Aircon Beibars Fze vs Heligo Charters Private Limited
2022 Latest Caselaw 1644 Bom

                                     IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                           ORDINARY ORIGINAL CIVIL JURISDICTION
                                               IN ITS COMMERCIAL DIVISION


                              COMMERCIAL ARBITRATION PETITION NO.1130 OF 2019


                     Aircon Beibars FZE
                     A company incorporated in Sharjah
                     under the laws of UAE having it's
                     registered office at P.O. Box 121095
                     SAIF Zone, Sharjah UAE.                                 .. Petitioner
                              v/s.
                     Heligo Charters Private Limited
                     A body corporate incorporated under
                     the Indian Companies Act, 1956 and
                     having its registered office at
                     Hangar No.3A, Juhu Airport,
                     Vile Parle (W), Mumbai-400 053.                         .. Respondent



                     Dr. Abhinav Chandrachud, a/w Mr. Aman Vachher, Mr. Sajid
                     Mohamed, Mr. Dhiraj, Mr. A. Mukherjee and Mr. Darshil Thakkar, i/by
                     Agrud Partners, for the petitioner.

                     Mr. Darius Khambata, Sr. Advocate, a/w Mr. Pheroze Mehta, Mr.
                     Nishant Shah, Mr. Abhileen Chaturvedi, Ms. Virangana Wadhawan, Mr.
                     Samarth Saxena and Ms. Sharmin Kapadia, i/b. Economic Laws Practice,
                     for the respondent.


                                                             CORAM : A. K. MENON, J.
                                                        RESERVED ON : 1ST DECEMBER, 2021
                                                   PRONOUNCED ON : 17TH FEBRUARY, 2022
        Digitally
        signed by
        SANDHYA
SANDHYA BHAGU
BHAGU   WADHWA



                                                           1/64
WADHWA Date:
        2022.02.17
        18:11:15
        +0530


                     CARBP-1130-2019.doc
                     wadhwa
 JUDGMENT :

1. The petitioner, a company incorporated in Sharjah, UAE, under

the laws of UAE, is engaged in the business of leasing and

chartering of aircraft and/or helicopters. The respondent, a

private limited company, incorporated under the Companies Act,

1956, is carrying out a business of providing helicopter services

to the oil and gas industry in India. By this petition, filed under

Sections 47 and 49 of the Arbitration and Conciliation Act, 1996,

the petitioner seeks enforcement of the Final Arbitration Award

dated 25th January 2017 ("Award").

2. The Award is a foreign award within the meaning of Section 44

Part II of the Arbitration and Conciliation Act made pursuant to

an agreement in writing for arbitration to be held in Singapore.

The seat of arbitration under the Settlement Deed was at

Singapore. The Awards directs the respondent to pay sum of USD

6,563,700/- and SGD 775,462.28.

3. The opposition to enforcement on behalf of the respondent is on

five grounds which are briefly as follows;

CARBP-1130-2019.doc wadhwa

(i) Foreign Award grants the price of the helicopter under the

agreement which had been terminated and hence enforcement of

such an award would be contrary to the public policy of India;

(ii) The respondent was unable to defend the petitioner's

amended claim which changed the nature of the claim. As a

corollary, it is contended that the award contains no discussion

and does not render any findings on this objection;

(iii) The award is unreasoned to the extent it relates to amounts

awarded under clauses 2(c) and 2(d) of the Settlement Agreement;

(iv) Enforcement of the award would lead to unjust enrichment

of the petitioner which would be contrary to the public policy of

India; and

(v) The petitioner's contention that the award may be enforced

since overall justice has been done, is not justified.

4. Save and except these grounds, no other ground has been pressed

into service in the respondent's attempt to oppose enforcement of

the award.

CARBP-1130-2019.doc wadhwa Facts in brief :

5. The brief facts giving rise to the present petition are as under :

The petitioner and the respondent entered into a Lease Agreement

on 3rd July 2012 in respect of one Bell 412 EP Helicopter. Under

the said lease agreement, the respondent agreed to pay to the

petitioner a sum of USD 5.5 million and a monthly lease charge of

USD 80,000 + variable flying hour charges all which remained

unpaid. On 9th September 2014, both the parties entered into a

Settlement Deed, which provided for settlement of outstanding

sum payable under the lease agreement to the petitioner and for

sale of the used helicopter. The respondent having failed and

neglected to pay the sum due under the Settlement Deed, despite

numerous demands made by the petitioner, the petitioner

initiated arbitration proceedings against the respondent. On 8 th

April 2015, the respondent was served with notice of arbitration.

The respondent replied on 4th May, 2015 nominating an

arbitrator. On 5th May 2015, Arbitrators nominated by the parties

came to be appointed by the President of the Court of Arbitration

of Singapore International Arbitration Centre (SIAC). On 2nd June

2015 by consent, Chairman of the Tribunal was then appointed.

CARBP-1130-2019.doc wadhwa

6. At a preliminary meeting of the tribunal held on 8 th June 2015, a

procedural order came to be passed, by which both the parties

were directed to serve submissions, file disclosure affidavits and

affidavit-of-evidence. Dates of hearing were fixed. These

directions were duly complied by the parties on 20 th July

2015/23rd July 2016 and 14th September 2015 respectively.

Having considered the submissions advanced by both the parties

and having perused the documents and evidence on record, the

tribunal passed the Award on 25th January 2017. Since there were

some typographical errors in the Award, by consent, corrections

were carried out and accordingly an Addendum came to be issued

on 8th March 2017. Since there was no challenge to the Award in

any court in Singapore, on 9 th May 2017, the High Court of

Republic of Singapore declared the Award, along with the

Addendum, as final and binding upon the parties with liberty to

the petitioner to enforce the same as a Judgment or Order.

7. The petitioner then filed Commercial Arbitration Petition No.269

of 2017, under Section 9 of the Arbitration and Conciliation Act,

1996, seeking injunctions against the respondent, which came to

be allowed on 28th April 2017. On 9th June 2017, pursuant to the

CARBP-1130-2019.doc wadhwa directions of this court, the petitioner filed Commercial Execution

Application No.826 of 2018 for execution of the Award. Having

fulfilled the conditions prescribed in Section 47 of the Arbitration

and Conciliation Act, 1996, it is stated that the Award is

enforceable. Apart from considering the evidence on record in

detail, the tribunal has also heard the contentions of the

respondent in detail, thereby followed the principles of natural

justice. Since there was no challenge to the Award on the part of

the respondent within a prescribed time, it was declared as final,

binding and enforceable against the respondent on 9th May 2017.

8. It was contended by the respondent that on or about April 2014,

the petitioner was investigated by the US Bureau of Industry and

Security (BIS) and on 18th September 2014, the petitioner was

placed on the US Government BIS Entity List, which governs the

export, re-export and in-country transfer of items, which are

subject to the Export Administration Regulations. In view thereof,

the respondent was prevented from performing its obligations

under the Settlement Deed and as a result, the Settlement Deed got

frustrated. This contention had been rejected by the tribunal.

CARBP-1130-2019.doc wadhwa Petitioner's Submissions

9. In support of the award, Dr. Chandrachud contended that mere

misinterpretation of substantive law by ignoring a binding

precedent or otherwise would not result in a violation of the

fundamental policy of Indian law. In explaining this it is

submitted that every violation of substantive law would otherwise

constituted a violation of the fundamental policy of India. There

would be no difference between violation of the substantive law

and violation of the fundamental policy of Indian law. That

almost every statute in India has been subject matter of at least

one binding judgment of a superior court in India and therefore

he submits that a party which terminates a contract can sue for

specific performance or sue for the price of the goods. Counsel

contends that the principle that a party terminating a contract

cannot sue for specific performance or sue for the price of goods

is not part of the fundamental policy of Indian law. A mere

violation of the substantive law of India will not constitute a

breach of the fundamental policy of Indian law.

10. Inviting my attention to the decision in Associate Builders

v/s. Delhi Development Authority1 Dr. Chandrachud submitted

(2015) 3 SCC 49

CARBP-1130-2019.doc wadhwa that the Supreme Court did not mean that when an arbitral

tribunal ignores a binding precedent of a superior court in India,

it necessarily violates a fundamental policy of Indian law. He

submits that the judgment in particular paragraph 27 must be

understood in the context of the judgment of the Supreme Court

in Renusagar Power Company Limited v/s. General Electric 2. He

submits that a judgment is not to be read like a statute and this is

a fact that has been reiterated by the Supreme Court. In effect

therefore, the learned counsel for the petitioner submitted that an

arbitral tribunal which penalizes a party for observing a binding

order or judgment, would violate the fundamental policy of

Indian law but if it merely ignores a binding precedent, it would

not violate fundamental policy of Indian law.

