Rajasthan High Court - Jodhpur
Maximus International General Trading ... vs R.K. Industries on 20 February, 2019
Author: Arun Bhansali
Bench: Arun Bhansali
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
S.B. Arbitration Application No. 26/2017
Maximus International General Trading LLC, Having its Office At
602, 603, Tower A, Centurion Star, Port Saeed Deira, Dubai UAE
Through its Authorised Representative Mr. Shailesh Taparia,
Commercial Manager of Maximus International General Trading
LLC.
----Petitioner
Versus
M/s. R. K. Industries, G-184, Mandore Industrial Area Nagour
Road, Jodhpur 342001
----Respondent
For Petitioner(s) : Mr. Manoj Bhandari.
Mr. Rajendra Saraswat.
For Respondent(s) : Dr. Sachin Acharya.
Mr. Shridhar Mehta.
HON'BLE MR. JUSTICE ARUN BHANSALI
Order 20/02/2019 The applicant - Maximus International General Trading has filed the present application for enforcement of a foreign award dated 3/7/2017 inter alia with the submissions that the award was made by the Refined Sugar Association, London under Rule 9 of the Association's Arbitration Rules by the Tribunal in the arbitration proceedings arising out of and under sale-purchase contract - RKI/16-17/SC/027 dated 9/6/2016.
It may be noticed that simultaneously the respondent R.K.Industries also filed an application under Section 34 of the Arbitration and Conciliation Act, 1996 ('the Act, 1996') being S.B. Arbitration Application No.25/2017 seeking setting aside of the arbitral award dated 3/7/2017. The application filed by (2 of 8) [ARBAP-26/2017] R.K.Industries was rejected by order dated 16/3/2018 as not maintainable, which order dated 16/3/2018 was upheld by the Division Bench in R.K.Industries vs. Maximum International General Trading LLC : AIR 2019 Raj. 1.
Preliminary objections to the present application seeking enforcement of the award has been filed by the respondent inter alia on the allegations that as the mandatory requirements of Section 47 of the Act, 1996 have not been complied with by the applicant, the application is liable to be rejected.
The parties were heard on the said preliminary objections raised by the respondent, the same being legal & preliminary in nature, pertaining to the maintainability of the application.
Learned counsel for the respondent submitted that in terms of Section 47 of the Act, 1996, the applicant was required to produce before the Court the original award or a copy thereof, duly authenticated in the manner required by the law of the country in which it was made, the original agreement for arbitration or a duly certified copy thereof and such evidence as may be necessary to prove that the award is a foreign award. However, the applicant has failed to comply with any of the requirements inasmuch as neither the original award has been produced nor a copy duly authenticated in the manner required by the law has been produced. Further, the applicant has also failed to produce the original agreement for arbitration or a duly certified copy thereof and, therefore, the application being in non- compliance of the provisions of Section 47 of the Act, 1996, deserves to be rejected.
Further submissions were made that a bare look at the award reveals that the same bears the signatures of Chairman (3 of 8) [ARBAP-26/2017] only and two other arbitrators have not even signed the award and, therefore, also the award cannot be relied on/enforced. It was emphasized that even in the application the applicant has not claimed the document annexed with the application as an original award and, therefore, it is apparent that the applicant has failed to comply with the mandatory requirements of Section 47(a) of the Act, 1996.
It was emphasized by learned counsel for the respondent that as the award filed with the application is not original, the same was required to be duly authenticated in the manner required by British law as the award was made in London and as admittedly there is no such authentication on the award there is a clear non-compliance of the provisions. The requirement of authentication has been highlighted by the Delhi High Court in the case of Glencore Grain Rotterdam B.V. vs. Shivnath Rai Harnarain (India) Co. : 2008 (4) Arb.L.R. 497 and by Bombay High Court the case of Louis Dreyfus Commodities Asia Pte Ltd. vs. Govind Rubber Limited : (2013) 3 Bom.C.R. 174.
Further submissions were made that neither the original agreement for arbitration nor a duly certified copy of the said agreement for arbitration has been produced before the Court, which also is a clear non-compliance of the statutory requirement as contained in Section 47 (b) of the Act, 1996 and on that count also the application deserves to be rejected.
Reliance was also placed on and Swiss Singapore Overseas Enterprises Pte. Ltd. vs. LMJ International Ltd. : AIR 2017 (NOC) 1002 (Cal.).
Learned counsel appearing for the applicant vehemently opposed the submissions. It was submitted that the objections (4 of 8) [ARBAP-26/2017] raised by the respondent have no substance and the same have been raised merely with a view to somehow delay the enforcement of the award and, therefore, the submissions made in this regard deserve to the rejected.
It was submitted that the applicant along with application has filed the original award, which is apparent from the first page of the award, wherein, in the indication "original/copy", the word 'copy' has been struck off and, therefore, there is no reason for the respondent to claim that the award is not an original award.
Further submissions were made with reference to a communication dated 14/1/2017 from the Secretary of the Refined Sugar Association indicating that the original final arbitration award dated 3/7/2017 was published to the parties with one and only original final award signed by the Chairman being sent to the Maximus on 10/7/2017 and a signed copy final award sent on the same date to R.K.Industries. Further, with reference to the award being signed by the Chairman only, it has been indicated in the letter that the signing by the Chairman was all that was required pursuant to Rule 9 of the Rules relating to Arbitration and, therefore, the objection raised in this regard is absolutely baseless.
Reference was made to Rule 9 of the Refined Sugar Association Rules relating to Arbitration, which requires the award to be signed by the Chairman and when so signed shall be deemed to be the award of the Council and shall be final & binding in all cases.
Based on the above submissions, it was submitted that the objections raised regarding non-compliance of Section 47 (a) of the Act are baseless.
