Madras High Court
Videocon Power Limited, Rep. By Its ... vs Tamil Nadu Electricity Board And Anr. on 9 December, 2004
Equivalent citations: 2005(3)ARBLR399(MADRAS), 2004(5)CTC668
Author: S. Ashok Kumar
Bench: S. Ashok Kumar
ORDER S. Ashok Kumar, J.
1. The above Execution Petition has been filed under Sections 44, 47, and 49 of the Arbitration and Conciliation Act, 1996, read with Order XXI, Rule 12, CPC and Order XIV, Rule 8 of the Original Side Rules for enforcement of the foreign arbitral award dated June 21," 2004. When this Execution Petition was filed, the Registry did not number it and only gave the S.R number on entertaining a doubt whether the Execution Petition is maintainable or not.
2. The brief facts of the contentions raised by the petitioner/decree holder are as follows:
The petitioner is a public limited company incorporated under the Indian Companies Act, 1956. The respondent is the Tamil Nadu Electricity Board. Between the petitioner and the respondent there was an arbitration proceedings before a foreign arbitral tribunal consisting of three members viz., (i) Mr.V.V.Veeder, Q.C., (the Chairman of the Tribunal appointed by the Secretary General of the Permanent Court of Arbitration at the Hague); (ii) Mr.Justice S.Mohan (Retd) (the respondent/judgment debtor's nominee; and (iii) Mr. Justice M.L.Pendse, (Retd)., the petitioner/decree holder's nominee) by invoking the arbitration agreement between the petitioner/decree holder and the respondent/judgment debtor contained in Article 173 of the Power Purchase Agreement dated February 2, 1998 as amended from time to time. The Arbitral Tribunal commenced its proceedings in November 2000. The arbitration proceedings were conducted in accordance with the UNCITRAL Rules of Arbitration as found in Article 17.3 of the Power Purchase Agreement. In accordance with the stipulation in the PPA the arbitration sittings were conducted at Singapore. After hearing the parties and considering the evidence let in by both the parties, the arbitral tribunal unanimously ruled in favour of the petitioner/decree holder by allowing the petitioner's claim for damages in a sum of Rs. 1,020,696,010/= and US$ 4,170,079 with post award simple interest on the Indian Rupee amounts at 13% per annum and on the US$ amounts at 5% per annum and also claim for legal and arbitration costs in the amounts of Rs. 1,078,370/= and US$ 125,000. The legal cost also carried post award simple interest on the Indian Rupee amounts at 13% per annum and on the US$ amounts at 5% per annum. The arbitral tribunal unanimously rejected the respondent/judgment debtor's counter claim for declaratory reliefs and compensation.
3. As per the Award dated 21.6.2004, the amount payable by the respondent/judgment debtor to the petitioner/decree holder was Rs.103,17,74,380 with an interest of 13% per annum from June 21, 2004 till payment. As on date, the amount awarded in favour of the decree holder under the foreign arbitral tribunal has remained unpaid. The seat of the arbitration being Singapore and the award having been made at Singapore and particularly in view of the express agreement between the parties that any award passed is subject to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 19858, the award sought to be enforced in these proceedings is a foreign award as defined under Section 44 of the Arbitration and conciliation Act 1996 and is governed by Chapter I of Part II of the said Act. The petitioner is thus entitled to seek the relief to record its satisfaction that the foreign award filed herein and marked as Annexure B is enforceable under Chapter I of Part II of the 1996 Act and on such recording the foreign arbitral award is to be executed under the provisions of code read with Or.XXXIX and XL of the Original Side Rules.
4. According to the petitioner this Court has territorial as well as pecuniary jurisdiction to entertain this petition. The respondent/judgment debtor has its registered office and carries on its business within the jurisdiction of this Court. The Garnishee Banks are also located within the jurisdiction of this Court.
5. The petitioner/decree holder prays (a) to record its satisfaction that the foreign arbitral award is enforceable under Chapter I of Part II of the 1996 Act; (b) execute the foreign arbitral award dated June 21,2004 attaching the Bank accounts/cash accounts and fixed deposits held by the respondent/Judgment debtor in the Garnishee Bank and its various branches more fully set out in Schedule I of the plaint to the extent of Rs.128 Crores and to direct the Garnishee Bank to deposit the same to the credit of the above Execution Petition and be applied in satisfaction of the award/decretal amount.
