Delhi High Court
Marina World Shipping Corporation Ltd. vs Jindal Exports (P) Limited on 16 December, 2003
Equivalent citations: (2004)2COMPLJ50(DEL), [2004]54SCL312(DELHI)
Author: Mukundakam Sharma
Bench: Mukundakam Sharma
JUDGMENT Mukundakam Sharma, J.
1. The present winding up petition is filed by the petitioner against the respondent company contending, inter alia, that the respondent is indebted to the petitioner in view of the foreign award passed in the arbitration proceeding between the parties, and that the respondent has failed and neglected to pay the said debt in spite of service of the statutory demand notice on it. Before filing the present petition, a statutory demand notice, as provided for under Section 434 of the Companies Act, was issued by the petitioner to the respondent. In the said notice issued by the respondent on 29 September, 2001, the petitioner called upon the respondent to make payment of the dues under the foreign award, dated 26 September, 2000. It was stated in the said notice that in accordance with the terms of the charter-party agreement, dated November, 1994, between the petitioner and the respondent an amount of US $ 47,506.42 fell due as demurrage which was claimed and, since it was not paid, the dispute was referred to arbitration and that on 26 September, 2000, the arbitrator considering the various claims and counter-claims raised by the parties, passed an award in respect of the voyage performance of the vessel together with interest at the rate of 7% p.a. It was also stated in the said notice that the said award was final and, therefore, a sum of US $ 68,843.91, which constitutes the awarded sum and the interest and a further sum of US $ 3477.13 is owed by the respondent to the petitioner. By the aforesaid notice, the petitioner called upon the respondent to make the aforesaid payment of US $ 72,321.04 with further interest till the date of payment failing which it was stated that the petitioner would commence appropriate winding up proceeding. No reply to the aforesaid notice was sent by the respondent and, accordingly, the present petition is filed by the petitioner.
2. It is, therefore, established from the records that the present winding up petition is based upon the foreign award, dated 26 September, 2000, in terms of which it is the stand of the petitioner that the respondent is liable to pay and, therefore, indebted to the petitioner for a sum of US $ 72,321.04 with interest.
3. The contention of the petitioner in the present petition is that the respondent has neglected and failed to make payment as per the foreign award, dated 26 September, 2000, and, therefore, the pre-conditions for exercising powers under Sections 433 and 434 are proved and established. It is also a further contention of the petitioner that the foreign award, dated 26 September, 2000, would by itself, constitute a debt presently payable by the respondent to the petitioner.
4. It is an admitted position that the petitioner so far has not sought for enforcement of the award in terms of the provisions of Sections 44, 45, 46, 47 and 48 of the Arbitration and Conciliation Act. Therefore, one of the issues that arise for my consideration in this petition is whether the present foreign award constitutes a debt due as sought to be made out by the petitioner, and whether the present winding up petition is maintainable in absence of an action by the petitioner for getting the award enforced so as to make it binding on the parties ?
5. The next important question which also would arise for consideration is whether there was any legal, valid and binding arbitration agreement between the parties, and, since a dispute is raised in respect of the same, whether the present petition is maintainable ?
