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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
NOTICE OF MOTION NO. 3430 OF 2011
IN
ARBITRATION PETITION NO. 24 OF 2010
AND
ARBITRTATION PETITION NO. 25 OF 2010
Pacific Basin Handymax (UK) Ltd. ... Petitioners
Versus
Ashapura Minechem Ltd. ... Respondents
Mr. Sunip Sen i/by M/s. Hariani & Co. for the petitioners.
Mr.Nitin Thakkar, Sr. Avocate i/by M/s. Dhruve Liladhar & Co. for the
respondents.
CORAM : R.D. DHANUKA,JJ.
DATED : OCTOBER 04, 2012 ORAL JUDGMENT :
1. By this notice of motion, the petitioners seek an order and direction under Order 39 rule 11 of the Code of Civil Procedure, 1908 striking off the respondent's defence in Arbitration Petition No.24 of 2010 and to allow Arbitration Petition No. 24 of 2010 in terms of prayer clause (a) thereof. In the alternative to prayer clause (a), the petitioners seek mandatory order/direction ordering/directing the respondent to comply with the order dated 20th December, 2010 and deposit the security amount of USD 24,157,442.00 and sterling pounds 5,000.00 in this court.
2. The Petitioners have filed Arbitration Petition (24 of 2010) under section 49 of the Arbitration and Conciliation Act, 1996 (for short Arbitration Act, 1996) ::: Downloaded on - 09/06/2013 19:13:09 ::: 2 NM3430.11-ARBP24.10.odt seeking enforcement of the foreign arbitration award dated 8 th July, 2009 and award on cost dated 15 th March, 2010 made and published in its favour by Mr. Alan Oakley, the sole arbitrator by which the petitioner had been awarded various amounts. Some of the relevant facts for the purpose of deciding the issue raised in this Notice of Motion are as under :
3. On 25th October, 2007 a contract of affreightment (for short "COA") was executed by and between the petitioners and the respondents by which the respondents agreed to load minimum of 6 shipments annually of 45,000 MTS to 50,000 MTS of Bauxite from various ports in Gujarat to be carried on board the petitioner's vessels for discharging at various ports in China. Clause 28 of the said COA provides that the disputes arising out of the COA to be referred to English Law Arbitration in London. Clause 28 reads as under :
"CLAUSE NO. 28" Any dispute arising under this C.O.A. is to be settled and referred to Arbitration in London. One Arbitrator to be employed by the Charterers and in case they shall not agree then shall appoint an Umpire whose decision shall be final and biding, the Arbitrators and Umpire to by Commercial Shipping Men, English Law to apply. Notwithstanding anything to the contrary agreed in the C.O.A. All disputes where the amount involved is less than USD 35,000/- (thirty five thousand) the Arbitration shall be conducted in accordance with the small claims Procedure of the L.M.A.A."
4. On 24th November, 2007 the said C.O.A. was amended so as to increase the ::: Downloaded on - 09/06/2013 19:13:09 ::: 3 NM3430.11-ARBP24.10.odt minimum number of annual shipments. The freight rate was also amended.
5. According to the petitioners, between January to April, 2008 three voyages under the said C.O.A. were performed and the respondents thereafter ceased to offer bauxite for shipment.
6. On 30th September, 2008 the respondents addressed a communication to the petitioners that due to governmental interference, they would not be able to perform C.O.A. According to respondents that amounted to force majure frustration of the C.O.A. ig The respondents sought to terminate the C.O.A.
retrospectively with effect from June, 2008.
7. On 3rd October, 2008, the petitioners repudiated the contents of the notice of termination dated 30th September, 2008 and treated the said communication as an anticipatory breach of C.O.A. by the respondents. The Petitioners notified that the respondents would be held liable for all damages/losses occasioned to the petitioners.
8. On 3rd November, 2008, the petitioners commenced Rule B attachment proceedings in New York against the respondents to obtain security pending invocation and resolution of disputes by the arbitrators. Pursuant to the said proceedings the petitioners garnished the respondent's funds aggregating to USD 99426.04 in New York. According to petitioners, there were other creditors who led claims to those garnished funds.