6. The first respondent has filed a counter through its legal advisor and Secretary in-charge. A petition for setting aside the award has been filed by the first respondent and therefore the present application is not maintainable at all. No doubt it is true that an arbitral award has been passed by the foreign arbitral tribunal. Challenging the said award a petition has already been filed by the respondent herein and the same is at the stage of numbering. At this stage the petitioner has chosen to file this Petition without fulfilling all the requirements contemplated under the Arbitration and Conciliation Act, 1996 before seeking relief asked for in the application. It is very clear that the Execution Petition itself has not been numbered and therefore the question of maintaining a petition under the provisions of Code of Civil Procedure also does not arise. The award cannot be enforced for want of satisfying the requirements for enforcement. The petitioner is not entitled to maintain the Execution Petition under Sections 44, 47 and 49 of the 1996 Act or for that matter read with Order XXI, Rule 11 of CPC, 1908. The fact that an unanimous award has been passed does not mean that the applicant is entitled to execute the award. Further, the award does not fulfill the requirement contemplated under law and therefore is not executable. The first respondent does not admit the calculations made by the petitioner as regards the amount claimed. There is no need to approach the Court in Singapore as stated by the petitioner. The first respondent is entitled to file a petition for setting aside the award before this Court. Further within a period of 90 days as contemplated under the provisions of the 1996 Act, a Petition has already been filed. Since the petition for setting aside the award has already been filed the question of paying the amounts under the award as claimed by the petitioner does not arise. Once a Petition for setting aside the award is filed the E.P., proceedings cannot be pursued. The first respondent has enough resources to pay the decree amount in the event of the Petition field by the first respondent is rejected by this Court. The first respondent has got strong reasons for not paying the amount as per the award, because according to the first respondent the award passed is erroneous and therefore the same has been challenged before this Court.
7. Along with the Execution Petition, the petitioner/decree holder has also filed Application No: 3986 of 2004 to issue a prohibitory order, prohibiting the garnishee bank from paying or delivering any cash deposits, reserves, receivables and Fixed Deposits held by the first respondent/judgment debtor lying in any of the respondent's bank accounts in the Garnishee Bank and its Branches for the decree amount pending disposal of the above Execution Petition.
8. The Point for consideration is:
(i) Whether the Execution Petition is maintainable? and
(ii) Whether an interim order should be passed as prayed for in Application No.3986 of 2004?
9. The fact that there was a Power Purchase Agreement (PPA) between the petitioner and the first respondent is not in dispute. The fact that a Three Member arbitral tribunal was constituted and had its sitting at Singapore as per Art.l7.3(a) of the PPA is also not in disputed. The respondent has also not disputed the fact that an award has been passed by the arbitral tribunal allowing the petitioner's claim for damages in a sum of Rs. 1,020,696,010 and US$ 4,170,079 with post award simple interest on the Indian Rupee amounts at 13% per annum and on the US$ amounts at 5% per annum and also claim for legal and arbitration costs in the amounts of Rs. 1,078,370 and US$ 125,000. The legal cost also carried post award simple interest on the Indian Rupee amounts at 13% per annum and on the US$ amounts at 5% per annum. It is pertinent to note that the arbitral tribunal unanimously rejected the first respondent's counter claim for declaratory relief and compensation. Under Clause 17.3 (C), there is an express agreement between the petitioner and the first respondent that any award under Article 17.3 was subject to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958. In view of the express agreement the award is sought to be enforced and this proceedings is for enforcement of a foreign award as defined under section 44 of the Arbitration and Conciliation Act, 1996 and is governed by Chapter I of Part II of the said Act.
10. It is contended by the petitioner that despite more than ninety days elapsing after the foreign arbitral award having been made the respondent/judgment debtor did not file any proceedings before the appropriate at Courts at Singapore seeking the setting aside of the foreign award. The respondent has also failed to make any payment to the petitioner and therefore the foreign arbitral award has become final and binding which has culminated in the filing of the Execution Petition against the respondent.
11. As far as the first respondent is concerned, it has contended that it has filed a Petition before this Court to set aside the foreign award and according to the first respondent the same is yet to be numbered. But the respondent is not able to furnish even the S.R number of the said petition and no proof has been produced before this Court to show that any petition has been filed to set aside the award within 90 days as contemplated under the Act.
12. The burden of proof lies on the parties against whom any award is sought to be enforced to prove to the Court dealing with the case that the award is not enforceable as has been held in Trans-Ocean Shipping Agency (Pvt) Ltd., v. Black Sea Shipping and Ors., . Except asserting that a petition has been filed to set aside the award, no other reason is submitted by the respondent as to why the foreign arbitral award should not be enforced before this Court.
