According to the Calcutta High Court, when courts exercise their authority under Section 48 of the A&C Act, they are not permitted to reassess the evidence or replace their perspective with that of the arbitral tribunal.
The court emphasized that during the enforcement of a foreign award, judicial intervention is restricted to the grounds specified in Section 48, and the court's role is limited to making a preliminary determination.
Justice Shekhar B. Saraf's bench ruled that the arbitral tribunal's perspective on the existence of the arbitration agreement, formed through an examination of evidence, cannot be replaced unless it is clearly apparent that no agreement existed.
Brief Facts:
On 24.12.2009, the recipient of the award/petitioner sent an email expressing their willingness to transport the award debtor's iron ore shipment from one port to another. The email outlined specific terms and conditions regarding the completion of the task.
Upon receiving the email from the petitioner, the award debtor/respondent responded with a different offer. Following this, the vessel arrived at the assigned port, and the petitioner notified the respondent of its arrival. Subsequently, the petitioner drafted 'Fixture Note No. 1' containing the arbitration agreement and additional terms and conditions. The respondent sent a modified version of 'Fixture Note No. 1', but in the meantime, both parties continued to carry out the work based on the initial agreement, and the respondent acknowledged receipt of the vessel notification.
Upon receiving the modified 'Fixture Note No. 1', the petitioner proceeded to send 'Fixture Note No. 2' to the respondent's affiliated company. As a result, all subsequent invoices were addressed to the respondent's sister concern. Nevertheless, throughout this period, both parties continued to operate based on the initial agreement, and significant advancements were made in completing the task. These included the vessel successfully loading at one port, sailing to the destination port, and providing notice of readiness to load, which the respondent also acknowledged.
Disagreement arose when the respondent failed to unload the ship on time, resulting in demurrage charges and damages for the petitioner. The petitioner initiated arbitration, citing the arbitration clause in Fixture Note 1.
The arbitrator accepted the case, addressing the preliminary matter of a valid contract and tribunal jurisdiction. After careful consideration, the tribunal issued a partial award, confirming the contract's validity and its jurisdiction over the petitioner's claims. Additionally, the tribunal awarded damages to the petitioner. Following this, the petitioner applied for award enforcement under Part-II of the A&C Act.
Objections of the Respondent:
The respondent has raised multiple objections to the enforcement of the award, which can be summarized as follows. Firstly, the respondent argues that the petitioner failed to include the original copy of the arbitration agreement along with the award, thus violating Section 47(1)(b) of the Act and providing grounds for refusal of enforcement. Secondly, the respondent claims that no agreement was reached between the parties, as there was no consensus ad idem regarding the terms and conditions.
This is evident from the counter-offer made by the respondent and the revisions made to the Fixture Note 1 provided by the petitioner. Thirdly, the respondent argues that the execution of Fixture Note 2 occurred between the petitioner and the respondent's sister concern, which is a separate legal entity. Therefore, the respondent asserts that there was no privity of contract between the petitioner and the respondent, rendering the final concluded agreement between them non-existent. The respondent contends that the tribunal's determination of the existence of a contract between the parties is erroneous and violates Section 48(2)(a) of the Act. Finally, the respondent claims that the award lacks jurisdiction due to the absence of a contract between the parties. According to the respondent, an award passed without jurisdiction is null and void, and enforcing such an award would go against public policy.
Observations of the Court:
The Court addressed the objection regarding the non-filing of the original arbitration agreement and rejected it. The petitioner had rectified the issue by submitting a certified copy of the agreement, Fixture Note 1.
Regarding the objection on the existence of the agreement and violation of public policy, the Court stated that enforcement of a foreign award can be refused under Section 48(2)(a) only if it is clear that there was no agreement. The tribunal's finding on the existence of the agreement was based on careful consideration of the case's circumstances and evidence, including the parties' conduct. The Court noted that significant progress had been made in executing the work as per the original understanding, indicating the existence of an agreement.
The decision of the Court:
The Calcutta High Court rejected the objections and ordered the award to be enforceable and executable as a court decree.
Case Title: Jaldhi Overseas PTE Ltd v. Steer Overseas Pvt Ltd
Coram: Hon’ble Justice Shekhar B. Sharaf
Case no: EC 100 of 2022
Advocate for the Petitioner: Mr. Tilak Bose
Advocate for the Respondent: - Mr. Joy Saha
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