11. If an arbitral tribunal correctly invokes a binding

precedent but applies it incorrectly to the facts before it, it would

not constitute a violation of the fundamental policy of Indian law.

To support this proposition, Dr. Chandrachud relies upon the

decision of a Single Judge of this court in Union of India v/s.

Recon Mumbai3.

(2020) 6 MLJ 509

CARBP-1130-2019.doc wadhwa

12. My attention is also invited to paragraph 75 of the Award

in which the tribunal rejected the respondent's contention that

"following termination as a result of repudiation of a contract, a

seller cannot sue for the price of the goods but is relegated to a

claim in damages." The tribunal had proceeded to distinguish the

precedents holding that those precedents dealt with a situation in

which the property in the goods had not passed prior to the

contract being terminated. This could have been an erroneous

application of law in facts of the case before the tribunal since it

is not in dispute that the property in the helicopter had not passed

to the respondent, a fact that is recognized and is undisputed, yet,

this would not constitute a violation of the fundamental policy of

Indian law.

13. Dr. Chandrachud then submitted that the arbitral tribunal

had observed that when property in the goods had passed to the

buyer, a seller, in the instant case the petitioner could sue for the

price of the goods. This observation was based on Section 49 of

the Singapore Sale of Goods Act, 1999. The tribunal may have

erroneously applied the said law to the facts of the instant case

but this would not have the effect of violation of the fundamental

policy of Indian law at enforcement.

CARBP-1130-2019.doc wadhwa

14. Dr. Chandrachud submitted that even if there are grounds

for interfering or declining enforcement of an foreign award, a

court is required to look at whether overall justice has been done

between the parties and where the violation is not of a nature

such as to prevent enforcement, the pro-enforcement bias of the

New York Convention must prevail and the grounds for

interfering with an award must be construed narrowly. Adverting

to the facts on hand, Dr. Chandrachud submitted that the

helicopter had been retained by the respondent since the year

2012 it continued in possession of the respondent. The

respondent put it to use and earned USD 2.4 million between

September 2014 and July 2015 by using the helicopter. Yet the

respondent did not pay any part of the agreed amounts. The

award of the tribunal takes into account these facts and it appears

on a rough and ready approximation that the award is equivalent

to about 3 years revenue that would have been earned by the

respondent although the respondent has retained the helicopter

for over 9 years. In these circumstances, Dr. Chandrachud

submitted that overall justice has certainly been done and invited

me to hold in favour of enforcement.

15. Referring to the amendment to the statement of claim, Dr.

CARBP-1130-2019.doc wadhwa Chandrachud submitted that first date of final hearing of the

reference was 25th July, 2016 and on that very day, the petitioner

sought amendment to the statement of claim. The respondent

consented to the amendment. Thus, the amendment had been

made prior to the commencement of the trial and in arbitration

such as the one hand the trial would commence during the final

hearing, even before the cross examination started. The procedure

followed was in accordance with the law of India and not in

violation of the fundamental policy of Indian law which provided

inter alia that no amendment should be allowed to pleadings once

a trial is commenced without good reasons. He submitted that the

amendment allowed on 25th July, 2016 was before the trial had

commenced and in any case the respondent had consented to it

and did not seek time to counter the amendment in any manner

either at the stage of the amendment being allowed or to deal with

the amendment by filing any additional written statement. The

counsel submitted that the respondent was able to present its case

and therefore the award does not violate section 48(1) (b) of the

Act.

16. Referring to the opposition to enforcement and the

appellant challenge to the reasoning adopted by the arbitral

CARBP-1130-2019.doc wadhwa tribunal, Dr. Chandrachud submitted that poor reasoning cannot

be taken to a ground to prevent enforcement of a foreign award.

The tribunal had given reasons for reaching its conclusions inter

alia that the amount set out in the contract was not a penalty but a

genuine pre-estimate of the loss. Even assuming this reasoning to

be poor, enforcement cannot be prevented.

17. Lastly, Dr. Chandrachud submitted that the tribunal has not

unjustly enriched the petitioner inasmuch as the tribunal has

observed that upon payment of the amount claimed, the petitioner

was willing to transfer ownership of the helicopter to the

respondent. The respondent had never been prevented from

using the helicopter and was entitled to and had utilized the same

and continues to retain the helicopter although it may not be

airworthy in the present state of affairs. Dr. Chandrachud

therefore submitted that the Award is liable to be enforced.

18. Apart from the various decisions cited before me, Dr.

Chandrachud invited my attention to the law in Singapore on the

aspect of breach of contract and invited my attention to Section

49 of the Contract Act which deals with seller's remedies and laid

stress upon the fact that under Section 49(2) where, under a

CARBP-1130-2019.doc wadhwa contract of Sale, the price is payable to the buyer and the buyer

wrongfully refuses or neglects to pay the price, the seller can

maintain an action to recover the price although the property in

the goods had not passed and goods had not been appropriated to

the contract. He submitted that this provision of law clearly

supports the action adopted by the present petitioner. Even

otherwise, he relies upon the remedies of a seller and cites from

Chitty on Contracts to highlight the rights of unpaid seller against

the goods.

19. In support, he relies upon Section 39(1) of the English Sale

of Goods Act which provides that notwithstanding the fact,

property in goods may have passed to the buyer, the unpaid seller

has a lien on the goods and a right to retain it and although the

unpaid seller's normal remedy is to sue the buyer for the price or

for damages on non-acceptance, the law allows him certain

remedies and by exercising these remedies the unpaid seller

secures a form of preference over general creditors. However, if

the buyer repudiates his obligations under a contract, the seller is

entitled to accept repudiation and treat the contract as terminated

and to deal with the goods as their owner. The buyer would be

treated as having repudiated the contract. These in my view are

CARBP-1130-2019.doc wadhwa aspects that need not be considered at this stage. The fact remains

that the respondent is in possession of the helicopter. It has used

the helicopter extensively and continues to retain possession and

is now prosecuting a suit in this court for transfer of ownership, a

material aspect which must be borne in mind.

20. In the present case, possession of the goods has always been

with the respondent and the property in the goods has not passed

to the respondent and the petitioner would have a lien on the

goods only so long as he is in possession of the goods of the

helicopter. There is an element of security that is retained by the

petitioner and although the commentary on Chitty on Contracts

deals with an aspect of insolvency we are not really concerned in

the present case with the effects of insolvency on the rights of the

petitioner as unpaid seller.

Respondent's Submissions

21. On behalf of the respondent, Mr. Khambata submitted that

the award is not enforceable. The award grants the purchase

price of the helicopter under a terminated agreement and that

enforcement of such an award would be contrary to public policy

of India. Apart from the purchase price, the award also grants

CARBP-1130-2019.doc wadhwa certain other amounts contemplated under the Deed of

Settlement. Despite the fact that the settlement deed was

terminated by the petitioner on or about 13 th May, 2015 by

accepting an alleged anticipatory repudiatory breach of the

settlement deed on behalf of the respondent. The termination of

the settlement deed has been recognized by the arbitral tribunal

yet the tribunal granted the petitioner a purchase price under the

settlement deed and directing the respondent to specifically

performance obligations under the settlement deed. Inviting my

attention to the purpose of the settlement deed, Mr. Khambata

submitted that the settlement provided for the property in the

helicopter to pass to the respondent only upon payment of the full

purchase price. He has taken me through provisions of clauses 3,

4 & 6 and the fact that the in order to complete the transaction

the sale would have to be executed outside the country for which

the helicopter would have to be taken out of India and the

helicopter would remain the property of the petitioner till the

purchase was completed. It is only after payment of the purchase

price that the helicopter is to be entered into the account in

records of the respondent.

22. Mr. Khambata submits that the intention of the settlement

CARBP-1130-2019.doc wadhwa deed which was to ensure that the property in the helicopter

would not pass till completion of the purchase price as aforesaid.

