Trading And Agency Services Ltd Wll vs Ion Exchange India Limited
2026 Latest Caselaw 2769 Bom

Bombay High Court

Trading And Agency Services Ltd Wll vs Ion Exchange India Limited on 17 March, 2026

2026:BHC-OS:6744


                                                                                  Judgment-CARBP-214-2024-F.doc


                                 IN THE HIGH COURT OF JUDICATURE AT BOMBAY

                                       ORDINARY ORIGINAL CIVIL JURISDICTION

                             COMMERCIAL ARBITRATION PETITION NO. 214 OF 2024
                                                WITH
           Digitally
           signed by
           CHAITANYA
 CHAITANYA ASHOK
           JADHAV
                                INTERIM APPLICATION (L) NO. 20707 OF 2024
 ASHOK
 JADHAV    Date:
           2026.03.17
           20:32:15
           +0530




                         Trading and Agency Services Limited WLL
                         B-Ring Road, AI Manara Building, P. O. Box 1884,                         ...Petitioner/
                         Doha, Qatar                                                              Applicant
                                    Versus
                         Ion Exchange (India) Limited
                         Ion House, Dr. E. Moses Road, Mahalaxmi,
                         Mumbai - 400 011                                                         ...Respondents


                             Mr. Sharan Jagtiani, Senior Advocate a/w Ms. Sushmita
                             Gandhi, Ms. Sanaya Patel, Mr. Vedant Chajed, Ms. Kritika
                             Garg, Adv. Sankalpita Mallik i/b Trilegal, for the Petitioner.
                             Mr. S. U. Kamdar, Senior Advocate a/w Adv. Shaheda
                             Madraswala, Adv. Devam Singh, Adv. Sharanya Sahadevan
                             i/b Vashi and Vashi for the Respondent.



                                                            CORAM : SOMASEKHAR SUNDARESAN, J.

                                             RESERVED ON : JANUARY 19, 2026

                                       PRONOUNCED ON : MARCH 17, 2026


                        JUDGMENT :

Context and Factual Background:

1. This is a Petition filed under Part II of the Arbitration and

Conciliation Act, 1996 ("the Act"), seeking recognition and

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enforcement of an Arbitral Award dated October 27, 2022 ("Subject

Award") passed by a Learned Sole Arbitrator under the aegis of the

International Chamber of Commerce ("ICC") in London.

2. The disputes and differences between the parties relate to a

Memorandum of Understanding dated June 20, 2016 ("MOU"),

pursuant to which the Petitioner, Trading and Agency Services Limited

WLL ("Trading and Agency") and the Respondent, Ion Exchange

(India) Limited ("Ion Exchange") entered into four sub-contracts, all

dated October 27, 2016 ("Sub-Contracts"), in connection with plants

set up by the ultimate clients of Trading and Agency, namely, Ras

Laffan Olefins Company Ltd. ("Ras Laffan") and Qatar Chemical

Company Limited ("Qatar Chemical"). In this judgement, Ras

Laffan and Qatar Chemical are collectively referred to as "Main

Clients".

3. Trading and Agency entered into two contracts with the Main

Clients on October 20, 2016 ("Client Contracts"), and for the

purpose of performing said contracts, engaged Ion Exchange on a back-

to-back basis as a sub-contractor via the MOU and the four Sub-

Contracts. The Client Contracts were lumpsum contracts for the

specific value of QAR (Qatari Riyal) 106.41 million with Ras Laffan, and

QAR 122.97 million with Qatar Chemical. The services to be provided

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were of engineering, procurement, installation and commissioning for

the recovery and reuse of treated industrial water at the sites of the

Main Clients in Qatar.

4. Disputes and differences arose between the parties in 2018. On

May 13, 2018, the Main Clients terminated the contract with Trading

and Agency and, on a back-to-back basis, the four Sub-Contracts with

Ion Exchange also stood terminated. This led to Ion Exchange initiating

the arbitration proceedings that culminated in the Subject Award.

5. In the Arbitration, Ion Exchange was the claimant and sought

declarations that:

(a) Trading and Agency had not validly and legally terminated

the Sub-Contracts with Ion Exchange;

(b) Trading and Agency had breached various provisions of the

Sub-Contracts;

(c) The enforcement of a performance bank guarantee in the

sum of USD 1.24 million was illegal;

(d) Reimbursement of certain amounts incurred towards

design and engineering was due; and

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(e) Damages were payable to Ion Exchange.

