Madras High Court
M/S Bharat Salt Refineries Ltd vs M/S Compania Naviera "Sodnoc" on 1 August, 2008
Author: P.P.S.Janarthana Raja
Bench: K.Raviraja Pandian, P.P.S.Janarthana Raja
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 01.08.2008 CORAM THE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIAN AND THE HONOURABLE MR.JUSTICE P.P.S.JANARTHANA RAJA O.S.A.NO.52 of 2008 & M .P.No.1 of 2008 M/s Bharat Salt Refineries Ltd., Haveli, 32-D, North Crescent Road, T.Nagar, Chennai-600 017. .. Appellant Vs. 1.M/s Compania Naviera "SODNOC", No.16, Aristidon Street, Piracus 185 31, Greece. 2.Christopher J W Moss, 4, Charlothe Place, Wilton Road, London. .. Respondents For Appellant : Mr. V.Venkadasalam For respondents : Mr.R.Murari O.S. Appeal filed under Order XXXVI Rule 9 of O.S. Rules and Clause 15 of the Letters Patent against the order dated 05.03.2007 passed by the learned single Judge in O.P.No.388 of 2005. JUDGMENT
P.P.S.JANARTHANA RAJA,J.
The above appeal is filed against the order dated 05.03.2007 passed by the learned single Judge in O.P.No.388 of 2005.
2. The brief facts are as follows:
The appellant is a limited company incorporated under the Companies Act carrying on the business at Haveli, 32-D, North Crescent Road, T.Nagar, Chennai-600 017. The first respondent is also the company carrying on business in the name and style of M/s Compania Naviera "SODNOC", No.16, Aristidon Street, Piracus 185 31, Greece. The second respondent is a sole arbitrator, who passed an award dated 02.03.2000. A Charter Party dated 24.08.1998 was entered into between Mutual Task Maritime Limited and the appellant herein in respect of the vessel MV Sea Mana, which was owned by Mutual Task Maritime Limited. As per the terms of the Charter party, the appellant chartered the Vessel MV Sea Mana for the carriage of 8,000 m.t. of bagged salt from Port Kandla, India to Tanga, Tanzania, on terms and conditions set out in the said charter party. The said Mutual Task Maritime Limited claimed damages for detention of a sum of US $ 43,483.49 together with interest. The appellant denied the claim. Because of the dispute, the matter was referred to the second respondent, who is the Arbitrator. The place of arbitration is London. The parties to the agreement appeared before the Arbitrator and placed their respective case. The Arbitrator passed an award on 02.03.2000, directing the appellant to pay the claim amount of US $ 43,483.49 to the Mutual Task Maritime Limited together with interest at 8% compounded with three monthly rests from 01.12.1998. After the award being passed, the awardee, the Mutual Task Maritime Limited assigned the award in favour of the first respondent assigning all rights arising out of the Charter Party dated 24.08.1998. Based on the assignment of award, the first respondent sent a letter of demand dated 29.06.2002 to the appellant to make payment of the amount due under the award. The appellant denied the liability to pay the said amount to the first respondent. Then another reminder was also sent by the first respondent to the appellant, but there was no response from the appellant. As no amount was paid by the appellant, the first respondent filed a petition under Sections 47 and 49 of the Arbitration and Conciliation Act, 1996 for the following reliefs.
"a. That the award dated 2nd March 2000, be deemed to be a decree of this Hon'ble Court.
b. To pronounce judgment according to the Award dated 2nd March 2000, made and published by the second respondent (the Arbitrator) and direct the first respondent to pay to the petitioners a sum of USD 63,923.98 as more particularly set out in paragraph 6 of this petition.
c. The respondents be ordered and decreed to pay the petitioners the cost of this petition.
d. For such further orders and reliefs as this Hon'ble Court may deem fit and proper."
3. The appellant opposed the petition and resisted the claim of the first respondent. After considering the argument advanced by both the learned counsel, by reason of the impugned order, this Court held that the award dated 02.03.2000 is enforceable in law and directed the appellant to make the payment as per the award. The correctness of the said order is assailed in this appeal.
