that the Act is brought for meeting the specific needs of the international commercial arbitration practice. Thus, it can be seen that the enforcement of a foreign award can be resisted only under the ground available under Section 48 of the Act. Section 48 of the Act contains under what circumstances the court can refuse the enforcement of a foreign award. The proceeding is in a summary way.
25. In a decision of the High Court of Delhi decided on 11.4.2017 in Cruz City 1 Mauritius Holdings v. Unitech Limited ( MANU/DE/0965/2017) in paragraph 47 and 48 it is held as follows :
" 47. In a recent decision, the Swiss Supreme Court declined to set aside an award of Court of Arbitration for Sport O.P.(C)No.1877/2018 25 on the ground of good faith principle. The good faith principle required a party to take a procedural plea immediately in the course of the arbitral proceedings. The court held that at the recognition stage, a party is precluded from relying on grounds if it did not raise those grounds in due time, in the course of the arbitration proceedings.
48. In the case of Minmetals Germany Gmbh v. Ferco Steel Ltd. : ( 1999) 1 All ER (Comm) 315, the foreign award was enforced as the court found that the defendant's conduct was unreasonable. In that case, the defendant requested the Court to decline enforcement of the award under Article V (1) of the New York Convention alleging that the award was in breach of the principles of natural justice and against the English public policy. Justice Colman set out the following to be relevant considerations for deciding the issue :-
"(i) the nature of the procedural injustice;(ii) whether the enforcee has invoked the supervisory jurisdiction of the seat of the arbitration;(iii) whether O.P.(C)No.1877/2018 26 a remedy was available under that jurisdiction;(iv) whether the courts of that jurisdiction have conclusively determined the enforcee's complaint in favour of upholding the award; and (v) if the enforcee has failed to invoke that remedial jurisdiction, for what reason, and in particular whether he was acting unreasonably in failing to do so."
It can be seen that good faith principle is projected therein.
26. Thus, after considering all these case laws, what comes out is that the court should first go through the contentions and affidavit if any filed in support of the resistance petition. If there is a bonafide case, the court can then go through the counter affidavit if any filed by the other side and look into whether the case projected will lie. If found necessary, cross examination can be allowed. Even then if the court feels that the contention coming under Section 48 of the Act stands proved, it can be held that the award is not enforceable in India. Thus, the picture is clear. An application, after O.P.(C)No.1877/2018 27 compliance of the requirement under Section 47 of the Act comes before the court, there is a presumption of enforceability attached to it. Enforcement can be refused only at the request of the party against whom it is invoked furnishes proof in respect of any of the ground shown in Section 48 of the Act. The proceeding is a summary proceeding, as stated above.
27. Now let us look into the facts of the case :
In this case, instead of affidavits, the proof affidavit filed in lieu of chief examination is available. In paragraph 8 of the affidavit, it is categorically stated that after Ext.B16 no notice received from decree holder or the CENTA. Again in paragraph 9 (b) it is categorically stated that no notice issued. Thus, the specific stand of the petitioner is that there was no notice and hence the case will come under Section 48(1)(b) of the Act.
28. In this case notice is very important in another angle also. The petitioner herein got a case that he is a victim of fraud, a ground coming under O.P.(C)No.1877/2018 28 Section 48(2) of the Act.
29. In an international commercial contract, terms arrived at in between the parties plays a vital role. In this case arbitration by CENTA, whose seat of arbitration is in U.K. was originally agreed by the parties. Thus, keeping the principle and dictum laid down by the Hon'ble Apex Court in Sasam Power Limited v. North American Coal Corporation India Pvt. Ltd reported in AIR 2016 SC 3974; it can be only said that petitioner cannot neglect arbitration proceeding in this matter and expect to raise all contentions available for him before Indian Courts and resist the enforcement of an award. Good faith principle will be staring towards the party, provided there is notice of arbitration. Surely the petitioner herein got a case that there was novation. To buttress this contention the decision reported in [(2013) 10 SCC 535] is also cited. There is an admission regarding original arbitration clause. When the seat of arbitration is agreed upon in U.K., the petitioner cannot ignore an arbitration proceeding and choose Indian law to get a O.P.(C)No.1877/2018 29 full fledged enquiry. Surely, as per Section 48 of the Act, it is possible but only when bonafide test is passed. What will be the position if there was notice. He could have raised his contention before CENTA or before the arbitrator or at least challenged the same before the appropriate authority under the curial law, where the arbitration took place.
