Calcutta High Court
Veikle Grain Ltd vs Vijaywargi Pulses & Grains Agency Pvt. ... on 16 January, 2020
Author: Debangsu Basak
Bench: Debangsu Basak
ORDER SHEET
GA No. 1267 of 2019
Newly numbered as
GA No.1 of 2019
EC No.113 of 2019
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
VEIKLE GRAIN LTD.
Versus
VIJAYWARGI PULSES & GRAINS AGENCY PVT. LTD.
BEFORE:
The Hon'ble JUSTICE DEBANGSU BASAK
Date : 16th January, 2020.
Appearance:
Mr. Siddhartha Mitra, Sr. Adv.
Mr. D. Gomes, Adv.
Mr. Jishnu Chowdhury, Adv.
Mr. Aritra Basu, Adv.
The Court : Old GA No.1267 of 2019, New GA No.1 of 2019 in EC No.113 of 2019 is an application at the behest of the award-debtor seeking dismissal of the execution petition and a declaration that the award dated July 15, 2014 is unenforceable in India.
Learned advocate appearing for the award-debtor and in support of the application submits that, the award was passed by the Grain and Feed Trade Association (GAFTA) London, United Kingdom. The arbitral award dated July 15, 2 2014 is, therefore, a foreign award. He submits that, the arbitration was a two tier arbitration proceedings with the first award being passed on February 1, 2013. On appeal, the Appellate Tribunal of GAFTA passed the arbitral award dated July 15, 2014 which is sought to be executed. He draws the attention of the Court to the Tabular Statement in the execution petition. He submits that, the award-holder did not make any prayer under Section 49 of the Arbitration and Conciliation Act, 1996. According to him, in absence of the Court being invited to return a satisfaction that the foreign award is enforceable under the Act of 1996, the award cannot be enforced. According to him, only after the Court returns a finding that the foreign award is enforceable, will such foreign award partake the character of a decree of Court and become executable. Such prayer not being made and the Court not being invited to return such satisfaction, according to him, the execution petition cannot be proceeded with as it stands today. He relies upon AIR 1999 Bombay 417 (Toepfer International Asia Pvt. Ltd. vs. Thapar Ispat Limited ) in support of his contention.
Relying upon Section 48(1)(a) of the Act of 1996, learned advocate appearing for the award-debtor submits that, the Court should refuse enforcement of the foreign award in the present case as, the agreement between the parties resulting in the foreign award is not valid under the law to which the parties have subjected it to. He submits that, a different period of limitation was prescribed by the agreement between the parties which is at variance to that prescribed by the laws of limitation in India. Therefore, according to him, the 3 agreement between the parties is not valid under the law to which the parties have subjected it.
Learned advocate appearing for the award-holder next submits that, the arbitral award did not take into consideration issues relating to quality as raised by the award debtor in the arbitral proceedings. He submits that, such issue as to quality was raised contemporaneously. The arbitral tribunal ought to have taken into consideration such issues. In the event such issues were taken into consideration, then, the arbitral award could not have been passed. Therefore, according to him, the arbitral award should not be enforced by the Court in India.
Learned senior advocate appearing for the award-holder submits that, the contentions raised on behalf of the award-debtor are no longer res integra. He relies upon 2001 6 SCC 356 (Fuerst Day Lawson Ltd. vs. Jindal Exports Ltd.) and submits that, separate application is not required to be filed by the award-holder holding a foreign award and produce evidence as contemplated under Section 47 of the Act of 1996. He submits that, Fuerst Day Lawson Ltd. (supra) was followed by the Calcutta High Court in the order dated July 6, 2017 passed in GA 2814 of 2013 in EC 322 of 2013 (Swiss Singapore Overseas Enterprises Pte. Ltd. vs. LMJ International Ltd.).