6. Section 433 of the Companies Act lays down the circumstances under which a company could be wound up by the court. Reliance is placed in the present case by the petitioner that in view of the foreign award passed in favor of the petitioner and against the respondent, and also in view of the fact that the respondent has neglected to make payment in respect of the aforesaid foreign award, Clause (e) of Section 433 of the Act is attracted in the present case, as it is provided therein that a company could be wound up by the court, if it is found that the respondent is unable to pay its debt. The aforesaid Clause (e) of Section 433 has been the subject matter of interpretation in various decisions. In this connection, reference may be made to a decision of the Gujarat High Court in Registrar of Companies, Gujarat v. Kavita Benefits (P) Ltd. (1978) 48 Comp Case 231 (Guj), wherein the Gujarat High Court, after referring to various decisions of the Supreme Court, has held that the word 'debt' under Sections 433 and 434 of the Companies Act means that the amount must be then due and payable and, therefore, refers to the present obligation. In other words, it is a liability to pay a sum of money in praesenti. However, as far as Clause (a) is concerned, the debt must then be due and payable, i.e., payable on the date of issuance of the notice under Section 434(a) of the Companies Act. Clause (c) of Section 434 of the Act envisages a case where the company is unable to pay its debt, and in determining whether a company is unable to pay its debt, the court shall take into account contingent and prospective liability of the company. The case of Union of India v. Raman Iron Foundry is a case in point. In paragraph 9 of the said judgment, the Supreme Court observed that a sum would be due to the purchaser when there is existing obligation to pay it in praesenti. It clearly laid down that it would be profitable to refer to the concept of a 'debt', for a sum due is the same thing as a debt due. In the said decision, the Supreme Court took notice of the classical definition of 'debt' as found in the case of Webb v. Stenton (1883) 11 QBD 518 and the observations of Justice Lindley. It was further held that when there is an obligation to pay a sum of money on a future date, it is a debt owing, whereas when the obligation is to pay a sum of money in praesenti, it is a debt due and, therefore, a sum due would mean a sum for which there is an existing obligation to pay in praesenti, or, in other words, which is presently payable. After laying down the legal principle as aforesaid, in paragraph 11 of the said judgment, it was held by the Supreme Court that a claim for unliquidated damages does not give rise to a debt until the liability is adjudicated and damages assessed by a decree or order of a court or other adjudicatory authority. In the context , it was held by the Supreme Court that a claim for damages for breach of contract is, therefore, not a claim for a sum presently due and payable, and the purchaser is not entitled, in exercise of the right conferred upon it under Clause 18, to recover the amount of such claim by appropriating other sums due to the contractor.
7. In the light of the aforesaid ratio of the decision laid down by the Supreme Court in (Union of India v. Raman Iron Foundary , supra,) and in the context of the provisions of Sections 433 and 434 of the Companies Act, it would be appropriate to consider as to whether or not it could be said that in terms of the foreign award, the sum is ascertained and due and payable immediately by the respondent to the petitioner. In order to appreciate the aforesaid issues, the provisions of Sections 44, 45, 46, 47 and 48 of the Arbitration and Conciliation Act shall have to be taken notice of. Section 44 of the Arbitration and Conciliation Act finds place in Part II of the said Act. Section 44 of the said Act defines the words 'foreign award' which mean an arbitral award given on differences between the persons, arising out of a legal relationship considered as commercial under the law in force in India and made on or after 11 October, 1960, in pursuance of an agreement in writing for arbitration to which the Convention set forth in the First Schedule applies. The aforesaid section resembles the definition of foreign award under Section 2 of the Foreign Award Recognition and Enforcement Act, 1961. One of the requirements of the foreign award in the aforesaid section is that the award should have been made in pursuance of an agreement in writing, for arbitration to which the Convention set forth in the Schedule applies. Clause (2) of Article-II of the First Schedule as mentioned in Section 44 of the Act provides that the term 'agreement in writing' shall include an arbitration clause in a contract or an arbitration agreement signed by the parties or contained in exchange of letters or telegrams.
8. Sub-section (4) of Section 7 also provides that an agreement is in writing, if it is contained in the documents signed by the parties or by exchange of letters, telex, telegrams or other means of telecommunication, which provide a record of the agreement or exchange of statements of claims and defense in which existence of the agreement-is alleged by the one party and not denied by the other. In Smita Conductors Ltd. v. Euro Alloys Ltd. (2001) 7 SCC 728 - the Supreme Court considered the aforesaid expression 'agreement in writing' as appearing in Clause 2 of article II, and held that the said clause consists of following parts:
(1) a contract containing an arbitration clause signed by the parties;
(2) an arbitration agreement signed by the parties;
(3) an arbitration clause in a contract contained in exchange of letters or documents ;
(4) an arbitral agreement contained in exchange of letters or documents.
