Delhi High Court
Jindal Exports Ltd. vs Fuerst Day Lawson Ltd. on 1 September, 1999
Equivalent citations: 1999(51)DRJ170
Author: S.K. Aggarwal
Bench: S.K. Aggarwal
JUDGMENT Devinder Gupta, J.
1. The preliminary objection raised by the respondent is about maintainability of this appeal, which has been filed against the order passed on 19.2.1999 by learned Single Judge. Appeal has been preferred under Section 10 of the Delhi High Court Act with a prayer to set aside the execution proceedings instituted by the respondent.
2. Facts in brief are that on 1.8.1994 parties entered into an agreement by which the appellant agreed to supply 108 Metric Tonnes of Menthol Crystals to the respondent during the period January, 1995 to June, 1996. The appellant could not supply the stipulated quantity of goods within time, therefore, sought extension of time from the respondent. A notice was issued by the respondent to the appellant in repudiator breach on the appellant's obligation under the contract for supply of remaining quantity of good. On 18.12.1995 claim was filed by the respondent before the International General Produce Association, London, U.K. (hereinafter referred to as "the IGPA"), the Arbitral body nominated by the respondent. The claim was for short fall in supply of goods in respect of the period July to December, 1995. Protest was raised by the appellant before the IGPA that there did not exist any Arbitral disputes and as such the Arbitrator had no jurisdiction to proceed with the reference. On 13.8.1996 Award No. 1030 was passed by the IGPA against the appellant. Two notices were issued by the respondent holding the appellant in repudiator breach of contractual obligation in respect of the remaining supplies for the period January to June, 1996. Claim was lodged by the respondent with IGPA on which also Award No. 1034 was passed by the IGPA on 16.10.1996. The respondent straightaway filed two execution petitions No. 168 and 169 of 1998 in this Court in respect of the two aforementioned Awards dated 13.8.1996 and 16.10.1996 respectively. On 4.8.1998 learned Single Judge directed issuance of order of attachment in respect of the properties, of the appellant company to secure execution of the foreign awards. On coming to know of filing of the execution petitions and of the order of attachment, two separate applications, namely, EA. 347/98 and EA. 346/98 were filed in the two execution proceedings No. 168 and 169 of 1998 respectively. In those applications, the appellant challenged the maintainability of the execution proceedings arid validity of the orders passed therein. By order dated 9.9.1998 learned Single Judge recalled the order of attachment in both the execution proceedings subject to the appellant's furnishing security to the extent of Rs. 4.24 Crores.
3. The main objection raised by the appellant about the maintainability of the execution proceedings has been that the Awards are covered by the New York Convention and whether the Foreign Awards Recognition & Enforcement Act, 1961 (hereinafter referred to as "FARE Act") or the Arbitration & Conciliation Act. 1996 (hereinafter referred to as "the A&C Act") applied, the awards being foreign awards are not liable to be executed proprio vigore. The awards under the two Acts had to be sued upon, when the objection, set out in Section 7 of the FARE Act, 1961 or under Section 48 of the A&C Act could be raised by the party against whom awards have been made. On such questions being raised, issues would then have to be framed, which would have to be tried before a judgment is delivered. Only then a decree capable of execution would come into existence.
4. Learned Single Judge by order dated 19.2.1999 disposed of E.A. 374/98 and proceeded to dismiss Execution Petition No. 168/98 holding that the same was not maintainable. It was held that arbitral proceedings having commenced prior to the coming into force of A&C Act, 1996, the enforcement of the award would have to be sought under FARE Act, 1961 and consequently ordered release of security to the extent 1.74 Crores. By a separate order passed on the same day in EA No. 346/98 filed in Execution Petition No. 16/98, it was held that execution proceedings were not maintainable prior to enforcement proceedings in respect of the second Award and then learned Single Judge proceeded to convert the execution proceedings instituted by the respondent into proceedings seeking enforcement of the foreign award on the ground that there was sufficient compliance with the requirements of Section 47 of the A&C Act and also directed for retaining security to the extent of Rs. 2.5 Crores furnished by the appellant.
5. The order passed in EA No. 346/98 in Ex. Petition No. 169/98 is under challenge in this appeal.
6. Learned counsel for the respondent vehemently contended that Part II of the A&C Act deals with enforcement of certain foreign awards. Chapter I in Part II would apply to the award in question. Section 50 of the A&C Act enumerates the orders against which appeal is provided. The impugned order is not covered by Section 50, therefore, no appeal is maintainable against the said order under Section 50 of the A&C Act. Section 10 of the Delhi High Court Act does not confer any right of appeal. It provides only for a forum of appeal. Appeal is a creature of statute and there is no inherent right of appeal. As such the appeal is not maintainable. Reliance has been placed by learned counsel for the respondent on the decision of Division Bench of this Court in East India Hotels Ltd. v. Jyoti Pvt. Ltd., 1996 III AD (Delhi) 242 in support of this proposition. It has further been contended by him that no appeal lies from an order, which is not covered by any of the clauses of Section 50. As the order does not fall in any of the clauses of Section 50, no appeal would lie to a Division Bench even under Clause 10 of the Letters Patent, for which reliance has been placed on the decision of the Supreme Court in State of West Bengal v. Gourangalal Chatterjee, .