13. According to the petitioner for enforcement of a foreign arbitral award, separate proceedings one for deciding the enforceability of the award to make it a rule of the Court or decree and another to take up execution petition thereafter is not necessary. In support of the said contention the learned Senior Counsel Mr.C.S. Vaidyanathan would press into service the judgment of the Supreme Court in Fuerst Day Lawson v. Jindal Exports Limited, wherein their Lordships of the Supreme Court held as follows:
"The only difference as found is that while under the Foreign Awards Act a decree follows, under the new Act the foreign award is already stamped as the decree. Thus, in our view, a party holding a foreign award can apply for enforcement of it but the Court before taking further effective steps for the execution of award has to proceed in accordance with sections 47 to 49. In one proceeding there may be different stages. In the first stage the Court may have to decide about the enforceability of the award having regard to the requirement of the said provisions. Once the Court decides that the foreign award is enforceable, it can proceed to take further effective steps for execution of the same. There arises no question of making foreign award a rule of the Court/decree again. If the object and purpose can be served in the same proceedings, in our view, there is no need to take two separate proceedings resulting in multiplicity of litigation...In our opinion, for enforcement of a foreign award there is no need to take separate proceedings, one for deciding the enforceability of the award to make it a rule of the Court or decree and the other to take up execution thereafter. In one proceeding, as already stated above, the Court enforcing a foreign award can deal with the entire matter."
14. Based on the observation of the Supreme Court which lays down the procedure for enforcement of a foreign award in India, the petitioner has filed the Execution Petition before this Court along with Application No.3986 of 2004. The Registry of this Court did not number the Execution Petition, but informed the petitioner that SR number will be given and that as and when the Court declare satisfaction as to the enforcement of the award the Execution Petition will be numbered.
15. Though the first respondent has claimed that it has field a Petition to set aside the award before this Court, no number has been furnished before this Court with regard to the said petition. It is the contention of the petitioner that the arbitral award has been passed at Singapore and the same has to be set aside only by the Courts in Singapore and not in India. Even assuming that this Court has got jurisdiction to entertain such a Petition by the first respondent the same is yet to be numbered and no interim order has been passed.
16. According to Clause (e) of sub-section (1) of Section 48 of the Arbitration and Conciliation Act, 1996 the competent authority to decide or suspend the award is the Courts of a country in which, or under the law of which, that award was made. Therefore for the purpose of the present case the reference sought under sub-section 3 of Section 48 to competent authorities for the purposes of the present case and in view of the provisions in Article 17.3(a) would be the authorities/Courts at Singapore. As per subsection (3) of Section 48, even assuming that this Court has got jurisdiction, this Court can pass orders or directing security to be given by the party against whom enforcement is sought. As far as this case is concerned, it is a fit case for such orders to be passed. Section 48 of the Arbitration and Conciliation Act, 1996 envisages certain conditions for enforcement of the foreign award. As far as the petitioner is concerned none of the conditions disable the petitioner from filing a petition for enforcement of the foreign award. Section 48 corresponds to Article V of the New York Convention and Section 7 of the 1961 Act. This Section adopts Article 36 of the UNCITRAL Model Law under which Recognition or enforcement of an arbitral award, irrespective of the country in which it was made may be refused. The conditions enumerated in Art.36 are:
(a) At the request of the party against whom it is invoked, if that party furnishes to the competent Court where recognition or enforcement is sought proof that,
(i) a party to the arbitration agreement referred to in Article 7 was under 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
(ii) The party against whom the award is invoked was not given proper notice of the appointment of an arbitration or of the arbitral proceedings or was otherwise unable to present his case; or
(iii)The award deals with a dispute 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 recognised and enforced, or
(iv) The composition of the Arbitral Tribunal 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
(v) The award has not yet become binding on the parties or has been set aside or suspended by a Court of the contrary in which, or under the law of which that award was made;
All the above conditions do not apply as far as the respondents are concerned.
17. Section 49 of the Act which deals with enforcement of foreign awards reads as follows:-
"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."
18. Thus if the conditions for enforcement are fulfilled the Court is satisfied about enforceability of a foreign award, the award is deemed to be a decree of that Court and must be executed as it is. The Act does not make any distinction between the enforcement and execution. Both words are interchangeable. An award is executable by its own force. It may be mentioned that even in case of domestic award the same is the position.
19. By virtue of Art.l7.3(d) of the Power Purchase Agreement, the parties have contracted that any rights of appeal available at law against an arbitral award may be exercise only after a party has deposited the amount of the award in the Court or Tribunal of competent jurisdiction. Thus, on a conjoint reading of the law as well as the contractual stipulations as well as the facts and circumstances of the case, the petitioner is entitled to maintain the petition for execution of the foreign award and also for a prohibitory order against the Garnishee Bank.
20. In the result, the Registry is directed to allot number for the Execution Petition. As regards Application No.3986 of 2004 is concerned, there will be a prohibitory order prohibiting the Garnishee Bank and its Branches from paying or delivering any cash deposits, reserves, receivables and Fixed Deposits held by the first respondent/judgment debtor lying in any of the respondent's bank accounts in the Garnishee Bank and its Branches, set out in Schedule-I of Judges Summons upto a sum of Rs. 127,15,34,918 pending disposal of the above Execution Petition. No costs.