9. By letter dated 10th November, 2008, the respondents called upon the ::: Downloaded on - 09/06/2013 19:13:09 ::: 4 NM3430.11-ARBP24.10.odt petitioners not to proceed either with the arbitration or with Rule B proceedings in New York contending that the C.O.A. could not be performed since the DG Shipping had by letter dated 3rd November, 2008 refused to grant respondent's licence as contemplated under the Merchant Shipping Act, 1958. On 11 th November, 2008, the respondents filed Special Civil Suit (58 of 2008) before the District court in Jamkhambalia, Gujarat inter alia seeking a declaration that the C.O.A. was null and void and sought to injunct the petitioners from taking further steps either in New York or in arbitration. The District Court passed an exparte order of injunction against the petitioners.
10. On 6/7th December, 2008 the petitioners applied for vacating exparte order of injunction before the District Court, Jamkhambalia and filed an application seeking transfer of Special Civil Suit (58 of 2008) from the court at Jamkhambalia to the court of Principal Senior Civil Judge, Jamnagar since similar matters were pending before the court at Jamnagar. The said suit was thereafter transferred to the court of Principal Civil Judge, Jamnagar and was re-numbered as Civil Suit (130 of 2008). On 12 th January, 2009, the Principal Senior Civil Judge at Jamnagar passed an exparte order vacating the injunction order passed on 11th November, 2008. It was concluded that the said court did not possess jurisdiction to entertain the suit filed by the respondents and the respondents had failed to establish prima facie case that the grave and irreparable loss/damage/hardship and injury would be caused to them if the injunction was not continued. It was held that the balance of convenience was not in favour of the order of injunction being continued.
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11. On 28/29th January, 2009, the respondents filed an appeal (22 of 2009) before the High Court of Gujarat at Ahmedabad impugning the order dated 12 th January, 2009.
12. On 6th February, 2009 the petitioners invoked arbitration as per clause 28 of the C.O.A. and called upon the respondents to nominate its arbitrator. The Petitioners nominated Mr. Alen Okley. The respondents failed to nominate arbitrator within the stipulated time. Mr. Alen Okley therefore, entered upon the reference as a sole arbitrator having regard to the applicable law.
13. Though the learned arbitrator directed the respondents to file defence submissions/counter claim repeatedly, the respondents did not file defence submission/counter claim. The petitioners filed claim submissions before the sole arbitrator claiming the amount of USD 24,649,942/- by way of damages together with interest and cost from respondents on 11/13 th May, 2009. On 1st/2nd July, 2009, the Sole arbitrator passed a final and peremptory order directing the respondents to file defence submission/counter claim by 6 th July, 2009 failing which the mater would proceed exparte. The respondents did not reply to the said communication. On 8th July, 2009 the sole arbitrator made an exparte award in favour of the petitioners and awarded USD 24,694,942.00 together with interest and cost in favour of the petitioners.
14. On 10th July, 2009 the respondents withdrew said Appeal (22 of 2009) which was pending before the High Court of Gujarat. The order dated 12 th ::: Downloaded on - 09/06/2013 19:13:09 ::: 6 NM3430.11-ARBP24.10.odt January, 2009 thus passed by the Principal Senior Civil Judge, Jamnagar attained finality.
15. On 16th July, 2009 the petitioners placed notice of demand upon the respondents calling upon to make payment of amounts due under the award.
16. On 21st July, 2009 the respondents addressed a communication denying its liability and informing the petitioners that the respondents had filed Misc.
Application (111 of 2009) under section 34 of the Arbitration Act, 1996 before the District Court at Jamkhambalia, Gujarat impugning the said arbitration award passed in favour of the petitioners. The petitioners filed reply and opposed the said proceedings filed before the District court at Jamkhambalia.
17. On 25th August, 2009, the petitioners filed proceedings in New York seeking enforcement of the award passed in their favour against the respondent's funds garnished in New York pursuant to Rule B action filed by the petitioners.
18. On 10th September, 2009 the respondents filed Misc. Application (111 of 2009) seeking to injunct the petitioners from proceeding to enforce the foreign award in the court of District Judge, Jamkhambalia, Jamnagar. By an order dated 15th October, 2009 passed by the District Judge, Jamkhambalia, the application of the petitioners came to be rejected on the ground that in view of the pendency of application filed by the respondents under section 34 and by virtue of section 36 of the Act, the said award became unexecutable and until the said application filed under section 34 by the respondents was decided, the petitioner could not ::: Downloaded on - 09/06/2013 19:13:09 ::: 7 NM3430.11-ARBP24.10.odt seek enforcement/execution of the said award.