4. Learned counsel appearing for the appellant contended that the first respondent is not party to the Charter Party Agreement. They are strangers to the agreement. Therefore, the first respondent has no right to enforce the award. He further contended that the petition filed for enforcement of the award is barred by limitation. The order impugned is not in accordance with law and the same has to be set aside.
5. Per contra, learned counsel appearing for the respondent submitted that this appeal itself is not maintainable, as no appeal would lie to the Division Bench against the order of the learned single Judge under Letters Patent, in view of Section 50 of the Arbitration Act. He further contended that the respondent can enforce the arbitration award, as there is a valid assignment in favour of the respondent. The petition filed by the first respondent is not barred by limitation. Therefore, the order passed by the learned single Judge is in accordance with law and hence, the appeal deserves no merit consideration and has to be dismissed.
6. Heard the learned counsel on either side and perused the materials on record.
7. From the rival contentions stated above, the points for consideration in this appeal are as follows:
1. Whether the appeal is maintainable in law?
2. Whether the assignment made in favour of the respondent is valid in law?
3. Whether the petition filed for enforcement of the award is barred by limitation?
Point No.1:
8. Part II of the 1996 Act deals with enforcement of certain Foreign Awards and further provides for appellate remedy under certain circumstances. Section 50 is the relevant provision for filing appeal, which reads as under:
"50. Appelable Orders-- (1) An appeal shall lie from the order refusing to-
(a) refer the parties to arbitration under Section 45; (b) enforce a foreign award under Section 48, to the Court authorised by law to hear appeals from such order.
(2) No second appeal shall lie from an order passed in appeal under this Section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court."
9. From a reading of the above provision, it is clear that the appeal shall lie from an order refusing to refer the parties to arbitration under Section 45 and refusing to enforce a foreign award under Section 48 of the Act. Sub Section 2 of Section 50 of the Act contemplates that no second appeal shall lie from an order passed in appeal under this Section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court. So it is categoric, that the legislature intended that only certain orders are appealable. In this case, the foreign award is enforced under Section 48 of the Act and there is no refusal. Once the award is enforced, no appeal is provided under Section 50 of the Act and no second appeal would lie against the order. The only remedy available for the appellant is to file an appeal before the Supreme Court and he does not have the benefit of the second appeal. The right of appeal envisaged under Section 50 of the Act is substantive and has emanated from the statute itself. Since the Arbitration and Conciliation Act does not provide for right of appeal against an order allowing execution, then the same cannot be by-passed by invoking Clause 15 of the Letters Patent. Clause 15 of the Letters Patent is nothing but a law authorizing Court to hear internal appeals in the original side. It is clear that under Section 50 of the Act, appeal can be preferred [amongst others] if the competent Court refuses to enforce a foreign award, which would effectively mean that if there is no refusal then consequently there is no right of appeal.
10. Section 50 of the Act, according to us, is exhaustive though it is slightly different from the corresponding provision Section 37 under part I of the Arbitration and Conciliation Act. A perusal of Section 37 is required since it is similar to section 50 of the Act which is in controversy now. Section 37 of the Act reads as follows:
"(1) An appeal shall lie from the following orders (and from no others) to the court authorized by law to hear appeals from original decrees of the court passing the order, namely,-
(a) granting or refusing to grant any measure under Section 9;
(b) setting aside or refusing to set aside an arbitral award under Section 34.
(2) An appeal shall also lie to a Court from an order of the arbitral tribunal.
(a) accepting the plea referred to in Sub-section (2) or Sub-section (3) of Section 16; or
(b) granting or refusing to grant an interim measure under Section 17.
(3) No second appeal shall lie from an order passed in appeal under this Section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court."
11. As per Section 37 (1)(a) of the Act, an appeal shall lie from original decree of the Court granting or refusing to grant measure under Section 9. Sub Clause (b) provides appeal against the order i.e., setting aside or refusing to set aside an arbitral award under Section 34. Sub-section (2) (a) of section 37 provides that appeal shall also lie to the Court from an order of the arbitral tribunal accepting the plea under Sub-section (2) or Sub-section (3) of Section 16 and Sub-section (2)(b) contemplates appeal against the order granting or refusing to grant an interim measure under Section 17 i.e. at the time of pendency of the arbitration proceedings by the Tribunal. Sub-section (3) says that no second appeal shall lie from the orders passed in appeal under this section. Sub Section (3) of Section 37 and sub section (2) of Section 50 of the Act are identically moulded/worded.