6. The Learned Arbitral Tribunal arrived at a finding that Ion

Exchange had completed 46% of the work assigned and was required to

be paid for the unpaid amount of work to the extent of 11%, resulting in

an amount of USD 263,905.80 being payable by Trading and Agency to

Ion Exchange. The termination by Trading and Agency was held to be

valid and legitimate. Trading and Agency was awarded damages

amounting to USD 349,972.82 along with simple interest at the rate of

5% per annum from 9 April 2020 until the date of the Award; legal

costs of the arbitration in the sum of USD 312,107.25; and costs and

expenses of USD 271,562.92. In the aggregate, Ion Exchange has been

directed to pay to Trading and Agency, an amount of USD 978,300.48

along with interest at the rate of 5% per annum, compounded annually

from November 26, 2022 until actual payment.

7. The parties appear to have attempted to resolve their differences

by way of without-prejudice settlement discussions but the same failed

and thereafter, this Petition has been filed.

Contentions of the Parties:

8. I have heard Mr. Sharan Jagtiani, Learned Senior Advocate on

behalf of Trading and Agency, and Mr. S. U. Kamdar, Learned Senior

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Advocate on behalf of Ion Exchange. With their assistance, I have

examined the material on record and have assessed the grounds of

objection raised on behalf of Ion Exchange against the grant of

recognition and enforcement of the Subject Award.

9. Admittedly, the provisions of Part II cover the assessment of the

Subject Award for purposes of recognition and enforcement.

10. While the Affidavit in Reply to the Petition contains myriad

objections to the recognition of the Subject Award, Mr. Kamdar

formulated his objections within the framework of the contours of

Section 48 of the Act in the following manner:

a) The Subject Award has granted unliquidated damages and

also granted liquidated damages despite Trading and Agency not

having suffered any real loss. Therefore, it falls foul of not only

Qatari law, which requires damages to be proved to award

liquidated damages, but also Indian law because the Subject

Award grants both liquidated as well as unliquidated damages for

the same breach of contract. Therefore, the Subject Award falls

foul of Section 48(2)(b) of the Act being contrary to the public

policy of India owing to contravention of the fundamental policy

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of Indian law and being against most basic notions of morality

and justice; and

b) The Subject Award falls foul of Section 48(1)(b) of the Act

since it has been passed in breach of natural justice as Ion

Exchange was unable to present its case effectively owing to the

Learned Arbitral Tribunal's refusal to accommodate a request for

rescheduling of a hearing;

11. At the threshold, the relevant provisions of Section 48 of the Act

sought to be relied upon for resisting enforcement of the Subject Award

would bear reproduction and is extracted 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--

            (a)     *****

            (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) to (e) *****

(2) Enforcement of an arbitral award may also be refused if the Court finds that--

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(a) *****

(b) the enforcement of the award would be contrary to the public policy of India.

Explanation 1.-- For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,--

(i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or

(ii) it is in contravention with the fundamental policy of Indian law; or

(iii) it is in conflict with the most basic notions of morality or justice.

Explanation 2.-- For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.

[Emphasis Supplied]

Award of Liquidated and Unliquidated Damages :

12. Mr. Kamdar would submit that Subject Award permits

profiteering inasmuch as Trading and Agency has chosen to fully and

finally settle all disputes with the Main Clients, and yet has raised

claims against Ion Exchange, thereby being awarded damages without

having actually suffered damages. This, he would submit, constitutes

unjust enrichment and also is a position alien to the fundamental policy

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of Indian Law, namely, that only reasonable damages can be granted,

and without suffering real loss or damages, no damages can be granted.

13. Mr. Kamdar would submit that where liquidated damages are

awarded, the assessment of unliquidated damages over and above the

liquidated damages cannot be granted. Therefore, the Subject Award

does not deserve recognition being completely contrary to the most

basic principles of Indian law on damages. He would submit that the

very foundation of liquidated damages provisions under Indian law is

the parties' contractually agreed perceived inability or difficulty in

arriving at a reasonable assessment of damages. Therefore, one cannot

agree to liquidated damages indicating that it is not possible to quantify

damages, award the same, and also proceed to grant unliquidated

damages.

14. Mr. Kamdar would submit that Trading and Agency had claimed

an amount of QAR 7 million as the settlement amount paid by it to the

Main Clients owing to termination of the contracts with them. Yet, an

amount of USD 618,885.88 has also been claimed as liquidated

damages under Article 3.7.1 contained in the four Sub-Contracts with

Ion Exchange.