19. The petitioners filed Special Civil Application (12583 of 2009) before the Hon'ble High Court of Gujarat seeking writ of prohibition restraining the learned District Judge, Jamkhambalia from entertaining the application filed by the respondents under section 34 of the Act on various grounds including ground of jurisdiction of the District court, Jamkhambalia in entertaining the petition under section 34 of the Act.
20. By an ad interim order dated 1st December, 2009, Gujarat High Court granted stay of the proceedings before the learned District Judge, Jamkhambalia filed by the respondents. The said special Civil Application was directed to be heard along with Special Civil Application No. 12021 of 2009 filed by one Eitzen Bulk A/S, another party in which ad interim stay of proceedings filed before the learned District Judge Jamkhambalia under section 34 filed by the respondent had been granted.
21. The respondents preferred Letters Patent Appeal (2469 of 2009) against ad interim order passed in Special Civil Application (12021 of 2009). The respondents preferred another L.P.A. (1907 of 2010) challenging the order dated 1st December, 2009 in Special Civil Application (12583 of 2009) filed by the petitioners. By order dated 10th August, 2010 the said L.P.A. was disposed of by the Division Bench of Gujarat High Court holding that the order dated 1 st December, 2009 had been passed on the basis that the similar proceeding was pending before the Division Bench of Gujarat High Court and therefore, the said ::: Downloaded on - 09/06/2013 19:13:09 ::: 8 NM3430.11-ARBP24.10.odt order dated 1st December, 2009 required no interference.
22. By an order dated 22nd September, 2010, the Gujarat High Court disposed of the Letters Patent Appeal (2469 of 2009) along with Special Civil Application (12021 of 2009) thereby dismissing the Special Civil Application (12021 of 2009) and held that the application under section 34 of the Act challenging the foreign award is maintainable. The issue of territorial jurisdiction has to be decided by the learned District Judge, Jamkhambalia. It is common ground that the Special Civil Application (12583 of 2009) filed by the petitioner before the Guajrat High Court has not been disposed of so far.
23. On 20th December, 2010, the Arbitration Petition (24 of 2010) filed by the petitioners came up for hearing before this court. The respondents have filed affidavit in reply opposing grant of relief in the said petition (24 of 2010).
When the said petition came up for hearing, the respondents submitted that since it had filed an application under section 34 of the Arbitration Act, 1996, impugning the award, proceedings in arbitration petition (24 of 2010) be adjourned. By a common order dated 20 th December, 2010 passed by S.C.
Dharmadhikari,J. in Arbitration Petition (24 of 2010 and 25 of 2010) after recording request of the respondents for adjournment of both the petitions, passed a conditional order on the petition under section 9 of the Act (25 of 2010) granting adjournment till the disposal of the petition filed by the respondents under section 34 of the Arbitration Act, 1996 in the District Court at Jamkhambalia on the condition that the respondents furnish security in the sum ::: Downloaded on - 09/06/2013 19:13:09 ::: 9 NM3430.11-ARBP24.10.odt of sterling pounds 24,157,442.00 and 5,000.00 respectively within a period of twelve weeks from the date of the said order.
24. The respondents did not comply with the order dated 20th December, 2010.
On 10th February, 2011 the respondents lodged Appeal (88 of 2011) impugning the order dated 20th December, 2010 passed by this court. The respondents did not get the said appeal numbered nor did it press for any early hearing. On 17 th May, 2011, the respondent applied for ad interim orders before the Division Bench. By ad interim order dated 17th March, 2011, the order dated 20 th December, 2010 passed by the learned Single Judge of this court in Arbitration Petition No. 24 of 2010 and 25 of 2010 came to be stayed in so far as it directed the respondent to furnish security. The Division Bench however, directed the respondent to state on affidavit to be filed on or before 31 st March, 2011 the details of its assets and its investments. The Division Bench recorded statement of the respondent made through its counsel that the respondent shall place on record the balance-sheet of the respondent company for the period ending on 31 st December, 2010 and that the same would contain all the necessary details of the assets and its investments.
It is the case of the petitioners that no such affidavit has been filed setting out details of the assets and investments and only balance sheet for the period ending 31st December, 2010 came to be filed by the respondents. On 2 nd July, 2011, the respondents filed reference before the B.I.F.R. under section 15 of the SICA Act, 1985 (for short SICA Act, 1985). It is the case of the petitioners that the said reference filed by the respondent was without jurisdiction. The application for impleadment made by the petitioner has been allowed by BIFR.