12. The learned counsel for the appellant to bring forth his contention that a second appeal would be maintainable heavily relied on the Calcutta High Court judgment reported in 2008 (1) Arb. L.R. 83 (LMJ INTERNATIONAL LTD. VS. SEA STREAM NAVIGATION LTD.), wherein in para 26, with the issue of maintainability of appeal against the enforcement of foreign award has been dealt with, which reads as follows:
"26.We have already quoted the provision of Section 50 of 1996 Act and by this section we are of the view, the provision of Clause 15 has not been affected and/or taken away albeit sub-section (2) thereof does not provide for second appeal. We have already noted Full Bench decision of Madras High Court and it appears therein upon reading language of Section 39(2) of 1940 Act which is identical with that mentioned in Section 50 of 1996 Act by the legislature, the above bench held that provision of Clause 15 remains untouched. Accordingly, we opine that Section 50 does not affect or alter Clause 15 in any manner."
From a reading for the above judgment, it is clear that Calcutta High Court mainly relied on the Full Bench decision of this Court reported in AIR 1962 Madras 52 in the case of MOOLCHAND VS. KISSINDOSS and held that the provision of Clause 15 remains untouched and accordingly Section 50 of the Act does not affect or alter Clause 15 of the Letters Patent in any manner.
13. Per contra, the learned counsel appearing for the respondent relied on the judgment of this Court reported in 2004 (2) CTC 334 (KARAIKAL MUNICIPALITY BY THE COMMISSIONER, KARAIKAL VS. NABISSA UMMAL AND OTHERS, wherein it has been held that no Letters Patent appeal is maintainable against the order of the learned single Judge of this Court in a matter arising under the Arbitration Act and in para 5 of the said judgment, it has been held as follows:
"5. The said judgment has been over-ruled by a decision of the Full Bench in Moolchand Kevalchand Daga Vs. Kissindoss Giridhardoss, 1974 L.W. 408, holding that the expression "Second Appeal" in Section 39) of the Arbitration Act would not apply to an appeal under Clause 15 of the Letters Patent from one Judge of the High Court to two or more Judges of the same Court. The above-said principle held in the said judgment has been declared as not good law by the Supreme Court in Union of India Vs. Mohindra Supply Co., AIR 1962 SC 256. The Apex Court has held as follows:
"(5) The problem to which attention must then be directed is whether the right to appeal under the Letters patent is at all restricted by S.39, sub-secs. (1) and (2). Clause 10 of the Letters Patent of the High Court, in so far as it is material, provides:
" And we do further ordain that an appeal shall lie to the said High Court ...... from the judgment (not being a judgment passed in exercise of appellate jurisdiction by a Court subject to the superintendence of the said High Court and not being an order made in the exercise of revisional jurisdiction......) of one Judge of the High Court...."
By this clause, a right to appeal except in the cases specified, from one Judge of the High Court to a Division Bench is expressly granted. But the Letters Patent are declared by C1.37 subject to the legislative power of the Governor-General in Council and also of the Governor-in-Council under the Government of India Act, 1915, and may in all respects be amended or altered in exercise of legislative authority. Under S.39(1), an appeal lies from the orders specified in that sub-Section and from no others. The legislature has plainly expressed itself that the right of appeal against orders passed under the Arbitration Act may be exercised only in respect of certain orders. The right to appeal against other orders is expressly taken away. If by the expression provision contained in S.39(1), a right to appeal from a judgment which may otherwise be available under the Letters Patent is restricted, there is no ground for holding that Cl.(2) does not similarly restrict the exercise of appellate power granted by the Letters Patent. If for reasons aforementioned the expression "second appeal" includes an appeal under the Letters Patent, it would be impossible to hold that notwithstanding the express prohibition, an appeal under the Letters Patent from an order passed in appeal under sub-sec.(1) is competent."