9. It was held that an arbitration agreement which satisfies any of the aforesaid conditions should be treated as an agreement in writing. The provision of Section 46 of the Arbitration and Conciliation Act is also relevant for the purpose of this case and, therefore, requires mention. According to the said provision, any foreign award, which would be enforceable under this Chapter, would be treated as binding for all purposes on the persons as between whom it was made, and may accordingly be relied upon by any of those persons by way of defense, set off or otherwise in any legal proceeding in India. The purport of the aforesaid provision is that a foreign award shall be treated as binding for all purposes on the persons between whom it is made provided the same is enforceable under the provisions of the aforesaid Chapter-II of the Act. The provision as to how an award becomes enforceable under the provisions of the said Chapter is also provided for in Sections 47 and 48 of the Act. An award becomes enforceable when an application of a party seeking enforcement of the said award has been allowed by the court and objection, if any, filed by the aggrieved party is rejected as provided for under Section 48. Once a foreign award becomes binding, it could be relied upon by any of such parties by way of defense, set off or otherwise in any legal proceeding in India and any requirement in the aforesaid Chapter to enforce a foreign award would be construed as including reference to relying on an award. In the case of Brace Transport Corporation of Monrovia, Bermuda v. Orient Middle East Lines Limited, Saudi Arabia -- it was held by the Supreme Court in the following manner :
"An award may be recognised, without being enforced; but if it is enforced, then it is necessarily recognised. Recognition alone may be asked for as a shield against re-agitation of issues with which the award deals. Where a court is asked to enforce an award, it must recognise not only the legal effect of the award, but must use legal sanctions to ensure that it is carried out."
10. From the tenor of the aforesaid judgment, it is clear that there is a difference between the two expressions 'recognition' and 'enforcement'. The substantive provisions of the Arbitration Act make a mention of the expression 'enforcement' only and does not use the expression 'recognition'. However, in the schedule annexed, both the aforesaid expressions find mention. The aforesaid decision of the Supreme Court in Brace Transport Corporation (1994) 4 Comp LJ 214 (SC), supra, clearly mentions that the two terms, namely, 'recognition' and 'enforcement' are distinct and connote separate meanings as because an award may be recognised without being enforced, though when it is enforced, it is necessarily recognised by the court, which orders its enforcement. As set out and noticed in the aforesaid decision, the expression 'recognition' has been held to be a defensive process as it is used as a shield against an attempt to raise in a fresh proceeding same issues that have already been adjudicated upon and decided in an earlier arbitration proceeding. A party, who receives a favorable award in an arbitration, is entitled to object to the subsequent arbitration with respect to the dispute which was the subject matter of the earlier arbitration. As opposed to the expression 'recognition', which is found to be a defensive process, 'enforcement' is a weapon of offence as it involves attack and aggression. The enforcement of a foreign award as provided for under Chapter-II of the Arbitration and Conciliation Act envisages that a party seeking to enforce the award has to make an application under Section 47 of the Act to the court along with evidence as mentioned therein in it. It is also laid down that the party against whom the award is sought to be invoked could resist the enforcement by furnishing proof to the court of the existence of one or more of the defenses as set forth in Section 48. Lastly, it envisages that the court, if on the basis of the evidence before it, is satisfied that the award is enforceable, it may enforce the award as a decree of the court under Section 49 of the Act.
11. During the course of arguments, counsel appearing for the respondent vehemently submitted that there is no arbitration agreement between the parties, which is signed by the parties and, therefore, it cannot be said that there is any debt, which is legally due and payable to the petitioner, nor the said alleged debt could be the subject matter of the present petition as no steps have been taken by the petitioner to prove and establish that the aforesaid award is enforceable.