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25. By an order dated 5th July, 2011 passed by the Division Bench of this court, the Division Bench took a view that the said appeal could not be entertained and disposed of. It has been held that the learned single Judge was justified in making the order of furnishing security. The relevant portion of the order passed by the Division Bench reads thus :
"2] There is no dispute before us that in view of provisions of sub-section (3) of section 48 of the said Act the learned Single Judge had the power to make an order for furnishing security. We have not been shown anything by the appellants which will even suggest that the learned Single Judge had no jurisdiction to entertain the petition filed under section 47 of the Act. In our opinion, considering the facts and circumstances of the case, the learned Single Judge was justified in making the order for furnishing the security. The subsequent conduct of the appellants of not furnishing security because of its inability to give any security justifies the order of the learned Single Judge requiring the appellants to give security. In this situation, therefore, in our opinion, the appeal cannot be entertained. It is disposed off.
3] The learned counsel appearing for appellants stated that in view of the registration of the reference with the B.I.F.R., the foreign award cannot be enforced. In the appeal, we are not ::: Downloaded on - 09/06/2013 19:13:09 ::: 11 NM3430.11-ARBP24.10.odt called upon to consider the question whether we can enforce the award or not, the proceedings for enforcement of the award are pending before the learned Single Judge. The registration of the reference does not come in the way of disposal of this appeal.
Appeal is disposed off."
26. Being aggrieved by the said order dated 5 th July, 2011 passed by the Division Bench of this court, the respondent preferred Special Leave to Appeal (Civil) No. 21242 of 2011 before the Supreme Court of India. On 16 th August, 2011, the Supreme Court passed the following order :
"Issue notice returnable in four weeks, Dasti, in addition, is permitted.
We, however, make it clear that issue of notice will not operate as stay of order of the Bombay High Court directing the petitioner to furnish security."
The said proceedings filed by the respondents before the Supreme Court are pending.
27. The Petitioner, therefore, filed Notice of Motion No. 3430 of 2011 seeking an order and/or direction under Order 39 rule 11 of the Code of Civil Procedure, 1908 for striking out the defence of the respondents in Arbitration Petition (24 of 2009) and allowing the said petition in terms of prayer clause (a) thereof or in the alternative mandatory order and direction directing the respondent to comply with the order dated 20th December, 2010 and to deposit the security amount as ::: Downloaded on - 09/06/2013 19:13:09 ::: 12 NM3430.11-ARBP24.10.odt directed within such time as this court deems fit and proper. The respondents have filed affidavit in reply opposing the reliefs sought by the petitioners on various grounds. By rejoinder dated 12 th September, 2012 the petitioner has denied the contentions raised by the respondents in the affidavit in reply.
28. Mr. Sunip Sen, the learned counsel appearing for the Petitioner made the following submissions :
(i) The respondents have taken advantage of the adjournment granted by this court. On the one hand, the respondents obtained the adjournment of the proceedings on a condition that it would deposit security amount as directed and on the other hand challenged the order passed by the learned Single Judge before the Division Bench. The respondents deliberately did not get the appeal numbered for quite some time and did not press for early hearing. Taking advantage of the order granting adjournment of the proceedings filed by the petitioners, the respondents filed Reference before the BIFR on 2nd June, 2011 under section 15 of SICA.
(ii) The conditional order passed by this court while adjourning the proceedings filed by the petitioner under section 49 and 9 of the Arbitration Act, 1996, is valid and is in force. The appeal filed by the respondents impugning the said order has not been entertained. Though the matter is pending in the Supreme Court, the Supreme Court has clarified that the notice issued by the Supreme Court will not operate as stay of order of the Bombay High Court directing the petitioner to furnish ::: Downloaded on - 09/06/2013 19:13:09 ::: 13 NM3430.11-ARBP24.10.odt security. The respondents thus not having complied with the mandatory order passed by this court and having taken advantage thereof, objections filed by the respondents to the petition filed by the petitioners under section 49 shall be struck of under Order 39 rule 11 of Code of Civil Procedure, 1908 and the Arbitration Petition (24 of 2010) be proceeded with as an undefended petition and be allowed.
29. On the other hand, the learned senior counsel Mr. N.G. Thakkar, appearing on behalf of the respondents made the following submissions :
(i) The Notice of Motion taken out by the petitioner is not maintainable in law. The Notice of Motion would not lie in Arbitration Petition filed under section 9 and 48 of the Arbitration Act, 1996.
