Bombay High Court
Pacific Basin Handymax (Uk) Ltd vs Ashapura Minechem Ltd on 4 October, 2012
Bench: R.D. Dhanuka
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hvn
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)
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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.
15 NM3430.11-ARBP24.10.odt
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
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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.
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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
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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
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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
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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
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
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
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
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
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.)