"(17) There is in the Arbitration Act no provision similar to S.4 of the Code of Civil Procedure which preserves powers reserved to Courts under special statutes. There is also nothing in the expression "authorised by law to hear appeals from original decrees of the Court" contained in S.39(1) of the Arbitration Act which by implication reserves the jurisdiction under the Letters Patent to entertain an appeal against the order passed in arbitration proceedings. Therefore, in so far as Letters Patent deal with appeals against orders passed in arbitration proceedings, they must be read subject to the provisions of S.39(1) and (2) of the Arbitration Act."
The Division Bench in the judgment cited supra followed the judgment of the Supreme Court and held that the Full Bench decision of this Court is no more a good law. The said Division Bench rendered a judgment under Section 39 of the Arbitration Act, 1940. The corresponding provision under the Arbitration and Conciliation Act, 1996 is Section 37. Both the sections deal with appealable orders. The appealable orders are categorised under the old Act as well as the new Act. There is no difference between them. Therefore, we are of the view that the judgment rendered under the 1940 Act is equally applicable to Section 37 of the 1996 Act. Learned counsel appearing for the appellant submitted that there is a difference between Sections 37 and 50 of the new Act and hence, the judgment rendered under Section 37 of the old Act would not be applicable to Section 50 of the 1996 Act. According to him, Section 37 of the Act is different to the extent it contained the following words ( and from no others) and therefore makes it different from Section 50 of the Act. We do not find any substantial difference in both the provisions. Both deal with appealable orders under the Arbitration Act. Therefore we follow the Division Bench judgment of this Court cited supra.
14. Further in AIR 1962 Supreme Court 256 (THE UNION OF INDIA VS. THE MOHINDRA SUPPLY CO.,) at Paragraph 19 it has been held as follows, .. The Arbitration Act which is consolidating and amending Act, being substantially in the form of a code relating to arbitration must be construed without any assumption that it was not intended to alter the law relating to appeals. The words of the statute are plain and explicit and they must be given their full effect and must be interpreted in their natural meaning, uninfluenced by any assumptions derived from the previous state of the law and without any assumption that the legislature must have intended to leave the existing law unaltered. In our view the legislature has made a deliberate departure from the law prevailing before the enactment of Act 10 of 1940 by codifying the law relating to appeals in Section 39.
15. Subsequently, the Supreme Court in the case of Milkfood Ltd Vs. GMC Ice Cream (P) Ltd reported in (2004) 7 Supreme Court Cases 288) reaffirmed the principle stated by the Supreme Court in the case of Mohindra Supply Co. by observing that having regard to the Section 39 of the 1940 Act as interpreted by this Court in the case of Union of India Vs. Mohindra Supply Co. second appeal, which included letters patent appeal under Section 39(2), was not maintainable.
16. Further in AIR 2004 SC 5152, (P.S. Sathappan(Dead) by Lrs. Vs. Andhra Bank Ltd. and Others. At Para 150), the supreme court has held as follows:
... An appeal is a creature of a statute. If a statute permits an appeal, it will lie. If a statute does not permit an appeal, it will not lie. Thus for example in cases under the Land Acquisition Act, Guardians and Wards Act and the Succession Act a further appeal is permitted whilst under the Arbitration Act a further appeal is barred. Thus different statutes have differing provisions in respect of appeals. There is nothing anomalous in that. There is conflict of decisions on this issue between this Court and the Calcutta High Court. However, we will have to rather follow this Courts Judgment as it is binding on us and not the judgment of the Calcutta High Court as it is only persuasive. It is also further noted that the Supreme Court in (1999) 2 SCC 541 (Orma Impex Pvt. Ltd Vs. Nissai ASB Pte Ltd) has referred the matter to a Bench of 3 Judges since the Supreme Court found that there are conflicting opinions.