(5 of 8) [ARBAP-26/2017] With regard to alleged non-compliance of Section 47(b), it was submitted that the applicant has produced Annex.2 duly supported by affidavit, which is a sale-purchase contract between the parties containing the arbitration agreement and as such the provisions thereof have been complied with. It was submitted that existence of the arbitration clause has not been denied by the respondent and, therefore, the objections in this regard being totally baseless deserve to be rejected.
Reliance was placed on Austbulk Shipping SDN BHD vs. PEC Limited : 2005 (2) Arb. L.R. 6.
I have considered the submissions made by learned counsel for the parties and have perused the material available on record in relation to the objections raised by the respondent regarding non-compliance of provisions of Section 47 of the Act.
The relevant portion of Section 47 the Act reads as under:
"47. Evidence.- (1) The party applying for the enforcement of a foreign award shall, at the time of the application, produce before the Court-
(a) the original award or a copy thereof, duly authenticated in the manner required by the law of the country in which it was made;
(b) the original agreement for arbitration or a duly certified copy thereof; and
(c) such evidence as may be necessary to prove that the award is a foreign award."
A bare perusal of the above Section would reveal that the provisions require that a party applying for enforcement of a foreign award shall at the time of application produce before the Court, the original award or a copy thereof duly authenticated in the manner required by the law of the country in which it was made and the original agreement for arbitration or a duly certified copy thereof.
(6 of 8) [ARBAP-26/2017] A bare look at the award Annex.1 annexed with the application reveals that the same has been accompanied by a covering letter, of which the opening words reads as under:-
"We enclose the Final Arbitration Award No.2309 dated 3 July 2017 made in the above arbitration for the attention of Maximum International General Trading LLC and a signed copy Award is enclosed for the attention of R.K.Industries."
The contents indicated above are clear and specific indicating enclosing of the 'Final Arbitration Award' for the attention of the Maximus and a 'signed copy Award' for the attention of R.K.Industries, which clearly brings out the distinction while sending the award, which aspect is fortified from the award itself, wherein, as submitted by counsel for the applicant and noticed hereinbefore, on the award itself in the indication "original/copy"
the word "copy" has been struck off, which clearly supports the submission made by learned counsel for the applicant and establishes that the award filed by the applicant is the original final award.
Once the said award is held as an original award, the submissions made regarding lack of authentication as required by Section 47 (a) of the Act, 1996 are of no consequence.
So far as the non-mentioning of the original award being filed in the application is concerned, mere absence of the word 'original' in the application while annexing the award does not change the character of the document.
So far as the objection regarding award being signed by the Chairman only, whereas, the arbitral Tribunal comprised of three members is concerned, the respondent itself has filed a copy of the Rules relating to Arbitration as Annex.R/3 as part of the (7 of 8) [ARBAP-26/2017] additional affidavit dated 14/3/2018, which inter alia reads as under:
"9........The award of such persons shall be signed by the said Chairman (and it shall not be necessary for any of the other persons appointed from the Panel of Arbitrators to sign it) and when so signed shall be deemed to be the award of the Council and shall be final and binding in all cases."
The award Annex.1 has been signed by the Chairman only can, though, raise doubt as sought to be contended by learned counsel for the respondent, on scrutiny based on the relevant applicable rules, the same is wholly baseless and as such the objection raised in this regard also cannot be sustained.
Coming to the alleged non-compliance of the provisions of Section 47(b) of the Act, 1996 requiring filing of original agreement for arbitration or a duly certified copy thereof, the applicant along with the application has filed the sale-purchase contract dated 9/6/2016 (Annex.2), which contains the arbitration agreement between the parties.
So far as the same being not original or a duly certified copy thereof is concerned, it would be noticed that the proprietor of the respondent firm Mr. Rakesh Kumar Jain in his additional affidavit filed in the present proceedings himself has produced a document Annex.R/1 indicating that the applicant and judgment debtor entered into a contract for supply of Indian sugar as per the provisions of the contract itself executed on 9/6/2016. The said copy annexed by the respondent also contains the identical arbitration clause as indicated in Annex.2. Apparently, the authenticity of the document Annex.2 has not been questioned and only the letter of the provision regarding non-production of the original agreement or a certified copy thereof has been emphasized.
(8 of 8) [ARBAP-26/2017] Recently, Hon'ble Supreme Court in PEC Limited vs. Austbulk Shipping SDN BHD : 2018 (6) Arb. L.R. 210 (SC), while dealing with identical issue, upheld the judgment of Delhi High Court in Austbulk Shipping (supra) relied on by learned counsel for the applicant and observed as under:
"20. It is relevant to note that there would be no prejudice caused to the party objecting to the enforcement of the award by the non-filing of the arbitration agreement at the time of the application for enforcement. In addition, the requirement of filing a copy of the arbitration agreement under the Model Law which was categorized as a formal requirement was dispensed with. Section 48 which refers to the grounds on which the enforcement of a foreign award may be refused does not include the non-filing of the documents mentioned in Section 47. An application for enforcement of the foreign award can be rejected only on the grounds specified in Section 48. This would also lend support to the view that the requirement to produce documents mentioned in Section 47 at the time of application was not intended to be mandatory."
In view of the law laid down by the Hon'ble Supreme Court and the fact that the respondent itself by way of additional affidavit has asserted agreement between the parties containing the arbitration clause, the objection raised in this regard also cannot be sustained.
In view of the above discussion, it is apparent that the preliminary objections raised regarding non-compliance of the provisions of Section 47 of the Act, 1996 have no substance, the same are, therefore, rejected.
List the application for further proceedings on 1 st March, 2019.
(ARUN BHANSALI),J 220-baweja/-
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