He submitted that although the helicopter is physically in the

possession of the respondent, it was delivered to the respondent

under a Lease Agreement of July 2012 and subsequently the

helicopter remains with the respondent at the Juhu Airport in

Mumbai and for which the respondent is incurring costs

regularly. The seller being the petitioner having terminated the

contract, it is Mr. Khambata's case that the seller viz. the

petitioner would only be entitled to damages for breach of

contract at best for a wrongful repudiation of the contract by the

buyer. However, in the instant case the tribunal has awarded the

purchase price to the petitioner.

23. In support of his contentions, he has relied upon the

commentary on Sale of Goods by Benjamin in the 9 th Edition to

submit that the seller terminates a contract following the buyer's

repudiation of fundamental breach. The seller can no longer sue

the buyer for the price but must necessarily claim damages. The

contract remains alive for the purpose of assessing the seller's

right of action for damages as a result of the buyer's breach as

observed in Chitty On Contract 32 nd Edition. My attention was

CARBP-1130-2019.doc wadhwa also invited to the decisions of AG v/s. Pritchard 4 in which the

court had occasion to observe that the facts of that case by

resuming possession of furniture abandoned by the defendant.

The Crown had disentitled itself to sue for part of the purchase

price but could sue for damages for breach of agreement to

purchase.

24. Mr. Khambata also relied upon the judgment of the Court of

Appeal in R.V. Ward V/s. Bignall5 wherein the court of appeal

observed that the payment of the price was of essence of the

contract. It requires the buyer to pay the price or tender it within

a reasonable time failing which the seller in possession of the

goods may treat the bargain as rescinded and resell the goods. A

suit for damages becomes comparable to a claim for damages for

non-acceptance of the goods where the property has never

passed. Rescission of a contract he submits, discharges both

parties from further liability to perform. Where rescission occurs

as a result of one party exercising his right to treat a breach by the

other as a repudiation of contract, it would give rise to a

secondary obligation of the party in breach that is to compensate

the other party to the loss occasioned to him as a consequence of

1928 Times Law Report 490 KB

(1967) 1 QB 534

CARBP-1130-2019.doc wadhwa the rescission and this secondary, obligation is enforceable in an

action for damages.

25. The short point that was sought to be canvassed in the case

at hand is that the arbitral tribunal could not have awarded the

purchase price but could only have awarded damages should it

have been claimed. Even under the law in Singapore as is the

case in Indian specific performance cannot be granted to a party

once it had accepted, repudiatory breach of the contract by the

other party and had terminated the contract. In this context, Mr.

Khambata cited the decision of the Singapore Court of the Appeal

in Lee Christina v/s. Lee Eunice and another6.

26. Mr. Khambata then submitted that reliance on 55 (2) of the

sale of Goods Act is misplaced since it overlooks section 60 of the

Sale of Goods Act which deals with a situation where a contract

had been repudiated and thus, not subsisting. For ease of

reference, I am reproducing below Sections 55 and 60 of the Sale

of Goods Act, 1930.

"55. Suit for price. - (1) Where under a contract of sale the property in the goods has passed to the buyer and the buyer wrongfully neglects or refuses to pay for the goods according

(1992) 2 SLR (R) 644

CARBP-1130-2019.doc wadhwa to the terms of the contract, the seller may sue him for the price of the goods.

(2) Where under a contract of sale the price is payable on a day certain irrespective of delivery and the buyer wrongfully neglects or refuses to pay such price, the seller may sue him for the price although the property in the goods has not passed and the goods have not been appropriated to the contract.

60. Repudiation of contract before due date. - Where either party to a contract of sale repudiates the contract before the date of delivery, the other may either treat the contract as subsisting and wait till the date of delivery, or he may treat the contract as rescinded and sue for damages for the breach."

27. In this background, Mr. Khambata submitted that in India

enforcement of a Foreign Award could not be permitted when it

seeks to recover price of goods under the repudiated contract and

the party which treats a contract as rescinded is only entitled to

sue for damages for breach. My attention is invited to paragraph

75 of the award, which inter alia considers the submissions made

by the respondent that following the termination caused by

repudiation, the seller can no longer sue for price but is relegated

to a claim in damages. However, the tribunal did not accept this

submission as the textbook and the cases relied upon, dealt with a

different situation from that in the present case which relates to a

simple sale of goods where the property in the goods has not

CARBP-1130-2019.doc wadhwa passed at the date of termination.

28. In the case at hand, however, the Settlement Deed clearly

provided for sums to accrue due and those sums had fallen due

before the date of termination. The petitioner had contended that

a tribunal which correctly invokes a binding precedent but

wrongly applies it to the facts of the case does not violate the

fundamental policy of Indian law. However, according to the

respondent, the tribunal not only was incorrect in its invocation

but also misinterpreted the law. It completely disregarded the

judgments which were binding on it. In support of this

contention, Mr. Khambata relied upon the fact that the ratio of the

judgments was to the effect that if the buyer was in wrongful

repudiation of a contract for sale of goods and the seller had

elected to terminate a such contract, the seller's remedy could

only be in damages and the ratio of the judgments had nothing to

do with the passing of the property.

29. According to Mr. Khambata, the ratio of the judgments cited

by him including that of Jawahar Lal Wadhwa & Anr. v/s.

Haripada Chakraberty7 are to the effect that if a buyer is in

(1989) 1 SCC 76

CARBP-1130-2019.doc wadhwa wrongful repudiation of a contract for sale of goods, and the seller

has elected to rescind and or terminate the contract, then the

sellers remedy will only be in damages. It has nothing to do with

whether or not the property in the goods had passed. He

submitted that the petitioner's contention that reliance placed on

the comments of Benjamin's Sale of Goods and AG v/s. Pritchard

(supra) which were relied upon by the respondent turns on

whether the property in the goods passed or not, was erroneous.

30. The passage in Benjamin's Sale of Goods he would submits

contains two different propositions; first of which refers to the

sellers' right to resell the goods when the property in the goods

has not passed to a buyer; and the second where the sellers'

remedy against the buyer when a contract being repudiated.

These principles are distinct and the latter is not being subject to

the former. Similarly the portion cited from AG v/s. Pritchard

(supra) by the respondent and sought to be relied upon by the

petitioner in its submissions does not form part of the ratio of the

judgment but is merely an observation on the facts of the case.

On the aspect of the commentary of Chitty on Contracts and the

portion relied upon by the petitioner pertains to the sellers' right/

power of resale of the goods and did not pertain to the principle

CARBP-1130-2019.doc wadhwa relied upon by the respondent viz. that upon repudiation a

seller's remedy against the buyer was only for damages. Thus, the

underlying principle in all these cases is that once the contract

has been terminated, the seller's remedy can only lie in damages

irrespective of whether the property in the goods has passed or

not.

31. On the other hand, Section 49 of the Singapore Sale of

Goods Act, 1993 relied upon by the petitioner, Mr. Khambata

submits does not deal with a situation where the contract has

been terminated. According to Mr. Khambata the conclusion

drawn by the tribunal in paragraph 75 has completely

disregarded the ratio of the judgments that if a buyer is in

wrongful repudiation of a contract and the seller has elected to

rescind and terminate the contract, then the seller's remedy will

only be in damages. The tribunal had therefore misapplied the

judgments and also disregarded the ratio. In these circumstances,

it is contended that the Foreign Award is in complete disregard of

binding judgments of superior courts therefore leading to a

violation of the fundamental policy of Indian law as

contemplated in Associate Builders(supra). The petitioner also

canvassed the fact that the helicopter is the property of the

CARBP-1130-2019.doc wadhwa petitioner till the purchase was completed. A fact that was

specified in the settlement deed in clause 6 thereof.

32. Mr. Khambata then invited my attention to the judgment in

the case of Ssangyong Engineering & Construction Co. Ltd. v/s.

National Highways Authority of India (NHAI) 8 and in particular

paragraph 33 & 34 thereof ascertaining the fact that public

policy of India whether contained in Section 34 or in Section 48,

would now mean the 'fundamental policy of Indian law' as

explained in paragraph 18 and 27 of Associate Builders (supra) in

which the Supreme Court held that in Renusagar v/s. General

Electric (supra) the Supreme Court had construed Section 7(1) (b)

(ii) of the Foreign Awards (Recognition and Enforcement) Act,

1961. According to the respondent and as held in Renusagar

(supra) violation of Foreign Exchange Regulation Act and

disregarding of orders of superior courts in India could be

regarded as being contrary to the fundamental policy of Indian

law and it could also be stated that the binding effect of a

judgment of a superior court being disregarded would equally be

a violative of the fundamental policy of Indian law.