17. Learned counsel for the respondent also relied on the following judgements of the Supreme Court reported in 1993 (2) Arb. LR 95 (STATE OF WEST BENGAL VS. GOURANGALA CHATTERJEE), (2002) 6 SCC 201 (SHYAMA CHARAN AGARWALA & SONS VS. UNION OF INDIA), (2002) 10 SCC 506 (RAMCHANDRA TRADING CO. VS. STATE OF UTTAR PRADESH) and (2002) 5 SCC 510(ITI LTD. VS. SIEMENS PUBLIC COMMUNICATIONS NETWORK LTD.) to support the proposition that the second appeal is not maintainable. As we have already concluded the issue in favour of the respondent by following the Division Bench judgment of this Court cited supra, which in turn followed the judgment of the Apex Court in Mohindra Supply Co., we have not considered the above judgment in detail as they only support the view taken by us.
18. On merits also, we do not find any substance in the contention of the appellant.
Point No.2:
19. It is on record that on behalf of the Arbitration awardee- Mutual Task Maritime Limited, by means of agreement, the Association for P&I and FD&D Insurance have handled number of claims. For that purpose of making the claims, earlier assignment of the award was made in favour of the Association on 20.12.2000. After settling all the claims to the earlier assignee - North of England P&I Association Limited, the assignment in favour of the respondent was made. The same is established by the copy of 'E Mail' of the Solicitor of the North of England P&I Association Limited, in which it is stated that neither the Mutual Task Maritime Limited nor Compania- Naviera Sodnac SA owe the Association any money and the deed of assignment dated 20.12.2000 has no effect as the sum of US $ 55,676,79 referred to in the recital of the assignment deed has been paid. The said fact was further confirmed by another letter dated 20.12.2000 of the Associate Director of the North of England P&I Association Limited, who confirmed the fact as stated by their solicitors. Hence the only assignment of the award remains made in favour of the respondent is a valid assignment. Thus the point is answered.
Point No.3:
20. The contention of the appellant that as the award was made on 2.3.2000, the petition for enforcement should have been filed within three years therefrom and the petition for enforcement filed in the year 2005 is hit by limitation is raised only for rejection. Under the 1996 Act, the foreign award is stamped as a decree and the party having a foreign award has got 12 years time like any other decree for its enforcement or execution. Hence the point of limitation is also decided against the appellant, in the sense, the petition filed for enforcement is well within the period of limitation. Our view is fortified by the ruling of the Apex Court in the case of M/S FUERST DAY LAWSON LTD. VS. JINDAL EXPORTS LTD (AIR 2001 Supreme Court 2293), in paragraphs 28 to 30, the Supreme Court has held as follows :
"29. ........ 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 the 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 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. It is also clear from the objectives contained in para 4 of the Statement of Objects and Reasons, Sections 47 to 49 and the scheme of the Act that every final arbitral award is to be enforced as if it were a decree of the court. The submission that the execution petition could not be permitted to convert as an application under Section 47 is technical and is of no consequence in the view we have taken. 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. Even otherwise, this procedure does not prejudice a party in the light of what is stated in para 40 of Thyssen judgment.
30. Part II of the Act relates to enforcement of certain foreign awards. Chapter 1 of this Part deals with New York Convention awards. Section 46 of the Act speaks as to when a foreign award is binding. Section 47 states as to what evidence the party applying for the enforcement of a foreign award should produce before the court. Section 48 states as to the conditions for enforcement of foreign awards. As per Section 49, if the court is satisfied that a foreign award is enforceable under this Chapter, the award shall be deemed to be a decree of that court and that court has to proceed further to execute the foreign award as a decree of that court. If the argument advanced on behalf of the respondent is accepted, the very purpose of the Act in regard to speedy and effective execution of foreign award will be defeated. Thus none of the contentions urged on behalf of the respondent merit acceptance so as to uphold the impugned judgment and order. We have no hesitation or impediment in concluding that the impugned judgment and order cannot be sustained."
A reading of the above it is clear that once the Court decides that a foreign award is enforceable, it can proceed to take further effective steps for execution of the same and also the award shall be deemed to be a decree of that Court.
21. Thus, we find no merit in this appeal and for the reason of discussion made above, the appeal fails and the same is dismissed. However there is no order as to costs. Consequently, the connected M.P.No.1 of 2008 is also dismissed.
raa To The Sub-Asst.Registrar Original Side High Court Madras