30. To satisfy myself that petitioner was not helpless, if notice was therein, this court had gone through the CENTA terms and conditions. Even an in house appeal provision is therein. That aspect was once considered by this court in M/s. Abbas Cashew Company v. M/s Bond Commodities and Another [2010 (3) KHC 325 (DB)]. Thus, what comes out is prima facie CENTA is a respectable organisation. The ground of "making of the award was induced or affected by fraud"
is not available. The parties not raised the same before arbitrator, CENTA or Courts in U.K. Reason is obvious. Introduction to the Act, Statement of Objects and reasons as well as preamble to the Act will show that, it was introduced for a unified legal frame work O.P.(C)No.1877/2018 30 for the fair and efficient settlement of disputes arising in international commercial relations.
31. At this juncture, it is also relevant to note that English Arbitration Act 1996 is therein where there are provision to approach court. Parties opted English law. At least as per the case of the petitioner, at the initial stage. When a party accepted the law of another country in respect of arbitration and a proceeding took place therein, the party cannot turn to Indian courts and say a reappreciation of whole matter is necessary. Surely party got a case of novation. But novation is a matter to be raised before the Arbitrator or before the Court, wherein the seat of arbitration situates. Good faith principle warrants this. In short, test of even bonafide case is not made out, provided there is notice of arbitration to the petitioner herein. If there was no notice the picture will be different.
32. Section 48 (1)(b) deals with notice which reads as follows :
O.P.(C)No.1877/2018 31
" 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) ************
(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."
33. Here comes the vital question. How far the petitioner succeeded in proving non-receipt of notice. The decision of this court in Emmanuel Cashew Industries v. Chi Commodities Handlers Inc. ( 2017(1) KLT 850) is relevant in this regard. As per the section, burden never shifts. The wording is clear in Section 48. But what about onus.
34. The Hon'ble Apex Court considered this aspect in Raghavamma and another v. Chenchamma and another ( 1964 AIR (SC) 136. Therein in paragraph 12, it is held as follows :
O.P.(C)No.1877/2018 32
" There is an essential distinction between burden of proof and onus of proof : burden of proof lies upon the person who has to prove a fact and it never shifts, but the onus of proof shifts. The burden of proof in the present case undoubtedly lies upon the plaintiff to establish the factum of adoption and that of partition. The said circumstances do not alter the incidence of the burden of proof. Such considerations, having regard to the circumstances of a particular case, may shift the onus of proof. Such a shifting of onus is a continuing process in the evaluation of evidence. The criticism levelled against the judgment, of the lower courts, therefore, only pertains to the domain of appreciation of evidence.
We shall, therefore, broadly consider the
evidence not for the purpose of
revaluation, but to see whether the
treatment of the case by the Courts below is such that it falls in the category of exceptional cases where this Court, in the interests of justice, should depart from its usual practice."
35. This decision later followed by the Apex Court O.P.(C)No.1877/2018 33 in R.V.E.Venkatachala Gounder v. Arul Migu Viswesarswami and V.P.Temple and others reported in JT ( 2004) 6 SC 442 which is again followed in Anil Rishi v. Gurbaksh Singh reported in 2006 (6) MhLJ 280 (SC).
36. In this case documents as required under Section 47 of the Act produced by the respondent. Thereon the petitioner has to prove his case. There is proof affidavit of the petitioner herein. It can be seen that petitioner discharged his onus of non-receipt of notice by the evidence on oath. Thereon onus shifts i.e., at this stage, if there is no other material for appreciation of evidence, it can be only held that the resisting party produced 'proof' regarding non-receipt of notice. But during cross examination, a specific suggestion was made to the effect that on 29.11.2012 by e-mail Arbitration clause and nomination of arbitrator was sent. It was denied. When the burden of proof is on the petitioner herein mere denial will not be sufficient. That is, when evidence appreciated at this stage, when burden of proof is specifically on the resisting party, it can be seen that petitioner failed O.P.(C)No.1877/2018 34 to prove his case.
37. Thus, again the onus shifts to the petitioner herein to show that on that particular date no such e-mail obtained. Surely the Senior counsel submitted that when sender of the notice will have better evidence, non-production of the same, will entail to draw an adverse inference. But as per Section 48 of the Act, the burden is squarely on the petitioner herein. The better evidence theory will not be available in this case.
38. Before coming to a final conclusion, this court also perused UN model law. What UNCITRAL Arbitration Rules says about notice. Articles 2 and 3 read as follows :
"Article 2
1. A notice, including a notification, communication or proposal, may be transmitted by any means of communication that provides or allows for a record of its transmission.O.P.(C)No.1877/2018 35
2. If an address has been designated by a party specifically for this purpose or authorized by the arbitral tribunal, any notice shall be delivered to that party at that address, and if so delivered shall be deemed to have been received. Delivery by electronic means such as facsimile or email may only be made to an address so designated or authorized.