7. Mr. Venugopal has vehemently contended that neither under FARE Act, 1961, nor under A&C Act, 1996 execution application is maintainable. Learned Single Judge has also held that execution petition is not maintainable. Therefore, execution petition not being a proceeding either under FARE Act, 1961 or under A&C Act, 1996, an order passed in such proceedings cannot be taken to be an order passed under the Act. The order passed by learned Single Judge of this Court has thus to be taken as an order passed in exercise of inherent jurisdiction on Original Side to which Clause 10 of the Letters Patent would apply. Nature of order is such that it would be covered by the expression "judgment" under in Clause 10 of the Letters Patent and, therefore, appeal would lie to this Court.
8. We have given due consideration to the submissions made at the Bar. One important aspect to which we may make reference at this stage is that against the order passed by learned Single Judge in EA No. 374/98 in Execution Petition No. 168/98, the respondent had preferred SLP (Civil) No. 7674/99 in which on 13.7.1999 the following order was passed by the Supreme Court:-
"Mr. K.K. Venugopal, learned Senior Counsel appearing for the respondents on caveat raises a preliminary objection and states that the impugned order can be validly made a subject matter of appeal in the High Court under Section 50(1)(b) of the Arbitration & Conciliation Act or Section 10 of the Delhi High Court Act. We find substance in this preliminary objection and Mr. Venugopal further states that he will not object to the maintainability of the appeal if it is so filed. As the petitioner has moved this Court in Special Leave Petition directly against the order of learned Single Judge he may file the requisite appeal against the aforesaid judgment, if so advised, within 15 days from today and the same if so filed will be decided on its own merit as the learned senior counsel for the respondents fairly con-
cedes that no objection on ground of limitation will be raised by the respondents in that eventuality. The Special Leave Petition is disposed of accordingly. The Special Leave Petition is disposed of accordingly without going into the merits of the controversy between the parties."
9. Only for the purpose of deciding the preliminary objection, which has been raised by learned counsel for the respondent, it may be observed that Section 49 of the A&C Act, 19% provides that only where Court is satisfied that foreign award is enforceable under Chapter I of Part II, being New York Convention Awards that the said award shall be deemed to be a decree of that Court. Therefore, it would not be permissible to straight away file execution application in Court and in order to enforce the award, it would be necessary, for a person seeking enforcement, to first approach the Court and seek appropriate adjudication, as envisaged under Section 48 of the A&C Act. Such an adjudication was not sought and only execution application was filed, which by the impugned order has been held to be not maintainable. Learned Single Judge observing that since the petition substantially complies with the requirement of an application under Section 47 of the A&C Act, 1996, ordered that it be treated as an application under Section 47 of the said Act. Admittedly, the impugned order is such against which an appeal would not lie under Section 50 of the Act. The question, which was raised by the appellant before learned Single Judge in EA. 346/98 was about the very maintainability of execution petition. The objection is such, which if allowed, would have the effect of terminating the main proceedings. Learned counsel for the respondent is perfectly justified in placing reliance upon the decision of this Court in East India Hotels Ltd. case (supra) that Section 10 of the Delhi High Court Act does not confer any right of appeal but provides only for a forum of appeal. As such appeal would not lie under Section 10 of the Delhi High Court Act unless there is any other provision under which it with be permissible for the appellant to file appeal against the impugned order to a Division Bench of this Court.
10. Now the question is whether the appeal would be maintainable under Clause 10 of the Letters Patent or not? Reliance placed by learned counsel for the respondent in M/s. Gourangalal Chatterjee's case (supra) is misconceived in as much as the impugned order is not such, which learned Single Judge has passed in any of the proceedings taken out under the A&C Act. The order on the face of it and as has rightly been observed, in the impugned order by learned Single Judge is in proceedings, which were initiated by respondent not under the Act but de hors the Act. For that reason alone by the impugned order proceedings have been ordered to be converted into proceedings under the A&C Act. Therefore, the impugned order has to be treated as one having been passed by learned Single Judge not under any of the provisions of A&C Act, but in exercise of his inherent jurisdiction on original side of this Court. Thus, the impugned order is such, which would be deemed to have been passed de hors the provisions of the Act.
11. The next question to be considered is whether the impugned order would be covered by the expression "judgment" so as to enable the appellant to challenge the same before a Division Bench of this Court under Clause 10 of the Letters Patent. In Shah Babulal Khimji v. Jayaben D. Kania and Anr. , tests were culled out to determine as to when an order passed by a learned Single Judge can be said to be judgment. It was held that every interlocutory order cannot be regarded as a judgment but only those orders would be "judgments", which decide matters of moment or affect vital and valuable rights of the parties and which work serious injustice to the party concerned. While laying down the guide lines to determine whether or not an order passed by the trial Judge would be 'judgment' within the meaning of the Letters Patent, instances have been given therein, which are illustrative and dot exhaustive. Tests laid down by Sir Arnol White, C.J. in T.V. Tulzaram Row v. M.K.R.V. Allagappachettiar (1912) I.L.R. 35 Madras 1, were adopted and approved, which inter alia also laid down that if there is a possibility of the defendant succeeding and thereby bringing about termination of the proceedings by an order being passed the other way, the order would be an appealable because the order involves an adverse determination or adjudication to a valuable right of the defendant.
12. There is no manner of doubt that upholding of the objection of the appellant ultimately is likely to have an effect of terminating the proceedings initiated by the respondent as was ordered by learned Single Judge in the other execution case against which the respondent has preferred an appeal. For that reason, we are of the view that applying the tests laid down in Shah Babulal Khimji's case (supra), the appeal would be maintainable under Clause 10 of the Letters Patent. We direct that the appeal be treated as one having been filed under Clause 10 of the Letters Patent.
13. To be de-registered as F.A.O. (OS) and be registered as L.P.A.