12. It is a statutory requirement that in order to rely upon a foreign award, the petitioner has to comply with and satisfy the requirements and conditions of Part-II, Chapter-I, particularly, the provisions of Section 44 and Clause (2) of Article-II of the First Schedule, which require existence of an arbitration agreement in writing. A successful party, in order to enforce and execute an award, has to initiate legal proceeding as envisaged under Section 47 of the Act.
13. A foreign award can be enforced under Chapter-II provided two basic norms are satisfied, namely, the parties have submitted to the arbitration by an agreement which is valid under its governing laws ; and the award is valid and final according to the law which governs the arbitration proceeding. It is also a requirement of law that a party seeking to enforce a foreign award has to make an application under Section 47 of the Act and the said application has to be accompanied by documentary evidence as mentioned in the said provision. This application for enforcement can be filed only by a party seeking enforcement of a foreign award, and not by a party which is resisting enforcement of the foreign award. Such an application also can only be filed before a Civil Court as defined in the Explanation, i.e., the principal Civil Court in the district or the High Court exercising ordinary civil jurisdiction. The party as against whom a foreign award is sought to be enforced has a right to contest the enforcement on one or some of the defenses as mentioned in Clauses (a) to (c) of Sub-section 1 of Section 48 of the Act. The said party has to satisfy the court by furnishing proof to the court that one or more of the five conditions is attracted calling for refusal to enforce the foreign award. Under Sub-section (2) of Section 48, the court can also and on its own refuse to enforce a foreign award, if any of the pre-conditions is not satisfied. Merely because a foreign award has not been set aside by a competent court/authority, it does not mean that the foreign award becomes automatically and immediately enforceable. The requirements as set out in Sections 47 and 48 of the Act are mandatory and are required to be complied with irrespective of the fact that an award has already been passed by the court in England, and no appeal has been preferred there from.
14. In the matter of enforceability of a foreign award in India, the Indian Arbitration Act and not the English Arbitration Act would govern. Section 48 of the Act gives an independent right to any party to challenge and object to a foreign award when its enforcement is sought in India. These rights which are given to a party are not dependent on whether the losing party has challenged and questioned the award in the country of its origin. Therefore, under the English Arbitration Act, when an award is passed and no appeal is filed there from, it is binding on the parties in the country of its origin only. But the losing party has the right to resist the said award within the parameters laid down under Sections 47 and 48 of the Act, as and when the said award is sought to be enforced in India. Therefore, failure to avail of or file any appeal under the English Arbitration Act would, in no manner, interfere with the rights of the respondent to challenge the legality of the award in this court on the grounds as set out in Sections 47 and 48 when an effort is made to enforce the said award in India.
15. Section 49 of the Arbitration Act makes it clear that only after objections are adjudicated and decided, and the court is satisfied that the foreign award is enforceable, then and then only, the award is deemed to be a decree of the Civil Court and thereafter, effective steps for execution of the said award could be taken. The foreign award becomes binding on the parties only when it is enforceable. In the decision of the Supreme Court in Fuerst Day Lawson Limited v. Jindal Export - the Supreme Court has held that an award could be enforced and also executed in the same proceeding. It was held that there is no need to take out separate proceeding ; one for deciding the enforceability of the award, and the other to make execution thereof. Therefore, although the adjudication process for enforcement and execution could be done in one single process, but, before ordering for execution, the Court has to examine whether or not the foreign award is enforceable.
16. The word 'enforcement' has not been defined in the Arbitration Act and, therefore, the same is to be understood by applying the general principles. In the case of S.N.D. Kiran Prabha v. Government of Andhra Pradesh and Ors. , the Supreme Court had occasion to deal with the meaning of the word 'enforcement'. The said decision stated that the word 'enforcement' has not been defined by the Constitution, but light could be had from the meaning given in the various English dictionaries. The Supreme Court referred to Collins English Dictionary wherein it is stated that the word 'enforce' means 'to ensure observance of or 'obedience of law', decision', etc. In the context thereof, and after considering other dictionary meanings, it was held by the Supreme Court that the word 'enforcement' means to 'impose' or to 'compel' an 'obedience of law'.