(ii) There is no legal basis for reading the provisions of the order 39 Rule 11 of the CPC 1908 (introduced by way of Maharashtra Amendment dated 1/10/1983) into the provisions of section 9 and or section 48 of the Arbitration Act, 1996. Section 9 and 48 of the Act are self contained provisions under the special law dealing with the subject of the arbitration.
(iii) The Arbitration Petition filed by the respondents under section 34 of the Arbitration Act, 1996 in the District Court at Jamkhambaliya, Gujarat has been filed in prior point of time i.e. on 21 st July, 2009 and is pending challenging the award and thus in view of section 42 of the Arbitration Act, 1996, the award is not executable under section 36 of the Act until the ::: Downloaded on - 09/06/2013 19:13:09 ::: 14 NM3430.11-ARBP24.10.odt petition under section 34 is disposed of. The Supreme Court has granted stay of the proceedings in Arbitration Petition No. 561 of 2009 pending before this court in Special Leave to Appeal (3959 of 2012) filed by the respondents against Eitzen Bulk A/s and the said mater is pending before the Supreme Court. The facts of the said matter are identical to the facts of this case. The present proceedings thus should be postponed till the disposal of the special Leave to Appeal as well as Special Leave to Appeal filed by the respondents impugning the order passed by the Division Bench of this court in this matter. The respondents have made out strong prima facie case on merits.
(iv) The Reference filed by the respondents on 2nd June, 2011 under section 15 of SICA before BIFR is pending and the petitioner has been already impleaded as party in the said Reference/proceedings before the BIFR.
(v) The order passed by this court on 20 th December, 2010 was only an order granting adjournment of the proceedings. Merely because the condition imposed while granting the adjournment has not been complied with, the defence of the respondents can not be struck of. Since the arbitration petitions filed by the petitioner have already been listed for final hearing, though the interim order is not complied with is of no consequence and the petition itself shall be heard finally.
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30. In rejoinder, the learned counsel Mr. Sen on behalf of the petitioner
submits as follows :
(i) The Gujarat High Court has already refused stay of the award. The appeal filed by the respondents after taking advantage of the adjournment has been rejected. The Supreme Court has categorically refused to grant stay. The Supreme Court while issuing notice has made it clear that the issuance of notice would not operate as stay of order of the Bombay High Court directing the petitioner to furnish security. The respondents having taken advantage of the order passed by this court by first making the application for adjournment, obtaining the order of adjournment from this court and thereafter filing an appeal challenging the said order in this court, as well as thereafter before the Supreme Court and filing reference application under section 15 of SICA before BIFR can not be heard on its objections to petition without first complying with the order passed by this court which is still in force. It is submitted that the Notice of Motion is maintainable in view of the fact that the arbitration petitions filed by the petitioners are already pending in this court. The form of proceedings is not relevant. The Notice of Motion has been taken out in the pending arbitration petitions and is thus maintainable.
(ii) This court cannot reopen the issue of jurisdiction for entertaining this petition in view of the fact that the same has already been decided by this court by order dated 20th December, 2010 and upheld by the Division ::: Downloaded on - 09/06/2013 19:13:09 ::: 16 NM3430.11-ARBP24.10.odt Bench. There is no stay of the present proceedings granted by Gujarat High Court. The respondents admittedly not having complied with the interim order passed by this court, the provisions of order 39 rule 11 of the C.P.C. 1908 or principles analogous thereto are attracted to the facts of this case and thus the petitioner is justified in seeking the relief of striking out the defence of the respondents and for enforcement of the foreign award. It is submitted that though it was brought to the notice of the Division Bench that the Reference under section 15 of the SICA filed by the respondent was pending before BIFR, the Division Bench rejected the ig said appeal filed by the respondent by observing that the registration of the Reference does not come in the way of disposal of that appeal. The learned counsel submitted that similarly registration of the Reference also does not come in the way of disposal of the arbitration petition filed by the petitioner or disposal of this Notice of Motion. The learned counsel placed reliance on the judgment of the Supreme Court in the case of Tayabbhai Bagasarwalla and another Vs. Hind Rubber Industries Pvt. Ltd. And Others, (1997) 3 Supreme Court Cases 443.
31. I have heard the learned counsel for both the parties and I have given my anxious consideration to the rival submissions made by the learned counsel.