3. In the absence of such designation or authorization, a notice is :
(a) received if it is physically delivered to the addressee; or
(b) deemed to have been received if it is delivered at the place of business, habitual residence or mailing address of the addressee.
4. If, after reasonable efforts, delivery cannot be effected in accordance with paragraphs 2 or 3, a notice is deemed to have been received if it is sent to the addressee's last-
known place of business, habitual residence or mailing address by registered letter or any other means that provides a record of delivery or of O.P.(C)No.1877/2018 36 attempted delivery.
5. A notice shall be deemed to have been received on the day it is delivered in accordance with paragraphs 2, 3 or 4, or attempted to be delivered in accordance with paragraph 4. A notice transmitted by electronic means is deemed to have been received on the day it is sent, except that a notice of arbitration so transmitted is only deemed to have been received on the day when it reaches the addressee's electronic address.
6. For the purpose of calculating a period of time under these Rules, such period shall begin to run on the day following the day when a notice is received. If the last day of such period is an official holiday or a non - business day at the residence or place of business of the addressee, the period is extended until the first business day which follows. Official holidays or non-
business days occurring during the
running of the period of time are
included in calculating the period. O.P.(C)No.1877/2018 37 Notice of arbitration Article 3
1. The party or parties initiating recourse to arbitration (hereinafter called the 'claimant") shall communicate to the other party or parties (hereinafter called the "respondent") a notice of arbitration.
2. Arbitral proceedings shall be deemed to commence on the date on which the notice of arbitration is received by the respondent.
3. The notice of arbitration shall include the following :
;(a) A demand that the dispute be referred to arbitration;
(b) The names and contact details of the parties;
(c)Identification of the arbitration agreement that is invoked;
(d) Identification of any contract or other legal instrument out of or in relation to which the dispute arises or, in the absence of such contract or instrument, a brief description of the relevant relationship;
(e)A brief description of the claim and an indication of the amount involved , O.P.(C)No.1877/2018 38 if any;
(f)The relief or remedy sought;
(g) A proposal as to the number of
arbitrators, language and place of
arbitration, if the parties have not
previously agreed thereon.
4. The notice of arbitration may also include:
(a) A proposal for the designation of an appointing authority refereed to in article 6, paragraph 1;
(b) A proposal for the appointment of a sole arbitrator referred to in article 8, paragraph 1;
(c) Notification of the appointment of an arbitrator referred to in articles 9 or 10.
5. The constitution of the arbitral tribunal shall not be hindered by any controversy with respect to the sufficiency of the notice of arbitration, which shall be finally resolved by the arbitral tribunal."
39. There is no doubt regarding the fact that notice can be sent by e-mail. The petitioner herein got an e-mail address. If copy of the inbox dated 29.11.2012 was produced to counter the claim of sending O.P.(C)No.1877/2018 39 notice on 29.11.2012, then surely the onus will be on the award holder to produce evidence regarding sending notice. In this case, it can be only held that petitioner not produced proof of non-receipt of notice.
40. Thus, again considering the facts available in this case, that is the party got a case that on an admitted liability of US dollar 3287.07, an award came into existence for US Dollar 288125.02, this court cannot go into that matter mainly due to good faith principle. Parties when entering into an international commercial relation, they are flying above the laws of the land and choosing a curial law as agreed upon. It is found that petitioner failed to prove non-receipt of notice. When notice is there, good faith principle will be applicable. Reconsideration of materials regarding dispute will be against the basic scheme or purpose of the statute. This is only a summary proceeding to see whether injustice is caused.
41. Thus, the conclusion that can be arrived at on the above discussion is that:
(a) The effect of Act 3 of 2016 is that amendment O.P.(C)No.1877/2018 40 is prospective in nature. As substantive right is involved, it will not affect the court proceeding which relates to the arbitral proceeding which already started under Section 48 of the Arbitration Act.
(b) Even though the burden to produce proof under Section 48(1)(b) of the Act is squarely on the resisting party, the onus may shift, according to facts. But still burden remains with the resisting party. It is, the degree of proof will vary as discussed in this case. It is a matter of appreciation of materials before the court.
(c) When originally there is an arbitral agreement in between the parties and when notice of arbitration is therein, good faith principle will be applicable, on the facts of the case. When there is notice, the facts projected to show fraud will not be sufficient to refuse enforcement. It could have been resolved under the curial law agreed upon by the parties when they entered into an international commercial relation.
There is nothing to interfere with the order of the court below dated 15.3.2018.
O.P.(C)No.1877/2018 41
Thus there is no merit in this petition. Accordingly, this original petition is dismissed.