(2019) 15 SCC 131

CARBP-1130-2019.doc wadhwa

33. While the petitioner had relied upon Renusagar, Sarat

Chandra Mishra and Associate Builders, it sought to contend that

the later part of paragraph 27 of Associate Builders ought to be

read to mean that it is only disregard of orders inter se parties to

the lis, or to similarly situated parties to whom such orders would

apply on facts, that would be violative of the fundamental policy

of Indian law. The petitioners' interpretation of paragraph 27 of

Associate Builders (supra), does not so reveal and as evident from

the language, it clearly states that the principle that the binding

effect of the Judgment of a superior court being disregarded

would equally be violative of the fundamental policy of Indian

law, is in addition to what has been observed in Renusagar

(supra). Whereas if the interpretation of the petitioner was

accepted, it would have the effect of rendering the later part of

paragraph 27 of Associate Builders (supra) otiose.

34. Mr. Khambata also contended that the reliance by the

petitioner on the decision of Recon (supra) is misplaced because

Recon (supra) also recognized the fact that ignoring a binding

precedent of a superior court would violate the fundamental

policy of Indian law. On this basis, Mr. Khambata submitted that

the tribunal had disregarded binding principles of law and

CARBP-1130-2019.doc wadhwa judgments which had been held to be violative of the policy of

Indian law and public policy in India and as a result enforcement

of the award in question would be in contravention of the

fundamental policy of Indian law and the public policy of India.

35. Mr. Khambata's second ground of opposition is that the

respondent was unable to respond to the petitioner's belated

amendment that foreign award contains no discussion and

renders no finding on the objections raised by the respondent.

Respondent had prepared its defence vide its written statement on

the basis that the petitioner was pressing a claim for damages

against it and on 12th July, 2016 counsel for the petitioner had

indicated that an amended statement of claim would be pressed

into service which was served upon the respondent on 14 th July,

2016. He contended that the petitioner had materially altered the

claim converting it from one for damages to a claim for the

purchase price. This amendment caused material change in the

claim and the respondent did not have sufficient time to prepare

and respond thereto and was therefore unable to present its case.

That an objection to this effect was raised by the respondent's

Advocates in their closing submissions on 12 th August, 2016 but

the award has not considered the objections raised and it

CARBP-1130-2019.doc wadhwa rendered no finding on the objection. Thus a material issue had

not been determined and this should shock the conscience of the

court and would constitute a violation of the public policy of

India.

36. Mr. Khambata submitted that reliance placed by the

petitioner in the case of Mohinder Kumar Mehra v/s. Roop Rani

Mehra & others9 is misplaced since it pertains specifically to an

application under Order 6 Rule 17 and in the facts of that case

the parties had an opportunity of leading evidence even on the

amended claim and the judgment recognizes the policy of order 6

Rule 17 need not permitting amendments after a trial had

commenced. The intention being that when evidence is led on

pleadings, no new case ought to be allowed to be set up an

amendment.

37. The third ground of opposition canvassed by Mr. Khambata

is that the Award does not contain any reasons for awarding

claims under clause 2(c) and 2(d) of the settlement agreement

that the respondent had specifically highlighted its contention

before the tribunal that clauses 2(c) and 2(d) of the settlement

(2018) 2 SCC 132

CARBP-1130-2019.doc wadhwa deed cannot be construed as a genuine pre-estimate of the losses

that would be suffered by the petitioner if the respondent acted in

breach of the settlement deed and therefore the tribunal was

expected to render a finding on whether clauses 2(c) and 2(d) of

the Settlement Agreement did constitute a genuine pre-estimate of

the actual loss suffered. The tribunal has in paragraph 99

observed that clauses 2(c) and (d) are not penalty clauses and are

fully enforceable since they arise out of the settlement agreement.

This observation is assailed by the respondent as one without any

reasons. The arbitral tribunal did hold that clauses 2(c) and 2(d)

were not in the nature of penalties but they did not render any

finding that these clauses constituted a genuine pre-estimate of

damage which is canvassed as a crucial element in establishing in

an award for liquidated damages.

38. The fourth ground of opposition canvassed before me is an

alternative defence to the effect that enforcement of the award

would lead to unjust enrichment of the petitioner which would be

contrary to the public policy of India. The award directs the

respondent to pay the purchase price of the helicopter under

clauses 2(a) and 2(b) of the Deed of Settlement and other

CARBP-1130-2019.doc wadhwa payments due under clauses 2(c) and 2(d) but without any

direction to the respondent to transfer ownership of the helicopter

as contemplated in the settlement deed.

39. My attention is invited to the fact that following the award

the respondent had called upon the petitioner to confirm whether

it was ready to complete the transaction. However, the petitioner

had reiterated that the settlement deed had been terminated. This

stand of the petitioner is said to be contrary to what it had

contended before the arbitral tribunal and in this respect

paragraph 101 of the award expressly records that the evidence

on behalf of the claimant petitioner indicates that on payment of

the sum claimed, the claimant was willing to transfer ownership

of the helicopter to the respondent. Mr. Khambata submitted that

the petitioner cannot approbate and reprobate, on one hand claim

the purchase price under the settlement deed and on the other

claim that the deed had been terminated while refusing to

perform obligations. This is sufficient to shock the conscience of

the court and if the award is to be enforced, it would result in the

petitioner receiving the purchase price without having to transfer

title of the helicopter to the respondent.

CARBP-1130-2019.doc wadhwa

40. Reliance was placed on the decision of Patel Engineering

Ltd. v/s. North East Electric Power Corporation India Ltd .10 in

which the Supreme Court had affirmed a judgment of the

Meghalaya High Court inter alia holding that unjust enrichment

is contrary to the fundamental policy of Indian law and would be

a ground for interference with an award and since Ssangyong

(supra) had already clarified that the expression 'public policy of

India' would mean the 'fundamental policy of Indian law'

supports this view.

41. The next submission seeks to deny the petitioners'

contention that if overall justice has been done between the

parties, the court can brush aside the objections to enforcement

and proceed to enforce the award. Mr. Khambata submitted that

only in case of minor violations of procedural rules has observed

in the case of Government of India v/s. Vedanta Limited 11 that a

court could proceed and enforce an award on the basis that

overall justice had been done. In the present case, it is contended

that grounds have been made out for refusing enforcement they

are not merely minor violations of procedural rules. In these

10 (2020) 7 SCC 167

11 (2020) 10 sCC 1

CARBP-1130-2019.doc wadhwa circumstances, it is contended that the court ought not to exercise

its narrow and limited jurisdiction to enforce the award in

question since sufficient ground has been made out for refusing

enforcement.

42. Mr. Khambata has invited my attention in his summary to

the contentions of the petitioner which he submitted was

fallacious and proceeded in utter disregard of the correct factual

position and including misrepresentation of facts. It is sought to

be contended that the petitioner had sought to exploit the fact that

the respondent's witness in the arbitration had disclosed that the

respondent had earned revenue of USD 2, 429,190. It was sought

to be clarified that this was a gross figure and not the net figure.

Furthermore, the amount of USD 2.4 million was not profit since

the respondent had incurred considerable expenditure and costs

in operating the helicopter. Submissions are sought to be made in

respect of the background to the settlement deed, the effect of the

Lease Agreement which expired and the requirement of BIS

License. These instances were cited by the petitioner as

impediments in handing over the helicopter. Mr. Khambata

submitted that the respondent used the helicopter until 18 th July,

2015 and not thereafter. It is submitted that overall justice had

CARBP-1130-2019.doc wadhwa not been done in the case at hand. Yet, the petitioner was

awarded a sum of USD 6.5 million under an award which is

contrary to the fundamental policy of Indian law and public

policy of India and which also seeks to unjustly enrich the

petitioner. It is contended that the respondent had already filed its

own suit which is pending in the Hon'ble Court for specific

performance of the settlement deed and that complete justice can

be done in terms of the respondent's suit. In this view of the

matter it is submitted that enforcement be declined and the

petition be dismissed.