Learned senior advocate appearing for the award-holder relies upon (2014) 2 SCC 433 (Shri Lal Mahal Ltd. vs. Progetto Grano SPA) and submits that, Section 48 of the Act of 1996 does not give an opportunity to the Court in seisin of the execution petition of a foreign award to have a 'second look' into the foreign 4 award. Procedural defects in the course of the foreign arbitration do not lead necessarily to the invalidity of the foreign award enforcement of which it sought. He draws the attention of the Court to the fact that, the Calcutta High Court in 2017 (4) CHN (CAL) 621 (Sleepwell Industries Co. Ltd. vs. LMJ International Ltd.) did not follow Toepfer International Asia Pvt. Ltd. (supra) and that it followed Shri Lal Mahal Ltd. (supra). He submits that, the Supreme Court in (2019) 5 Supreme Court Cases 302 ( LMJ International Ltd. vs. Sleepwell Industries Company Ltd.) dismissed the civil appeal directed against Sleepwell Industries Co. Ltd. (supra).
In the facts of the present case, the parties entered into a contract for the sale and purchase of 1080 Metric Tones of Canadian Whole Grain Peas Crop 2009 under Group Contract No. 10-02-0011 dated February 12, 2010 as revised on February 16, 2010. Disputes and differences arose between the parties to such contract which was referred to arbitration under the terms and conditions of GAFTA. Notice of arbitration was issued on May 26, 2011. The Dispute Resolution service of GAFTA appointed the Arbitral Tribunal. The award debtor raised a preliminary objection on the ground of limitation and lack of arbitration agreement. Such issue was decided by the Arbitral Tribunal by the interim award dated May 10, 2012. The Arbitral Tribunal found against the award debtor on such issues. The Arbitral Tribunal thereafter proceeded to pass its final award on February 1, 2013. Under the final award, the award debtor was required to pay a sum of US $ 157,989.25 together with 4% compound interest thereon at quarterly rests from December 8, 2010 onwards till the date of the award. The 5 judgment debtor preferred an appeal under the GAFTA Rules against the award of the Arbitral Tribunal being Appeal Award No. 4343A. Such appeal was disposed of on July 15, 2014. The appeal award dated July 15, 2014 requires the award debtor to pay a sum of USD 158,039.25. It directs the award debtor to pay interest at the rate of 4.5% per annum compounded at three monthly intervals from July 5, 2010 till the date of payment. It requires the award debtor to pay fees and expenses of £ 12,105.00 and a further sum of 7,342.00 in addition thereto. The appeal award requires the award debtor to pay the award-holder representative's reasonable expenses. This appeal award is in execution in this application at the behest of the award-holder.
Law relating to arbitration and conciliation is consolidated and codified in the Arbitration and Conciliation Act, 1996. The Act of 1996 is widely understood to be modeled on the UNCITRAL Model Law on International Commercial Arbitration, 1985. The Act of 1996 is divided into five parts with each part containing chapters and sections. Part II of the Act of 1996 deals with Enforcement of two kinds of foreign awards namely, New York Convention Awards and Geneva Convention Awards. Part II of the Act of 1996 containing two Chapters. Chapter I deals with New York Convention Awards and Chapter II deals with Geneva Convention Awards. In the present case, the award debtor do not question the fact that the foreign award in question comes within the definition of Section 44 of Chapter I of Part II of the Act of 1996. Section 46 of the Act of 1996 lays down that, a foreign award which is enforceable would be binding on the parties to it. Section 47 of the Act of 1996 lays down the quality 6 and quantity of evidence required to be produced in Court when a party applies for enforcement of the foreign award. In the facts of the present case, there is no dispute that requisite evidence under Section 47 of the Act of 1996 is available on record. There is no dispute that the award debtor suffered the appeal award sought to be enforced here after contest.
It is the contention of the award debtor that, since a lessor period of limitation was prescribed in the agreement between the parties relating to arbitration, and the GAFTA Rules prescribe lower period of limitation than what the Indian laws prescribe, the arbitral award is bad in law and unenforceable in India. in view of Section 48 of the Act of 1996. Section 48 of the Act of 1996 lays down the conditions on fulfilment of which the enforcement of a foreign award may be refused. The award debtor rely upon Section 48 (1)(a) of the Act of 1996 in support of its contention. The award debtor entered into and acted on the basis of contract containing an arbitration agreement governed by the GAFTA rules. There is nothing on record to substantiate that, the appeal award put into execution do conform to Part II of the Act of 1996. The GAFTA Rules prescribe a period of limitation for the initiation and conduct of the arbitration. The award debtor agreed to abide by such period of limitation. The award debtor is required to be held to the terms of the contract. Nothing is placed on record to suggest that, let alone substantiate that, the rules of GAFTA affected any right of the award-debtor.