17. A Company Court under Section 10 of the Companies Act is a court of limited jurisdiction and adjudicates and decides; only those matters in respect of which the Companies Act has specifically conferred jurisdiction upon it. The procedure for winding up a company is also provided in the Companies Act. Such a process is in the nature of a summary proceeding. In a number of decisions, it is held that the Company Court would decline adjudication in a winding up proceeding when the matter agitated involves complicated and disputed questions of fact requiring investigation on facts, and evidence in depth. The Company Court in such a proceeding, has only a restricted jurisdiction which is limited by the provisions of the Act. It cannot act like a Civil Court for adjudicating and fixing the liability by scrutinising and examining in-depth the entire evidence placed on record. In this connection, reference may be made to a decision of this court in Maharaja Exports and Anr. v. Apparels Export Promotion Council (1986) 60 Comp Case 353 (Del). In the said judgment, this Court reiterated the principle that except in cases where the Companies Act, 1956, confers jurisdiction on the Company Court or on some other authority like the Central Government or on the Company Law Board, all other disputes pertaining to a company are to be resolved through the forum of Civil Court. The aforesaid principle was also laid down by the Kerala High Court in the case of R. Prakasham v. Sree Narayan Dharma Paripalana Yogam (1980) 50 Comp Case 611 (Ker). Similar view has also been taken by the Punjab and Haryana High Court in the case of Panipat Woollen and General Mills Company Limited v. P.L. Kaushik (1969) 1 Comp LJ 289 (P&H) : (1969) 39 Comp Case 249 (P&H).
18. By filing the present petition in this court, the petitioner seeks to contend that there is already an adjudication of the debt by the arbitrator by giving an award in favor of the petitioner and against the respondent, and as the debt is ascertained through adjudication, the same requires obedience and performance. Therefore, it is obvious that the petitioner sought for payment of the amount as awarded under the foreign award, which according to the petitioner, is a debt due and payable. The petitioner sought performance and obedience of the said alleged debt by giving a winding up notice and thereafter filing this petition by stating that as there was no performance or obedience of the award in terms of the notice, therefore, it should be deemed that there is neglect and refusal to pay the said amount. The question, therefore, is whether such action is permissible, particularly, when for seeking performance and enforcement of a foreign award, it is mandatory for the petitioner to follow the procedure prescribed under Section 47, Arbitration Act. Even for holding that the award is binding oh the parties, it must be held by the Court that the award is enforceable. Therefore, without first ascertaining and giving a decision as to whether or not the foreign award is enforceable, it cannot be said that the same is a debt presently due and payable. In order to become a subject matter of winding up, it must be a debt ascertained, and payable in accordance with law, but so long as the debt although ascertained is not payable in accordance with law, the same cannot be a subject matter of a company petition, for a debt which is barred by limitation, although is ascertained, but is not payable in view of application of the provisions of the Limitation Act. Similarly, a debt although ascertained, but is held to be not enforceable, cannot be said to be binding between the parties and, therefore, cannot be the subject matter of a company petition. It is also established that there is distinction between the enforcement of a foreign award and recognition of the same; and that it is mandatory for a party seeking enforcement of an award to move an application before the competent Civil Court wherein the opposite party could raise objections to the enforcement of a foreign award. Even if no such objection is raised, the Court has the obligation to examine and decide whether the condition mentioned in Section 48(2) of the Arbitration Act is satisfied. Only where the court is so satisfied that the award is enforceable in India, then Only, the said award would be deemed to be a decree of the court. It is also held that a Company Court cannot adjudicate and decide the question of enforcement of a foreign award, and also whether or not the conditions for such enforcement are satisfied. The same is to be adjudicated upon and decided by a Civil Court in terms of the provision of Explanation to Section 47 of the Act.