Conclusions

43. As we have seen from the facts reiterated above, on 9 th

May, 2017, the High Court of Singapore declared that the final

award was binding and that the petitioner was at liberty to

enforce it. The award is in a sum of USD 6,563,700 along with a

security deposit of 975,462.28. There was no challenge to this

award in the Singapore court. The award was thus rendered

final. However, the respondent made no payment. Thus, as a

Foreign Award under Section 44 of Part II of the Arbitration and

Conciliation Act, 1996, the petitioner now seeks enforcement. The

differences between the parties are pursuant to a contractual

CARBP-1130-2019.doc wadhwa relationship which I have reiterated above and Singapore was the

juridical seat of the arbitration. Singapore being a reciprocating

territory it is the petitioner's contention that there is no ground for

declining enforcement of the award. Therefore assistance of the

court is being sought in terms of the prayers on that basis that the

petition complies with Section 47 of the Arbitration Act and it is

not falling within any of the exceptions under Section 48. It is

contended that the arbitral tribunal was impartial and that a

reasonable opportunity was given to the other side.

44. The award is neither illegal nor is it against public policy.

More importantly, I find that there is no application made to set

aside the award. The respondent is within the jurisdiction of this

court. On facts, it is not in doubt that the helicopter was used till

18th July, 2015. Income was generated and appropriated as set

out in the award and in the petition. No payment has been made

by the respondent. Admittedly, it is not being used after July

2015. However, that is not a fact to be considered in the present

petition since we are not concerned with the merits of the award.

In Vijay Karia the Supreme Court held that as far as the

challenges on the ground of public policy are concerned, it is the

same principle that will apply under Section 34 in case of a

CARBP-1130-2019.doc wadhwa Domestic Award and in Section 48 in case of an International

Commercial Arbitration and a Foreign Award. Therefore the

public policy ground of challenge is the same. The ground of

patent illegality appearing on the face of the award are outside

the scope of interference in International Commercial Arbitration

Awards which are made in India as well as Foreign Awards whose

enforcement is sought to be resisted in India.

45. A finding based on documents taken behind the back of

parties, is one based on no evidence, being not based on evidence

led by the parties and therefore perverse. Jurisdictional errors

would include situations when an arbitrator wanders outside the

contract and deals with matters which were not referred to him.

These may be corrected as patent illegalities but it would not be

applicable to International Commercial Arbitration decided under

Part II. This principle applies equally to foreign awards under

Section 48. In this behalf, paragraph 69 of Ssangyong (supra) is

of relevance. The public policy exception must be narrowly

viewed and only an award which shocks the conscience of the

court would be set aside. A very high threshold would have to

be crossed such as "egregious circumstances like corruption,

bribery or fraud which would violate the most basic notions of

CARBP-1130-2019.doc wadhwa morality and justice." That is not the case in the matter at hand.

46. Considering the general approach to enforcement of a

foreign Award and as found by the Supreme Court in Vijay Karia,

a public policy defence would have to be narrowly construed as

observed in paragraph 45 of Vijay Karia, while referring to the

judgment of the US Court of Appeals in Parcens and Whittemore

Overseas Co Inc v/s. Societe Generale de L'Industrie du Papier ,

objections that enforcement of Foreign Arbitral Awards may be

denied on this basis only where enforcement would violate the

forum states most basic notions of morality and justice.

47. The pro-enforcement bias of the New York Convention is

also relevant. The New York Convention recognizes that an

award may not be enforced where it is predicated on a subject

matter outside the jurisdiction of the arbitrator. In the present

case, I do not find that the arbitral tribunal has traveled beyond

the scope of the reference and beyond the jurisdiction of the

tribunal.

48. The New York Convention also provides that only a court in

a country with primary jurisdiction over an arbitral award may

CARBP-1130-2019.doc wadhwa annul that award. Courts in other countries and jurisdictions may

only decide on whether the award can be enforced in that

country. This is the secondary jurisdiction over an award. Vijay

Karia observes in paragraph 51 that enforcement of a foreign

award under Section 48 should be refused only if the respondent

furnishes proof that the watertight grounds in Section 48 are

made out. Section 48 as we have seen vests discretion in the court

to refuse enforcement. The commentary in Gary Born on

International Commercial Arbitration, Redfern and Hunter on

International Arbitration and Russell on arbitration are all

indicative of discretion vesting in this court. In fact Russell goes

on a step further in enhancing the extent of discretion and

suggests that the court also has discretion to allow enforcement

even in circumstances where one or more grounds are made out.

49. Discretion, however, is not to be exercised where the award

reveals a fundamental / structural defect. In my view in the

present case, no structural defects or fundamental defects are

revealed. Vijay Karia (supra) holds that a foreign award must be

read as a whole fairly and without nitpicking. If it does address

basic issues and decides claims and counter claims of the parties,

it must be enforced. The Award in hand qualifies and passes this

CARBP-1130-2019.doc wadhwa test. Poor reasoning while rejecting a claim does not attract the

public policy ground unless it offends the most basic notion of

justice. In this behalf, Ssangyong (supra) in paragraph 76 makes it

clear that a public policy ground based on violation of the most

basic notions of justice will be attracted only in very exceptional

circumstances when the conscience of the court is shocked. A

court cannot interfere with an award on the ground that justice

has not been done in the opinion of that court. Thus, it is not for

this court while deciding an application for enforcement to

consider whether the arbitral tribunal had taken the correct

approach and that the court finds approach to be correct. Even if

I come to the conclusion that the tribunal had taken an incorrect

approach, this court has no power to modify that award or to

refuse enforcement on the basis of this Court's opinion on merits.

50. In this behalf, it would be appropriate to consider the

provisions of Section 48 of the Arbitration and Conciliation Act

which reproduced below;

"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--

CARBP-1130-2019.doc wadhwa

(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:

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.

CARBP-1130-2019.doc wadhwa (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.

(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."

51. Emphasis provided above is to specify the only two grounds

set up to resist enforcement. In Vedanta (supra) the Supreme

Court held that enforcement may be refused in India even if the

Seat Court (In this case Singapore) had upheld an award. The

Indian Courts can still examine whether the award was oppose to

public policy in India. Vedanta also found that the use of the

word "may" in Section 48 indicates that the court retain

discretion to overrule objections to an award. If it finds that

overall justice has been done, in view of the 2015 amendment,

perversity is no longer a ground to set aside an award. Therefore,

CARBP-1130-2019.doc wadhwa Section 48 being in pari-materia to Section 34, this argument

must be rejected. In my view, the main reason for a court seeking

to refuse enforcement of an award is to ensure that the

respondent is not unjustly treated and in this behalf, I find that

one of the main grounds of opposition to enforcement is the fact

that an amendment was allowed at the instance of the petitioner

and that amendment has caused prejudice to the respondent. This

in my view is not an argument that can be sustained to oppose

enforcement inasmuch as the amendment was proposed by the

petitioner and was consented to by the respondent prior to the

commencement of the trial. The expressions "trial" and "trial on

merits" are defined in Black's Law Dictionary as follows;

"Trial:

"A formal judicial examination of evidence and determination

of legal claims in an adversary proceeding.

Trial on merits:

"A trial on the substantive issues of a case, as opposed to a

motion hearing or interlocutory matter."

52. In view of the fact that the petitioner had applied for

amendment before commencement of trial, it was always open for

the respondent to oppose the amendment or seek time instead of

CARBP-1130-2019.doc wadhwa consenting to the amendment and proceeds with the trial. In my

view, by consenting to the amendment, the respondent waived all

objections to the amendment being carried out. Once an

amendment is carried out, it was open for the respondent to seek

further time to oppose the grounds of the factual basis set out in

the amendment that it chose not to do. It proceeded with the

arbitral reference and on merits. If it was later found that

pursuant to the amendment, certain reliefs have been granted

which it had not envisaged when consenting to the amendment,

in my view, it is not open today to resist enforcement on that basis.

The amendment was sought before examination of issues by the

chosen forum which determined these issues on merits. It was

open to the respondent however, to challenge the award in the

Seat Court that is in the courts of Singapore, that not having been

done and the Singapore court having already found that the

award had attained finality as of 2017, in my view, it is of no avail

today to contend that the amendment caused prejudice and that

the respondent was unable to present its case. This ground of

opposition must in any event be seen to have been waived or is

deemed to have been waived.