Section 49 of the Arbitration and Conciliation Act, 1996 which is as follows:-
7
"49. Enforcement of foreign awards:- Where the Court is satisfied that the foreign award is enforceable under this Chapter, the award shall be deemed to be a decree of that Court."
Section 49 of the Arbitration and Conciliation Act, 1996 is under Part II Chapter I of the Act of 1996. It requires that, the Court must be satisfied that, the foreign award is enforceable under the Act of 1996. In the present case, there is no material placed on record to substantiate that, the foreign award sought to be executed in the execution petition is not enforceable under Chapter-I of Part-II of the Act of 1996.
Fuerst Day Lawson Ltd. (supra) is of the view that a party holding foreign award can apply for enforcement but the Court before taking effective steps for the execution of the award has to proceed in accordance with Sections 47 to 49 of the Act of 1996.
The Supreme Court in Shri Lal Mahal Ltd. (supra) is of the following view:
"45. Moreover, Section 48 of the 1996 Act does not given an opportunity to have a "second look" at the foreign award in the award enforcement stage. The scope of inquiry under Section 48 does not permit review of the foreign award on merits. Procedural defects (like taking into consideration inadmissible evidence or ignoring/rejecting the evidence which may be of binding nature) in the course of foreign arbitration do not lead necessarily to excuse an award from enforcement on the ground of public policy.8
46. In what we have discussed above, even if it be assumed that the Board of Appeal erred in relying upon the report obtained by the buyers from Crepin which was inconsistent with the terms on which the parties had contracted in the contract dated 12-5-1994 and wrongly rejected the report of the contractual agency, in our view, such errors would not bar the enforceability of the appeal awards passed by the Board of Appeal."
The Calcutta High Court in Swiss Singapore Overseas Enterprises Pte. Ltd. (supra) while considering the application challenging maintainability of the execution application on the ground that requirement of Section 47 of the Act of 1996 was not followed, considered the objections and applied the ratio laid down in Fuerst Day Lawson Ltd. (supra). In Sleepwell Industries Co. Ltd. (supra) the Calcutta High Court again considering the application ostensibly under Section 47 under the Act of 1996 applied the ratio of Shri Lal Mahal Ltd. (supra). Although Toepfer International Asia Pvt. Ltd. (supra) was cited before the Calcutta High Court in Sleepwell Industries Co. Ltd. (supra), the same was not followed. A civil appeal directed against Sleepwell Industries Co. Ltd. (supra) was dismissed by the Supreme Court in LMJ International Ltd. (supra).
In view of the pronouncement of the Supreme Court in LMJ International Limited (supra) and Shri Lal Mahal Limited (supra), the award debtor cannot be permitted to invite the Court to have a 'second look' into the foreign award on the merits of the case. Essentially, the award debtor in the facts of the present case is requiring the Court to have a 'second look' with regard to the foreign award. According to the award debtor, the issue of quality raised by the award 9 debtor before the Arbitral Tribunal was not considered. If the Court enters into such arena, then the executing Court would be sitting in appeal over the award, which is impermissible.
In such circumstances, I find no merit in the present application. Old GA No. 1267 of 2019 newly numbered as GA No. 1 of 2019 in EC No. 113 of 2019 is dismissed without any order as to costs.
Learned Senior Advocate appearing for the award-holder seeks order in terms of prayers [a], [b] and [c] of the Tabular Statement. Since the award remains outstanding and the challenge to the maintainability of the execution petition failed, it would be appropriate to pass orders in terms of prayers [a], [b] and [c] of the Tabular Statement.
List the execution petition in the monthly list of February, 2020.
(DEBANGSU BASAK, J.) B.Pal/TR/snn