19. Counsel appearing for the petitioner in support of his contention that the sum awarded under a foreign award is a debt and, therefore, could be a subject matter of the company petition, placed strong reliance in the decision of Dalhousic Jute Co. Ltd. v. Mulchand Laxmi Chand (1982) 2 Comp LJ 528 (Cal) : (1983) 53 Comp Case 607 (Cal). The said decision was rendered in the context of the Arbitration Act of 1940. Counsel appearing for the petitioner strongly relied upon the proposition laid down in the said decision that an unfiled award has some legal force and effect and cannot be treated as a mere waste paper. It was also held that when the award is pronounced, the original claim which was the subject-matter of the reference resulting in the award become merged in the award and no separate action could be started in enforcing the same save and except by enforcing the award itself, and that when the award is passed, the original cause of action to enforce the claim could not again be separately pursued except through the award itself for the purpose of enforcement. Considering various other decisions, the Calcutta High Court, in the aforesaid decision, observed that it is not a correct proposition to hold that until an award could be made a decree of the court, the same would remain an invalid document, or would be a mere waste paper. The High Court held that the winding up petition based on an unfiled award has its special significance, for the Court entertaining the winding up application does not decide any of the grounds for setting aside the award, which are to be decided by the Court entertaining an application for setting aside such an award under the Arbitration Act. It was further held that the winding up court does not enforce the award and it merely goes into the question as to whether a debt is presently payable and then to find out whether the dispute raised on behalf of the company in respect of the claim of the creditor is prima facie a bona fide one or not. It was also held that the debt is not finally decided, nor is the defense raising the bona fide dispute finally adjudicated upon by the Company Court except that a prima facie view is taken by the Company Court on the basis of the materials placed before it.
20. The aforesaid decision rendered by the Calcutta High Court is distinguishable on facts, as the same was rendered in the context of Arbitration Act of 1940 which did not contain the provisions similar to that of Sections 46 to 48, particularly, Section 46 in the Arbitration and Conciliation Act, 1996. Reference, at this stage, could be made to a decision of the Supreme Court in Oil and Natural Gas Commission v. Western Company of North America . The said decision was also rendered in the context of Arbitration Act of 1940. In the said decision, the Supreme Court had held that an arbitral award is unenforceable until it is made a rule of the court, and a judgment and decree are passed in terms of the award, and that till an award is transformed into a judgment and decree under Section 17 of the Arbitration Act, it is altogether lifeless from the point of view of its enforceability. It was held that life is infused into the award in the sense of its becoming enforceable only after it is made a rule of the court by the judgment and decree in terms of the award being passed. In the said decision, it was also held that an arbitral award rendered by an umpire may also be set aside, in which case it would be rendered non-existent, if the ONGC is able to successfully assail it in the petition under Section 30/33 for setting aside the award in question in India. The Supreme Court also observed that in case the award rendered by the umpire is set aside by the Indian Court, in that event, an extremely anomalous situation would arise inasmuch as the successful party may well have recovered the amount awarded as per the award from the assets of the losing party in USA after getting a judgment from the US Court and in that event, it would cause an irreversible damage being done to the losing party, for the court in USA would have enforced a non-existent award under which nothing could have been recovered. In the said decision, the plea put forth on behalf of ONGC was also upheld that the concerned court in India alone would have the jurisdiction to determine the question regarding enforceability or otherwise of the award in question, for admittedly, the arbitral proceedings are governed by the Indian Arbitration Act of 1940 and that a proceeding under the Indian Arbitration Act for affirming an award and making it a rule of the court can be instituted only in an Indian Court. In the context of the aforesaid conclusions arrived at, it was held that there is likelihood of conflicting decisions on the very vital issue resulting in legal chaos as though the Indian Court forms the opinion that the award is invalid and sets it aside still the company would have recovered the amount as per the award in question by obtaining a judgment in the American Court upon the award being confirmed by the said Court. Similarly, also in the present case, in case the award passed by the English Court is accepted and the amount awarded by it is held to be a debt due and payable immediately on the basis of which an order for winding up the company is passed, and if thereafter, a petition is filed for enforcing the said award, and the award is refused to be enforced on one or more of the five conditions set out in Section 47 of the Act or on one or more grounds set out in Section 48 of the Act, the same would create an anomalous situation for, on the one hand, the award is given effect to, whereas in the other case, the award is refused to be enforced.