53. In Union of India v/s. Recon Mumbai (supra) which also

CARBP-1130-2019.doc wadhwa holds that perversity is a facet of patent illegality but there cannot

be re-appreciation of evidence in that context simply because

another view is possible. The decision in Recon also takes into

consideration the effect of Ssangyong (supra) in paragraph 16 this

court has observed that it is necessary to consider to reconcile the

permissibility of a challenge on the ground that the award violates

fundamental policy of India. With the proscription against

entertaining a challenge on erroneous application of law. There

is a distinction made between an incorrect invocation of a law

citing for instance an overruled decision or a repealed statute or

ignoring a binding precedent or law and a correct invocation but

an inaccurate application of that to facts of a case. If a law is

invoked correctly and but is applied erroneously no challenge can

lie, but if the law is incorrectly invoked, despite a binding

precedent of a superior court which is ignored then a challenge

would lie. This is apparent from Associate Builders (supra)

which reiterates Renusagar (supra).

54. In the present case the respondent's contention that given

the termination of the Settlement Deed any damages could have

been ordered has been considered by the tribunal and negated on

the basis that the amount payable was agreed, had accrued prior

CARBP-1130-2019.doc wadhwa to termination and remained due and owing. This assessment is

based on an interpretation that only the tribunal was competent

to carry out. As observed in paragraph 18 of Associate Builders

(supra) taking a view contrary to a statute alone would not

amount to contravention of the fundamental policy of Indian law.

The Supreme Court has made a distinction between policy

embodied the Foreign Exchange Regulation Act (FERA) against

that of violation of statutory provisions frowning upon recovery

of compound interest and found that contravention of FERA

would be contrary to public policy of India since it is a statute

enacted in national economic interest and other statutes. Thus

violation of every statute would not result in violation of the

fundamental policy of Indian law. It goes to hold that

disregarding orders of suprior courts could also be a

contravention of the fundamental policy of Indian law. Thus, the

fundamental policy test is not a formula that can be applied to

lead to a predetermined result but would in my view depend on

facts of each case. In the facts at hand, nothing shown to me

constitutes a violation of the fundamental policy of Indian law.

55. The respondent's opposition to the petition is also based on

a contention that the award is contrary to the public policy of

CARBP-1130-2019.doc wadhwa India in the light of Section 48(1)(b), it was "otherwise unable to

present his case" and under Section 48(2)(d) on the basis that the

enforcement would be contrary to the public policy of India. The

case that Mr. Khambata has underscored amongst the objections

to enforcement is the contention that the award grants the

purchase price of the helicopter despite termination of an

agreement and that the agreement was embodied in a settlement

deed was willfully terminated by the petitioner by accepting

anticipatory repudiatory breach on the part of the respondent.

The tribunal has thus granted the petitioner price of the

helicopter under the settlement deed effectively directing specific

performance of its obligations thereunder despite the fact that the

agreement had been terminated. According to the respondent, the

petitioner could not have been awarded the price of the helicopter

specially since the contract intended that the property in

helicopter would not pass till the purchase was completed.

56. The respondent seeks to have me believe, this means that

the property would not pass until the purchase price was paid.

The respondent's interpretation of the contractual intent is

therefore clear even according to them, till the purchase price was

paid, the property in the helicopter would not pass. Thus

CARBP-1130-2019.doc wadhwa payment of the purchase price of the property would obviously be

the first step in that direction. The respondent has contended that

if the petitioner rescinded the contract albeit resulting from

wrongful repudiation of the contract then in such event the

petitioners' only remedy would be the nature of damages and the

seller could not recover the price. While reliance has been placed

on Benjamin's Sale of Goods and Chitty on Contract in support of

the contention that the seller cannot sue for the price, the fact

remains that under the Contract Act inforce in Singapore, Section

49 reads thus;

"49. - (1) Where, under a contract of sale, the property in the goods has passed to the buyer and he wrongfully neglects or refuses to pay for the goods according to the terms of the contract, the seller may maintain an action against him for the price of the goods.

(2) Where, under a contract of sale, the price is payable on a day certain irrespective of delivery and the buyer wrongfully neglects or refuses to pay such price, the seller may maintain an action for the price, although the property in the goods has not passed and the goods have not been appropriated to the contract."

57. Section 49(2) would come to the petitioner's rescue

inasmuch as the petitioner can recover amounts due to it even

CARBP-1130-2019.doc wadhwa before the property in the goods passes and in my view these are

aspects which would have been urged and/or considered by the

Arbitral Tribunal and or the court hearing an challenge against

the award.

58. In my view, it is not open for the respondent to expect the

court to consider these arguments on merits. There is no reason

to believe that these submissions were not advanced before the

arbitral tribunal. The contractual intent of the settlement deed

was for the arbitral tribunal to consider and which it did. If this

court was to enter upon this debate as to the contractual intent of

the settlement deed it would amount to the court to entering upon

the merits of the dispute. Undoubtedly, the property in the

helicopter was to pass on the price being paid under the

settlement deed. The settlement is said to have fructified and

therefore the parties were expected to comply. The question is

whether non-compliance of the settlement deed to deprive the

petitioner from receiving its dues under the settlement. In this

connection, the decision in AG v/s. Pritchard and R.V. Ward v/s.

Bignall (supra) will be of no assistance inasmuch as those

decisions do not consider Section 49 of the Singapore Act. In

Ward v/s. Bignall (supra) also the court was concerned with a

CARBP-1130-2019.doc wadhwa buyers' failure to pay the purchase price as a result of which the

seller can resell the goods. These are aspects which the arbitral

tribunal may have considered. It is not possible to consider these

arguments on merits at this stage. Accepting these arguments and

evaluating acceptability of the award, on that basis, would

amount to reconsideration of the award on merits and is clearly

not permissible.

59. In Lee Christina (supra) the purchaser Lee Christina had

agreed with her mother, the vendor that the mother would sell

her property in which she was living as a tenant for a named

price. The title deeds were held by the banking corporation and

the mother asked the bank for the title deeds in order to proceed

with the sale but before the release of the deeds the mother

expired. Despite demands, the property was not sold to Christina

and Christina's lawyers wrote to the Executors making time of

the essence of the contract, requiring the sale of the property to be

completed. The Executors having failed to respond to the demand

and Christina contended that the sale contract was now null and

void. Later it transpires that property prices having risen in

Singapore, Christina changed her mind and her lawyers wrote to

the executors seeking completion of the purchase at the earliest.

CARBP-1130-2019.doc wadhwa The executors declined since the contract had been rescinded on

behalf of Christina in June 1976. Christina, however, commenced

proceedings for specific performance of the oral agreement for

sale. The court of appeal has held that the vendor the mother, had

been in repudiatory breach by not taking steps to complete the

transaction and that Christina, the daughter had accepted the

breach vide her lawyers letter dated 14 th June 1976. The contract

thus having been put to an end, Christina could not resile from

her action and insist on proceeding with a contract. The action if

at all could be maintained was one for damages and not specific

performance of the agreement for sale. The facts in the present

case are being equated in a sense to that of Lee Christina. The

purchaser being the respondent and the party which had

allegedly committed the repudiatory breach and the petitioner

which had accepted the breach. This Mr. Khambata submitted

was a case which the arbitral tribunal could not have, but did

ignore. Mr. Khambata has made reference to the submission made

before the arbitral tribunal in this behalf. Reference to Lee

Christina (supra) and the orders passed by the Court of Appeals in

Singapore, once again is of no avail because these are aspects

which could have formed subject matter of the challenge to the

CARBP-1130-2019.doc wadhwa Award in Singapore but it was not so challenged.

60. I am also not in agreement with the contention on behalf of

the respondent that reliance on Section 55(2) is misplaced

because it overlooks Section 60 of the Sale of Goods Act. Referring

to paragraph 75 of the award, it was sought to be contended that

the arbitral tribunal has correctly invoked the binding precedent

wrongly applied to the facts of the case and that does not by itself

violate the fundamental policy of law. The contention on behalf

of the respondent is that the tribunal misapplied the law which is

correctly invoked. It was open for the respondent to challenge the

award in the Courts of Singapore but it did not.