32. Section 47 and 48 of the Arbitration & Conciliation Act, 1996 and Order 39 Rule 11 of the Code of Civil Procedure, 1908 which are referred to and relied upon by the parties in this matter are extracted as under :
"Section 47 - Evidence
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(1) The party applying for the enforcement of a foreign award shall, at the time of the application, produce before the court--
(a) the original award or a copy thereof, duly authenticated in the manner required by the law of the country in which it was made;
(b) the original agreement for arbitration or a duly certified copy thereof; and
(c) such evidence as may be necessary to prove that the aware is a foreign award.
(2) If the award or agreement to be produced under sub-section (1) is in a foreign language, the party seeking to enforce the award shall produce a translation into English certified as correct by a diplomatic or consular agent of the country to which that party belongs or certified as correct in such other manner as may be sufficient according to the law in force in India.
Explanation.---In this section and all the following sections of this Chapter, "Court" means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction over the subject-matter of the award if the same had been the subject-matter of a suit, but does not include any civil court of a grade inferior to such principal Civil Court, or any Court of Small Causes.
Section 48 - Conditions for enforcement of foreign awards (1) Enforcement of a foreign award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the court proof that--
(a) the parties to the agreement referred to in section 44 were, under the law applicable to them, under some 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
(b) the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(c) the award deals with a difference 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.
::: Downloaded on - 09/06/2013 19:13:09 :::18 NM3430.11-ARBP24.10.odt 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 enforced; or
(d) the composition of the arbitral authority 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
(e) the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.
(2) Enforcement of an arbitral award may also be refused if the court finds that--
(a) the subject -matter of the difference is not capable of settlement by arbitration under the law of India; or
(b) the enforcement of the award would be contrary to the public policy of India.
Explanation.--Without prejudice to the generality of clause (b), it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption.
(3) If an application for the setting aside or suspension of the award has been made to a competent authority referred to in clause (e) of sub-section (1) the Court may, if it considers it proper, adjourn the decision on the enforcement of the award and may also , on the application of the party claiming enforcement of the award, order the other party to give suitable security."
Order 39 Rule 11 of C.P.C. Reads as under :
"11. Procedure for committing breach of the undertaking to the Court:
(1) Where the Court orders any party to a suit or proceedings to do or not to do a thing during the pendency of the suit or proceeding, or where any party to a suit or proceeding gives any undertaking to the court to do or to refrain from doing a thing during the pendency of the suit or proceeding, and such party omits any default in respect of or contravenes such order or commits a ::: Downloaded on - 09/06/2013 19:13:09 ::: 19 NM3430.11-ARBP24.10.odt breach of such undertaking, the Court may dismiss the suit or proceeding, if the default or contravention or breach is committed by the plaintiff or the applicant, or strike out the defences if the default or contravention or breach is committed by the defendant or opponent.
(2) The Court may, on sufficient cause being shown and on such terms and conditions as it may deem fit to impose, restore the suit or proceeding or may hear the party in defence, as the case may be, if the party that has been responsible for the default or contravention or breach as aforesaid makes amends for the default or contravention of breach to the satisfaction of the Courts.
Provided that before passing any order under this Sub-rule, notice shall be given to the parties likely to be affected by the order to be passed."
33. It is not in dispute that the arbitration petitions filed by the petitioner under section 9 and 48 of the Arbitration Act, 1996 are pending. This court passed a conditional order granting adjournment on 20th December, 2010. In view of the respondents not having complied with the directions given by this court, the petitioner has taken out this Notice of Motion for seeking a direction to strike of the objections raised by the respondents to the petition filed by the petitioners under section 48 and opposing reliefs claimed under section 9 and also mandatory order to direct the respondents to comply with the order passed by this court on 20th December, 2010. There is no bar in the provisions of the Arbitration and Conciliation Act, 1996 or under High Court (Original Side) Rules from filing Notice of Motion in pending arbitration petition. In my view, the form of proceedings is not relevant. The court has to consider the reliefs claimed. Notice of motion as taken out by the petitioner is thus maintainable. I am therefore, not ::: Downloaded on - 09/06/2013 19:13:09 ::: 20 NM3430.11-ARBP24.10.odt inclined to accept the argument of the respondents made through its senior counsel that the motion is not maintainable.