21. Reliance was also placed by the counsel appearing for the petitioner in the decision of the Bombay High Court in Silver Shield Construction and Trading Limited v. Recondo Limited (1994) 15 CLA 92 (Bom). The aforesaid decision was rendered by the Bombay High Court on the basis of a foreign judgment. It was held in the said decision that both the remedies, i.e., for execution of the foreign judgment as also under the Companies Act are available in view of the fact that there is decree which is passed in favor of the petitioners and the company's liability is thus crystallised ; and since it is well-settled that a debt is a sum of money which is now payable or will become payable in the future by reason of a present obligation. The debt has become due in the sense that the petitioner is entitled to claim its payment presently, and, therefore, it is a debt within the meaning of Section 433(e) of the Act. As it is apparent from the observations made in the said decision, the decision was rendered in the context of a foreign judgment by dealing with the provisions of a different statute and is not a case of foreign award, therefore, the said decision is not applicable to the facts of the present case.
22. One of the main objections of the respondent in the present petition is that there is no arbitration agreement between the parties in writing, and signed by the parties. The arbitration clause, which is referred to and relied upon by the counsel for the petitioner is as follows:
"This charter party shall be governed by and construed in accordance with the English law and any dispute arising out of this charter party shall be referred to arbitration in London in accordance with the Arbitration Acts, 1950 and 1970 or any statutory modifications or re-enactment thereof for the time being enforced, unless the parties agree upon a sole arbitrator, an arbitrator shall be appointed by each party and their arbitrator so appointed shall appoint a third arbitrator. The decision of the three men Tribunal thus constituted or any two of them shall be final. On the receipt by the one party of the nomination of the other party's arbitrator, the other party shall appoint their arbitrator within fourteen days, failing which the decision of the single arbitrator appointed shall be final."
22.1 It was contended that on the basis of the aforesaid arbitration agreement, parties went to arbitration in London. It was also pointed out that the respondent participated in the arbitration proceeding, and it also filed its counter claim and reply against the claims of the petitioner under covering letter dated 8.8.2000. It was contended that the respondent not only did not raise any objection in the said counter claim and reply, that there was no arbitration agreement, but, in fact, it relied upon the charter party dated 5.11.1994 and, therefore, the respondent is estopped from raising an issue with regard to the existence of an arbitration agreement. It is one of the submissions that the letters and e-mail exchanged between the parties clearly establish that there was an arbitration agreement in writing as contained under the said letters and telegrams between the parties on the basis of which such arbitration proceedings were held in London and a reasoned award has been passed. Another submission was that there was no challenge to the aforesaid award under Sections 67, 68 and 69 of the Arbitration Act, 1996 (Indian Arbitration Act) and the time to challenge the said award has also expired and, therefore, the award has become final and binding upon the parties under the Indian Contract Act.
23. The aforesaid submission of the counsel appearing for the petitioner are refuted by the counsel appearing for the respondent by drawing my attention to the various correspondences between the parties, and also to the alleged arbitration agreement between the parties. My attention was drawn to the fact that the copy of the alleged charter party agreement relied upon and signed by the petitioner, was received by the respondent on 29.6.1995, i.e., after six months of the contract had been performed. By making a reference to the same, it was contended by the counsel appearing for the respondent that the clause appearing therein cannot be said to be the arbitration agreement between the parties. It was contended that the terms and conditions mentioned in the said charter party agreement were never agreed and settled. In fact, the said charter party agreement does not contain the signature of the respondent. The same appears to be an unsigned document by the respondent and, therefore, it cannot be prima facie said that the terms and conditions contained in the various clauses therein were discussed and settled and agreed upon between the parties. The said charter party agreement also is also subsequent to the date of performance of the contract. In the present case, the petitioner is relying upon the terms and conditions in the charter party agreement, which is subsequent to the date of the performance and execution of the contract. The respondent has denied the existence of any signed charter party or arbitration agreement.