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15. These were counterclaims mounted by Trading and Agency in

response to the claims made by Ion Exchange. Ion Exchange had

contended that there was no evidence whatsoever for the grant of the

amount QAR 7 million claimed by Trading and Agency. Mr. Kamdar

would submit that the principal objection to recognition of the Arbitral

Award is that a Qatari Riyal equivalent of USD 1.24 million had been

awarded to Trading and Agency, towards part reimbursement of its

payments to the Main Clients under a Settlement Agreement between

them, in addition to liquidated damages being awarded in the sum of

USD 615,385.88 under the liquidated damages clauses in the respective

contracts. Such grant of both liquidated as well as unliquidated

damages, Mr. Kamdar would submit, is completely contrary to the most

basic principles of the Indian Contract Act, 1872 ("Contract Act")

and thereby contrary to the fundamental principles of Indian law.

16. The Learned Arbitral Tribunal has come to the view and has

recorded that the reimbursement towards the settlement amount is an

independent indemnity claim distinct and separate from liquidated

damages and that the claim for liquidated damages was valid and

enforceable under Qatari Law. However, Mr. Kamdar would contest

this proposition by relying on the Qatar Civil Code, which provides that

if the obligor proves that the obligee has suffered no damage, no pre-

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agreed indemnity shall be payable. That apart, the Court may decrease

the pre-agreed indemnity amount if the obligor proves that the

calculation is exaggerated or that the obligation has been performed in

part.

17. Therefore, it is submitted that the award of liquidated damages is

totally irrational and contrary to the most basic notions of Indian Law

and indeed even in conflict with the Qatari Civil Code. Towards this

end, he would submit that even the invocation of the performance bank

guarantee amount is invalid because even if liquidated damages were to

be awarded over and above the unliquidated damages, the performance

bank guarantee amount was far in excess of the liquidated damages

amount and therefore the ruling that the invocation was legitimate

further contributes to the Subject Award being contrary to fundamental

policy of Indian Law.

18. The Learned Arbitral Tribunal held that the parties had an

explicit agreement in Article 3.7.1 in the four Sub-Contracts, and that

the parties had made a conscious choice. The Learned Arbitral Tribunal

found that the breaches by Ion Exchange significantly contributed to

poor quality and delay, which directly caused the termination by the

Main Clients. The settlement amount paid by Trading and Agency to

the Main Clients, the Learned Arbitral Tribunal held, is a distinct legal

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matter that would not impede the entitlement to liquidated damages

against Ion Exchange. It is in this light that the Learned Arbitral

Tribunal directed the payments awarded and referred to hereinabove.

19. Mr. Kamdar would submit that Article 5.1 in the Sub-Contracts

deals with indemnification in respect of third-party claims and not

claims between the parties. Likewise, Mr. Kamdar would contend that

Article 3.7.1, in each of the liquidated damages clauses, would apply

upon failure to mobilize, or in relation to delay in work completion,

non-availability of personnel or equipment or removal of personnel

without written consent. It is in these specific situations that liquidated

damages at the rate of 1% up to a maximum of 5% of the total

subcontract value, as stated in the price schedule would be payable for

each week of delay beyond the agreed completion schedule.

20. Mr. Kamdar would also submit that in the absence of any

proceedings in which either Trading and Agency or the Main Clients

were involved, the obligation to indemnify under Article 5.1 could not

even be attracted. Likewise, for award of liquidated damages, Mr.

Kamdar would submit, Trading and Agency ought to first prove that

actual losses were suffered and that it attempted to mitigate the losses

and it is only thereafter that liquidated damages would become

payable. It is on this ground that he would submit that the award of

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liquidated damages is contrary to both Indian law as well as Qatari

Law.

21. Mr. Jagtiani, on behalf of Trading and Agency, would submit that

the view taken by the Learned Arbitral Tribunal that Ion Exchange was

liable to honour the liquidated damages obligation is entirely justified

and defensible. He would submit that the reliance on the Qatari Civil

Code is of no use to Ion Exchange, since the provisions are clear about

the burden of proof - they require the obligor (Ion Exchange) to prove

that the obligee (Trading and Agency) has not suffered any damage.

Even going by Mr. Kamdar's submissions in relation to the Qatari Civil

Code, he would submit that the onus and burden of proving that no

damage has been suffered lies on the indemnifier and not on the party

that has to be indemnified.

Analysis and Findings on Damages:

22. At the threshold, the provisions of Article 266 of the Qatari Civil

Code and the relevant provisions in the sub-contracts may be noticed:

Article 266

No agreed indemnity shall be payable if the obligor proves that the obligee has suffered no damages. The court may decrease the agreed amount of indemnity if the obligor proves that the calculation is exaggerated or if the

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obligation has been performed in part. Any agreement to the contrary shall be invalid.