34. In so far as the submission of the respondents that the proceedings filed by the respondent in the District Court at Jamkhambalia, Gujarat under section 34 of the Act which is prior in point of time, the present proceedings are not maintainable in this court is concerned, this argument advanced by the respondent cannot be permitted to be re-agitated in this proceedings. This court while passing a detailed judgment on 20th December, 2010 had considered this issue and has rejected the same. The Division Bench while rejecting the appeal filed by the respondent, by order dated 5th July, 2011 has also negatived this contention raised by the respondents. The Division Bench has recorded a finding that the respondents had not shown anything which would even suggest that the learned Single Judge has no jurisdiction to entertain the petition filed under section 47 of the Act. The Supreme Court while issuing the notice also has declined to grant stay of the order passed by this court. In Para 47 of the said order passed by this court on 20th December, 2010, a finding is recorded that it cannot be held that this court had no jurisdiction to entertain and try the instant petition. It is further held that there is no reason as to why the court cannot entertain the main petition seeking enforcement of the foreign award. Said finding in my view has become final and thus this issue raised by the respondents now once again is barred by res-judicata.
35. The submission of the respondents that the Supreme Court has grated stay ::: Downloaded on - 09/06/2013 19:13:09 ::: 21 NM3430.11-ARBP24.10.odt of the proceedings in Arbitration Petition No. 561 of 2009 pending before this Court in Special Leave to Appeal (3959 of 2012), filed by the respondents against Eitzen Bulk (a third party) and since the said petition is pending before the Supreme Court, this proceedings are liable to be stayed is concerned, in my view, there is no substance in this submission made by he respondents. Perusal of the order passed by the Supreme Court passed on 16 th August, 2011 arising out of the order passed by this court in Special leave to Appeal (Civil) (21242 of 2011) makes it clear that the issue of notice would not operate as stay of the order of the Bombay High Court directing the petitioner ig to furnish security. Even otherwise, in this proceedings the petitioner has sought a direction to strike of the objections raised by the respondents in view of non-compliance of the order dated 20th December, 2010 placing reliance upon order 39 rule 11 of the Code of Civil Procedure, 1908, I am thus not inclined to accept this submissions made on behalf of the respondents. This submission is in the teeth of the orders passed by this Court and also the Supreme Court referred aforesaid.
36. In so far as the submission of the respondents that the reference is filed by the respondent under section 15 of the SICA before BIFR and the same is pending is concerned, from the perusal of the order passed by the Division Bench while rejecting the appeal filed by the respondent, it is clear that the Division Bench had negatived the contention of the respondents while dismissing the appeal filed by the respondents. The Division Bench has held that the registration of reference does not come in the way of disposal of that appeal. The Petition filed by the petitioners under section 49 of the Arbitration Act, 1996 is for the ::: Downloaded on - 09/06/2013 19:13:09 ::: 22 NM3430.11-ARBP24.10.odt declaration that the arbitration award dated 8 th July, 2009 read with 15th March, 2010 are enforceable before this Hon'ble Court. The Arbitration Petition No. 25 of 2010 filed by the petitioner is for interim measures under section 9 of the Arbitration Act, 1996. The present Notice of Motion is for seeking striking of the defence and in the alternative for compliance of the order dated 20 th December, 2010. In my view the said proceedings referred to aforesaid are not the proceedings in execution or distress as contemplated by section 22 of SICA and as such bar under section 22 is not attracted to this proceedings. It is only when the court is satisfied that the foreign award is enforceable that award is deemed to be decree of that court. In my view therefore, the objections raised by the respondents by referring to section 22 of the SICA is untenable and is rejected.