24. Certain further facts are also required to be mentioned in connection with the aforesaid issue. The respondent received a notice, dated 12.4.1999, from M/s Bose and Mittal, Calcutta, referring to the charter party agreement, and also to the claim for demurrage from the respondent. The respondent sent a short reply, dated 19.4.1999 denying that there was any charter party agreement. By letter, dated 4.4.2000, the petitioner asked Mr. A. Christofides to proceed with the matter as a sole arbitrator as the respondent had failed to appoint their arbitrator pursuant to the letter, dated 25.1.1996. Said Mr. A. Christofides accepted his appointment as the sole arbitrator as is disclosed from his letter dated 5.4.2000 stating that he was satisfied that due notice of appointment was given and the respondent had failed to appoint its arbitrator and, therefore, he would act as a sole arbitrator. The respondent sent a FAX dated 6.4.2000 wherein it was clearly stated that there was no valid and substantive claim against the respondent; and that there was no arbitration agreement between the petitioner and the respondent for having the disputes settled through the process of arbitration. The said FAX message was not only sent to the arbitrator, but also to the petitioner. Even in the letter, dated 18.4.2000 -- the respondent informed the arbitrator that it was objecting to the present arbitration proceeding and appointment of a sole arbitrator. In reply to the same the arbitrator wrote a letter, dated 19.4.2000 stating that if the respondent wishes to raise objections as to the constitution of the tribunal, it should take legal advice and once the arbitrator has accepted his appointment as a sole arbitrator, only court can disturb the same. Therefore, a clear stand was taken by the arbitrator that he was not going to decide any question with regard to existence of arbitration agreement/arbitration clause and also the issue with regard to validity of the arbitration agreement. Therefore, whether or not the respondent company had acquiesced or waived its right to question the existence of an arbitration agreement or competence of the sole arbitrator to adjudicate and decide and also whether or not an arbitration agreement was entered into between the parties through FAX and/or other communications exchanged between the parties are disputes with regard to facts and, therefore, are disputed questions of fact. Adjudication of such issues would necessarily require investigation and enquiry into facts and evidence produced. The respondent had definitely raised an objection with regard to existence and validity of the arbitration agreement at a very initial stage. The aforesaid objection raised by the respondent with regard to the existence and validity of the arbitration clause is also a defense available against enforcement under the arbitration law of India. The said issue also relates to the very foundation on the basis of which the arbitrator has assumed the power and sought to decide the dispute. Such a vitally important question is, therefore, required to be examined minutely and decided in accordance with law. It is also settled law ; that there can be no waiver as against jurisdiction. These are, therefore, matters which are required to be decided by an appropriate Civil Court in accordance with law and the Company Court being a court of limited jurisdiction, and its proceeding being a summary proceeding, it may not be appropriate to decide aforesaid questions in the present proceeding. I have refrained myself from discussing and examining the pleas with regard to validity and existence of the arbitration agreement in minute detail in view of the fact that any discussion on the merit of the aforesaid pleas would amount to expressing an opinion on the merit of the same, which could be a subject matter of a petition under Sections 44 to 48 of the Arbitration Act. Therefore, in my considered opinion, it would be improper to give any opinion, at this stage, with regard to the merit of the aforesaid pleas as it might prejudice one way or the other.
25. Considering the entire facts and circumstances of the case, therefore, I am of the considered opinion that the present petition is not maintainable in this court, at this stage. The petitioner has an effective remedy to seek for enforcement and also for execution of the award. Once enforceability of the award is established in the Civil Court, this Court will also have the jurisdiction to entertain a petition of this nature. Therefore, the present petition is not entertained and is dismissed, at this stage, on the grounds and reasons stated hereinabove.