61. In Renusagar (supra), the arbitral tribunal had upheld the

claim of General Electric Company (GEC) in a sum of USD

2,130,785.52 towards regular interest which had been withheld

by Renusagar. The issue that arose was whether in withholding

this amount, Renusagar had acted wrongfully. The tribunal found

that withholding or retention of the amount of interest by

Renusagar was wrongful since the failure on the part of

Renusagar to pay the taxes owed to the income tax department

had rendered it impossible for GE to get the US foreign tax credit

CARBP-1130-2019.doc wadhwa to which it would have been entitled to if the amount had been

paid. It was found that in the contract nothing authorized non-

payment of interest or withholding of taxes for tactical reasons

arising out of the litigation and the arbitral tribunal rejected the

contention of Renusagar that the claim in respect of regular

interest was barred by limitation. The court observed that it is a

fundamental principle of law that orders of court must be

complied with and any action which involves disregard of such

orders would adversely affect the administration of justice thereby

destructive of the rule of law and would be contrary to public

policy. The question that arose was whether enforcement of an

award of a tribunal would involve disregard of any order of a

court. It was argued that in the matter of withholding payment of

regular interest Renusagar was acting in accordance with interim

orders passed by the Delhi High Court in the writ petition filed by

Renusagar which had remained in operation from 1972 to1980,

and therefore the tribunal was in error in awarding

compensatory damages for retention by Renusagar of the amount

of income payable on the regular interest during the period the

writ petitions pending in the Delhi High Court and that

enforcement of the award for compensatory damages on regular

CARBP-1130-2019.doc wadhwa interest was contrary to public policy.

62. The Supreme Court found it difficult to accept this

contention. It quoted Renusagar's application filed in the Delhi

High court with a prayer that sought to restrain the respondent

and its officers from taking steps in proceedings for enforcement

of and /or preventing payment by the petitioner of tax free

interest at 6% in accordance with approvals granted. The court

observed that from the prayer made, it appeared that pending the

disposal of the writ petition there would be an injunction

restraining the Union of India and its officers from taking steps or

proceedings in enforcement pursuant to implementation of or

giving effect to the orders passed whereby tax exemption had

been withdrawn. The court observed that the orders of the Delhi

High Court did not prevent Renusagar from depositing the

Income Tax on the amount of regular interest payable in the

government treasury. The order instead of preventing Renusagar

from remitting the amount, permitted it to make payments to

General Electric and therefore it could not be held that in

retaining the amount by itself while the writ petition was

pending. Renusagar was acting in accordance with orders of the

Delhi High Court.

CARBP-1130-2019.doc wadhwa

63. In the instant case, the main thrust of the arguments on

behalf of the respondent is that in granting the price of the

helicopter, instead of damages, despite the property not having

passed, it is clearly violative of the public policy and the

fundamental policy of Indian law. On the other hand, it is the

petitioner's contention that merely because the arbitral tribunal

may have misinterpreted substantive law whether by ignoring a

binding precedent or otherwise it does not violate the

fundamental policy of Indian law. If that was not so, every

violation of substantial law would constitute a violation of the

fundamental policy of Indian law and there would be no

difference between violation of substantive law and violation of

the fundamental policy of Indian law, because several provisions

of numerous statutes in India would have been applied in at least

one binding judgment of the Superior Court in India. Therefore,

to lead to a conclusion that the arbitral tribunal had violated a

fundamental policy of Indian law by granting the price of the

helicopter, would be difficult to accept. I have already found that

the Award of the tribunal was not such as to constitute a violation

of the fundamental policy of Indian law.

64. One of the other submissions on behalf of the respondent

CARBP-1130-2019.doc wadhwa was that it was unable to fully respond to the belated amendment

carried out by the petitioner and the nature of the claims had

changed and therefore it was unable to present its case. It is

contended that the award contains no discussions and renders no

finding on the objection raised by the respondent. I find no merit

in this submission. Admittedly the petitioner had filed its

statement of claim on 20 th July, 2015 and no doubt respondent

had filed its written statement. However, on 12 th July,2016, the

petitioner proposed an amended statement of claim which was

received by the respondent on 14th July,2016. According to the

respondent, in the guise of clarifying a claim, the petitioner had

altered the very nature of the claim converting it from one of

damages to a claim for the purchase price and has since claim

damages in the alternative.

65. In my view, there is nothing whatsoever on record to

indicate that the respondent was prejudiced in any manner. The

respondent's counsel Mr. Yang quite clearly conveyed to the

tribunal that the respondent had no objection to the amendment

being allowed. No request was made for time. The amendment

was thus allowed by consent and absent a challenge to the

amendment at the material time which the record neither

CARBP-1130-2019.doc wadhwa indicates nor establishes. Moreover the amendment quite

obviously was to provide a breakup of the amount claimed. There

is no occasion to call this aspect into question in an application

which seeks enforcement of the award.

66. I am unable to accept the contention of Mr. Khambata that

the claim was materially altered or that the respondent did not

have sufficient time to prepare and respond thereto. The attempt

here is to bring its opposition squarely within the provisions of

Section 48 (1)(b) inasmuch as the respondent wants this court to

believe that it was "otherwise unable to present its case" . The

contention that the respondent was unable to present its case is

belied by the fact that its closing submissions had admittedly

opposed the proposed alternative claim. The contention that the

final award does not contain any discussions and therefore does

not determine a material issue, does not commend itself to me. I

am unable to find any element in the award or the manner in

which the amended claim was considered and a decision

rendered, to shock the conscience of this court and thereby

constitutes a violation of fundamental policy of Indian law. In

my view, no case whatsoever is made out for refusing

enforcement on this ground.

CARBP-1130-2019.doc wadhwa

67. This brings me to the next ground of opposition viz. the

award contains no reasons for awarding amounts claimed under

clauses 2(c) and 2(d) of the Settlement Agreement. The

contention is that absence of finding or reasons in respect of

amounts awarded under clause 2(c) and 2(d) of the Settlement

Agreement, should shock the conscience of the court as being in

violation of principles of natural justice and against the most basic

notions of morality and justice and therefore contrary to public

policy. This in my view has no merit since it would require me to

examine the merits of the case of parties under the Settlement

Deed and something which is beyond the pale of consideration

in the case of enforcement of a foreign award and a review of the

merits to form a different opinion is what the respondent expects

this court to do. Clearly an enquiry on this aspect will be out of

line.

68. It is the contention of the respondent that these amounts

are in the nature of liquidated damages that under the law of

Singapore, it is only if the amount of liquidated damages was a

reasonable estimate of damage actually suffered can an award

being made. It is contended that the tribunal was required to

render a finding that clauses 2(c) and 2(d) constituted a general

CARBP-1130-2019.doc wadhwa pre-estimate of damage suffered. The tribunal had concluded

that two clauses were not penalty clauses and were fully

enforceable but no reasons were given for these findings. In

effect, the award has ignored the respondent's submission on the

point and paid heed to determine a material issue and hence

enforcement of such an award would shock the conscience of the

court since it is against principles of natural justice and in conflict

with the basic notions of morality and justice and contrary to

public policy, reference being had to the decisions of the Vijay

Karia, Campos Bros. Farms (supra) [2019 SSC OnLine Delhi 8350]

which was approved in Vijay Karia (paragraph 83).

69. In my view, there is no merit in this ground of opposition to

enforcement. The award has considered the claim in paragraphs

82 to 101. I am unable to find any substance in the respondent's

contention that it is unreasoned. The extent of quality or

sufficiency of reasoning or insufficient reasoning is not within

the scope of adjudication by this court. Then this would require

the court to enter upon merits of the case and express this court's

opinion on the decision of the arbitral tribunal. Sufficiency or

insufficiency of reasons cannot be determined on the basis of the

mere say so of a party who is not satisfied with the award and it

CARBP-1130-2019.doc wadhwa was always open to the respondent to challenge the award in

Singapore which it has consciously avoided to do.