Sd/-
K.P.JYOTHINDRANATH
SV JUDGE
APPENDIX
PETITIONER'S/S EXHIBITS:
EXHIBIT P1 A COPY OF THE CONTRACT NO.S/RCN/014/12
DATED 21.8.2012.
EXHIBIT P2 A COPY OF THE NEW CONTRACT SINGED BY
THE RESPONDENT SENT TO THE PETITIONER BY THE BROKER SRI. GIREESH R. NAIR. EXHIBIT P3 COPY OF THE EMAIL DATED 22.8.2012 SEND BY THE PETITIONER ATTACHING EXT. P2 TO MATHEW LABAN SABARIRISHNA INTERNATIONAL. EXHIBIT P4 COPY OF EMAIL DATED 24.8.2012 ATTACHING EXT. P2 AFTER SIGNING IT BY RESPONDENT, SEND TO THE PETITIONER BY BROKER SRI. GIREESH R. NAIR.
EXHIBIT P5 A COPY OF THE CONTRACT ENTERED BY THE RESPONDENT WITH M/S. EMMANUEL CASHEW DATED 23.5.2012.
EXHIBIT P6 A COPY OF THE EMAIL DATED 14.9.2012 SENT BY THE PETITIONER TO THE RESPONDENT.
EXHIBIT P7 A COPY OF THE MAIL DATED 15.9.2012 SENT TO THE PETITIONER BY THE RESPONDENT. O.P.(C)No.1877/2018 42 EXHIBIT P8 A COPY OF THE LETTER DATED 21.9.2012. EXHIBIT P9 A COPY OF THE REPORT OF SRI. GOPAKUMAR DATED 6.10.2012.
EXHIBIT P10 A COPY OF THE MAIL DATED 19.10.2012. EXHIBIT P11 A COPY OF LETTER DATED 20.11.2012 FROM THE RESPONDENT BY REGISTERED POST. EXHIBIT P12 A COPY OF THE LETTER DATED 10.12.2012 SENT BY THE PETITIONER TO THE RESPONDENT.
EXHIBIT P13 THE POSTAL RECEIPT.
EXHIBIT P14 A COPY OF THE AWARD DATED 20.12.2012.
EXHIBIT P15 A COPY OF THE EP NO.97 OF 2013 DATED
11.2.2013.
EXHIBIT P16 A COPY OF THE OBJECTION DATED 22.7.2013
FILED BY THE PETITIONER.
EXHIBIT P17 A COPY OF THE REPLY AFFIDAVIT FILED BY
THE RESPONDENT.
EXHIBIT P18 A COPY OF THE ORDER DATED 23.9.2017 IN
EA NO.267 OF 2016 IN EP NO.97 OF 2013 OF THE II ADDITIONAL DISTRICT COURT, KOLLAM.
EXHIBIT P19 A COPY OF THE JUDGMENT OF THIS HON'BLE COURT IN ARB APPEAL NO.54 OF 2017 DATED 25.10.2017.
EXHIBIT P20 A COPY OF JUDGMENT IN OP(C) NO.2932 OF 2017 DATED 27.10.2017.
EXHIBIT P21 COPY OF THE ARGUMENT NOTES SUBMITTED BY THE AWARD HOLDER DATED 8.12.2017. EXHIBIT P22 COPY OF THE ARGUMENT NOTE SUBMITTED BY THE AWARD DEBTOR DATED 7.12.2017. O.P.(C)No.1877/2018 43 EXHIBIT P23 COPY OF THE ARGUMENT NOTE SUBMITTED BY THE AWARD HOLDER DATED 16.12.2017. EXHIBIT P24 A COPY OF THE TRANSFER PETITION DATED 15.1.2018.
EXHIBIT P25 A COPY OF THE ORDER OF THIS HON'BLE COURT DATED 8.2.2018.
EXHIBIT P26 A COPY OF THE ORDER DATED 15.3.2018 IN EP NO.97 OF 2013.
EXHIBIT P27 COPY OF THE ORDER DATED 13.3.2018 IN EP NO.97 OF 2013.
EXHIBIT P28 COPY OF THE ORDER DATED 21.11.2017 IN EA 347 OF 2017 IN EP 97 OF 2013.
EXHIBIT P29 A COPY OF THE ORDER OF THIS HON'BLE COURT IN OP(C) NO.1005 OF 2018 DATED 28.6.2018.
EXHIBIT P30 A COPY OF THE ORDER DATED 17.7.2018 IN EP NO.97 OF 2013.
EXHIBIT P31 A COPY OF THE LETTER DATED 7.12.2012 SENT BY THE PETITIONER TO THE RESPONDENT.
EXHIBIT P32 A COPY OF CAVEAT OP NO.162 OF 2012.