37. The next submission of the respondent is that the condition was imposed by this court while granting adjournment of the proceeding and that the matter itself being on board for final hearing, the matter be heard finally on merits. It is submitted that the non compliance of the order while granting adjournment is of no consequence. Sub section (1) and (2) of section 48 of the Arbitration & Conciliation Act, 1996 provides when the court may refuse enforcement of the foreign award. The order dated 20th December, 2010 clearly indicates that the respondents had sought adjournment of the proceedings filed by the petitioners for enforcement of the award and for interim measures. On such request for adjournment made by the respondents, the petitioner had applied for order against the respondents for providing suitable security. In that context, this court granted adjournment of the proceedings for enforcement and interim measures ::: Downloaded on - 09/06/2013 19:13:09 ::: 23 NM3430.11-ARBP24.10.odt by directing the respondents to give suitable security. The respondents thereafter, instead of complying with the said order passed by this court, filed an appeal challenging the said order. The respondents also filed Reference under section 15 of SICA before BIFR. The Division Bench while dismissing the appeal filed by the respondents recorded a finding about subsequent conduct of the respondents in not furnishing the security. In my opinion, with an intention of delaying the passing of an order of enforcement of award and interim measures by this court, when the petitions filed by the petitioners appeared on board for hearing, adjournment was sought by the respondents. The respondents, ig have taken advantage of the order of adjournment and thereafter deliberately did not comply with the same. The order passed by this court granting adjournment was conditional order. In my view party cannot enjoy the part of the order which is convenient and beneficial to him and refuse to comply with other part which provides for the conditions attached to first part of the order. In my view a party who has deliberately disobeyed the order of this court and having taking advantage of part of the order cannot be permitted to be heard on the objections filed by such party opposing the petition filed by the petitioner seeking enforcement of the award and cannot be permitted to be scot free and without facing any consequences. It is not in dispute that there is no stay of the petition filed by the petitioners seeking enforcement of the award as well as an application for interim measures. Though few proceedings are pending before the Gujarat High Court, admittedly no stay has been granted. I am thus not inclined to accept the submissions of the respondents that it was only an order of granting ::: Downloaded on - 09/06/2013 19:13:09 ::: 24 NM3430.11-ARBP24.10.odt adjournment and since the petition itself is on board for final hearing, the respondents cannot be compelled to comply with the order passed on 20 th December, 2010 or the objections filed by the respondents be not struck of. If this argument advanced by the learned counsel for the respondent is accepted, it would be contrary to the order dated 20th December, 2010, the order passed by the Division Bench and the order passed by the Supreme Court. The order dated 20 th December, 2010 is in force. Reliance on the judgment of the Supreme Court in the case of Taiyabbhai Bagasarwala (supra) on this issue would be relevant. It has been held by the Supreme Court that if the Civil Court and High Court did have powers to pass interim orders, they must also have power to enforce them under section 9A of the Code of Civil Procedure, 1908. It is held that in the light of the said provisions it can not also be held that those orders could be enforced only till the issue of jurisdiction is decided and not thereafter. It is further held that the court holding that it had no jurisdiction do not render the interim order passed in the meanwhile non est or without jurisdiction. In my view, even if the respondent succeeds in its application under section 34 of the Act filed before the District Court, Gujarat, that cannot be a ground for non compliance with interim order passed by this court, till the disposal of the said application.
38. In so far as submission of the respondent that the provisions under Order 39 Rule 11 of Code of Civil Procedure, 1908 is not applicable to the present proceedings is concerned, it is clear that there was amendment to order 39 carried out in Maharashtra. Rule 11 of order 39 provides that if any party is refrained from doing anything during the pendency of the suit or proceedings, the court may ::: Downloaded on - 09/06/2013 19:13:09 ::: 25 NM3430.11-ARBP24.10.odt dismiss the suit or proceedings if the default or contravention or breach is committed by the plaintiff or the applicant or strike out the defence if the default or contravention or breach is committed by the defendant. It is clear that the respondents have committed default of the order dated 20 th December, 2010 and are in continuous breach of the said order passed by this court. In my view the mandatory direction given by this court while granting adjournment under section 48(3) of the Act to furnish security has an effect of injunction. The said direction has become final and is in full force. The court is not without any powers to take appropriate action if breach of the order ig passed by the court has not been complied with by a party. In my view the respondents by not giving the security has committed willful default and disobedience of the order passed by this court.
The order passed by this Court on 20th December, 2010 was not an order granting adjournment simplicitor. When this Notice of Motion was argued by the parties through their respective counsel, this court gave one more opportunity to the respondents to comply with the order dated 20 th December, 2010 before passing any order on the Notice of Motion taken out by the petitioner in terms of prayer clause (a) but the respondent did not agree to accept any such opportunity given by the court. In my view, in the absence of any express provisions to the contrary in Arbitration and Conciliation Act, 1996, principles of order 39 rule 11 can be extended to application under section 48 and 49 read with Section 9 of the Arbitration & Conciliation Act, 1996. Court cannot be a silent spectator to the apparent breach and disobedience of order committed by a party before it. It is made clear that this court has not expressed any opinion on the merits of the ::: Downloaded on - 09/06/2013 19:13:09 ::: 26 NM3430.11-ARBP24.10.odt application filed by the respondents under section 34 of the Arbitration & Conciliation Act, 1996.
39. In the result, objections/defence filed by the respondents in Arbitration Petition No. 24 of 2010 are struck off. Arbitration Petition No.24 of 2010 and Arbitration Petition No. 25 of 2010 are directed to be placed on board for further hearing on 9th October, 2012. There shall be no order as to costs.
ig (R.D. DHANUKA,J.)
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