70. The tribunal has clearly observed that it was required to

consider whether clauses 2(c) and 2(d) were enforceable and

whether they were penalty clauses. The tribunal found that they

were not penalty clauses and they are fully enforceable and arose

out of the settlement. The tribunal also recorded the fact that the

respondent continued to use the helicopter as admitted by its

witness. In the settlement agreement therefore the nature of the

obligation had already been agreed between the parties. Nothing

shown to me would justify this court taking a view that the

reasons were insufficient or non-existent. The extent of reasons

required to be given, cannot be structured in a straightjacket

formula. It is for the tribunal to decide the manner in form or its

decision on an issue. There is no dispute as to the fact that the

tribunal was required to consider whether clauses 2(c) and 2(d)

were enforceable and one of the issues raised to be determine as

set out in clauses 29 (b)(ii) is whether the claim was entitled to

contractual liquidated damages pursuant to the clauses 2(c) and

(d) for breach of its payment obligations under the Settlement

Deed. There is no challenge mounted by the respondent in

CARBP-1130-2019.doc wadhwa Singapore as to the non-determination of any issues. In fact, as

even today, the respondent does not contend that certain issues

that arose had not been identified or framed and not decided. The

objection on the ground of the BIS listing has also been considered

and the contract was not found to be frustrated. The tribunal has

found that all issues had been subsumed in the main issues set out

in the award and the respondent has also proceeded on that basis.

I am therefore unable to find any merit in the contention that the

tribunal failed to decide the material issue going to the root of the

matter or that the award would shock the conscience of the court

or would be violation of principles of natural justice or in conflict

with the basic notions of morality and justice rendering it

contrary to public policy.

71. The tribunal was dealing with a Commercial contract and

had construed clauses of a settlement agreement which had been

arrived at and parties were ad idem on the terms thereof. There is

no justification in opposing enforcement on the basis that the

tribunal rendered no findings or issued an unreasoned award or

that the award in respect of clauses 2(c) and 2(d) were without

any reason.

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72. The next ground of opposition of enforcement was that of

unjust enrichment viz. if the awards were to be enforced it would

led to unjust enrichment of the petitioner and contrary to public

policy of India. This is a ground taken without prejudice and in

the alternative to other grounds. The ground is fairly simple in its

nature. The petitioner has been found to be entitled to sale price

of the helicopter under clauses 2(a) and 2(b) of the Settlement

Deed but without a direction to the petitioner to transfer

ownership of the helicopter.

73. It is sought to be contended before this court that the

petitioner is unwilling to transfer the helicopter. That is certainly

is not a valid ground for opposing enforcement inasmuch as the

award has been made on the basis of disputes referred to the

tribunal and the tribunal has in paragraph 101 observed that it

does not make any pronouncement on the status of the helicopter

since they have not asked by the either party to do so and hence

have no jurisdiction to do so in the reference. The tribunal has,

however, observed that evidence reveals that upon the payment of

the sums claimed, the petitioner was willing to transfer

ownership.

CARBP-1130-2019.doc wadhwa

74. There is no dispute as to the scope of the reference. The

respondent does not contend that the tribunal was also required

to decide the status of the helicopter. If that be so, one cannot

accept the contention that the tribunal had not decided a material

issue. The jurisdiction of the tribunal is something for the tribunal

to decide and if it did not exercise jurisdiction vesting in it, it

would be for reasons that this court cannot fathom, if that was a

ground of challenge on merits, that challenge would have to be

made in the courts for the Republic of Singapore and not at the

stage of enforcement. If the respondent attempt to resist

enforcement, it is not possible to accept the contention that if the

award was enforced, it would lead to unjust enrichment for the

simple reason that the award also seeks to grant relief in

accordance with settlement deed. It is only to be expected that the

petitioner would be obliged to transfer the helicopter in terms

upon payments of the sum awarded. I have not heard the

petitioner to contend otherwise and while seeking enforcement of

the award, petition itself contemplates attachment of the

helicopter and it goes without saying that the award could not

have directed the parties to deal with the helicopter in a

particular way. It stands to reason that if the price is paid the

CARBP-1130-2019.doc wadhwa helicopter would have to be transferred in accordance with the

agreement between the parties and it is not apparent that the

petitioner is indulging in approbation and reprobation and

claiming only the price without transferring the helicopter.

75. Meanwhile, I am informed that in a suit filed by the

respondent in this court, being the Commercial Suit no.886 of

2017 it seeks a direction to transfer of ownership of the helicopter

to it. This is a material factor to shows that the respondent also

seek to retain possession of the helicopter and upon payment of

the amounts due under the Award the respondent would probably

be entitled to press for a decree in that suit. Surely the respondent

would not otherwise have sought that relief.

76. The opposition to the award on this basis has no merit since

the award does not even contemplate the manner of transfer or a

decision on the status of the helicopter. Unjust enrichment may

be contrary to fundamental policy of Indian law but in the present

case the factual aspect whether the award amounts to unjust

enrichment has not been made out. To hold that enforcement

should not be allowed would amount to expanding the scope of

the award itself which has held by the tribunal did not

CARBP-1130-2019.doc wadhwa contemplate the status of the helicopter in the reference and the

tribunal was therefore not required to decide that issue. This

must also be reviewed in the light of the suit pending for Specific

Performance of the Sale. Once the payment is made the transfer

would have to follow.

77. The last ground to opposition to enforcement is that the

petitioner's contention that overall justice has been done or

complete justice has been done is not made out. This ground of

opposition is based on the petitioner's reliance on the decision in

Vedanta (supra). No doubt, Mr. Khambata is right that in

paragraph 83.12 the Court has observed that given the

mandatory language that enforcement may be refused indicates

that even if a party makes out one or more ground for refusing

enforcement, the court will have a discretion to overrule the

objection if it find the overall justice has been done. The Supreme

Court has observed that generally this would be resorted to when

the ground of refusal concerns a minor violation of procedural

rule applicable to arbitration or the ground of refusal was not

raised in arbitration. In the present context, the respondent has

contended that complete justice has been done because the

respondent had possession of the helicopter since 2012 and

CARBP-1130-2019.doc wadhwa continues to be in possession without paying any amounts to the

petitioner for using the helicopter since November 2012.

78. It is further the case of the petitioner that overall justice is

done since the respondent had admittedly "earned" USD 2.4

million by using the helicopter and that it would have "made"

similar amounts in subsequent years that the award made would

be approximately three years revenues considering that helicopter

has been with the respondent for nine years and therefore overall

justice has been done. This approach is sought to be contested by

the respondent by contending that the initial possession of the

helicopter was on the basis of lease agreement and thereafter

under the Settlement Deed. The earnings that the petitioner

contemplates was not really a profit but a gross figure and for

want of a BIS license the helicopter could not be released

therefore requiring the helicopter to be retained by the

respondent and factual that the helicopter was used only till July

2015. The respondent sought to rely upon correspondence inter-

partes / Advocates.

79. In this respect, I am of the view that it is not possible for this

court in its jurisdiction under Section 48 to enter upon this

controversy and that would clearly amount to entering upon the

CARBP-1130-2019.doc wadhwa merits to ascertain whether in the eyes of this court overall justice

had been done. The concept of considering whether overall

justice has been done, would have to be on a prima facie view and

not after in depth analysis of the merits of the case.

80. Vedanta (supra) does make reference to minor violation of

procedural rules but that is prefixed by the observation that it is

"generally done" for minor violations. It is not only in case of

minor violations that the court can exercise its discretion to

overrule the objection. The grounds canvassed before this court

in the present case are not, according to the respondent, minor

violations of procedure but essentially under Section 48(1) (b) and

48 (2)(b) which as we have seen in the facts of this case or that

the respondent was "otherwise unable to present his case and that

the enforcement would be contrary to public policy of India ". I

am not satisfied that any grounds to obstruct enforcement has

been made out and to my mind considering the factual aspects I

am clearly on the view that even assuming there is a breach of

substantive provisions of a statute, it was not breach of

fundamental policy of Indian law and overall justice appears to

have been done. Thus, there is no reason whatsoever for

preventing enforcement.

CARBP-1130-2019.doc wadhwa

81. As a result, the attempt to obstruct enforcement cannot

succeed and I therefore pass the following order;

(1) Petition is absolute in terms of prayer clause (a), (b)(i),

deposit to be made within four weeks from today.

(2) Petition is also allowed in terms of prayer clauses a-2(i)(ii)

(iii).

(3) Interim orders passed in Commercial Arbitration Petition

(L)no.208 of 2017 dated 28 th April, 2017 shall continue to

operate till payment is made in terms of the award.

(4) Failing compliance with prayer clause (a) above, there will

be an order in terms of prayer clause a-1.

After pronouncement, Mr. Mehta, the learned counsel for

the respondent seeks a stay of this judgment. In view of four

weeks time being granted for depositing the amount awarded,

the request for stay is declined.

(A. K. MENON, J.)

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