[Emphasis Supplied]

Article 3.7.1.:

Liquidated Damages shall apply upon failure to mobilize, Work Completion Delay, unavailability of Personal/Equipment or removal of personnel without written consent of the Client at the rate of one percent (1%) up to maximum of five percent (5%) of this total subcontract value as stated in the Price Schedule for each week of delay beyond the agreed completion schedule shall apply.

[Emphasis Supplied]

Article 5.1

The SUB-CONTRACTOR shall indemnify the Contractor and the Client against each and every liability which the Contractor or the Client may incur to any other person whatsoever and against the adverse effects of all claims, including claims by third parties, to the extent that the same arise as a result of the SUB-CONTRACTOR's breach of Clause 3. SUB-CONTRACTOR has to sign the Mutual Indemnity and Waiver of Recourse Agreement (Version for CONTRACTOR'S SUBCONTRACTORS) as per Appendix F.

[Emphasis Supplied]

Article 5.4

The indemnity undertaken by the SUB-CONTRACTOR or the Contractor in respect of the other, and of the SUB-CONTRACTOR to the Client, under

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Clause 5.1 or Clause 5.2 above, shall apply in matters whereof the one Party has issued proceedings against the other Party before the party of the relevant period stated in Schedule 1, or such earlier date as may be prescribed by law, after which any claim pursuant to this indemnity shall be absolutely barred.

[Emphasis Supplied]

23. It will be seen that the Article 266 indeed places the burden of

proving the absence of damages on the obligor - in this case, Ion

Exchange, which indeed is the claimant and did its best to present its

point of view. What is evident is that upon appreciation of evidence,

the Learned Arbitral Tribunal has come to a view that Trading and

Agency indeed had to settle with the Main Clients and mitigated its

losses by settling with them. It is the delay and only part completion on

the part of Ion Exchange that caused the termination of the contract

with the Main Clients and thereby the termination of the four Sub-

Contracts.

24. Therefore, the Learned Arbitral Tribunal found that a case for

compensation of Trading and Agency for the settlement with the Main

Clients was made out. The Learned Arbitral Tribunal has apportioned

and assessed the unliquidated damages and applied the liquidated

damages provisions. Delay is indeed the ground of the edifice falling

down, with the Main Clients terminating the contract with Trading and

Agency, which in turn terminated the Sub-Contracts. This indeed

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triggered the indemnity provision in Clause 5.1 and the liquidated

damages provisions in Clause 3.7.1.

25. The Learned Arbitral Tribunal is the best judge of the quality and

quantity of evidence. Multiple grounds on appreciation of evidence

have been drafted into the grounds in the Affidavit in Reply but the real

ground that was solely pressed on merits is the legal test articulated

above. In any case, the Part II Court cannot sit in judgement and re-

examine merits. The legislation has taken care to provide for the

Explanation 2 in Section 48(2) of the Act to prohibit a review of the

merits. I am afraid what this Court is being called upon to do in the

instant case is to examine the merits. Indeed, the grounds drafted into

the Petition were not pressed at the hearing, but they are entirely a

prayer for a full-blown review of merits. Ion Exchange indeed has had

to jettison such grounds and focus on the legal ground of a seemingly

double-assessment of damages.

26. However, I find that the unliquidated damages relate to the

settlement that Trading and Agency has had to pay for to the Main

Clients. The unliquidated damages are the bargain struck between the

parties on how to treat a situation where a third party claim is to be

indemnified and how liquidated damages would be payable. Ion

Exchange did not discharge the burden of proof that Trading and

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Agency suffered no damage at all - it did, as even in its settlement it

had paid the settlement amount. The liquidated damages would cover

all losses arising out of the default found against Ion Exchange. While

Indian law principles can be sought to be imported on what was a

Qatari-law governed contract, it would not be possible to simply apply

Indian law as if the parties' conscious choice of law is to be ignored, just

when it comes to enforcement of the Subject Award.

27. On an examination of the Subject Award, it is apparent that the

Learned Arbitral Tribunal being the master of the evidence, has

returned findings on questions of fact and applied the provisions of the

contract. Once Trading and Agency has proved that it has been forced

to settle with the Main Clients, it would demonstrate that Trading and

Agency in fact went out of pocket by incurring a liability by the

payments made to the Main Clients. This led to a valid indemnification

trigger since, on merits, the Learned Arbitral Tribunal, being the

master of the evidence, has recorded clear findings that the breaches on

the part of Ion Exchange had caused quality problems and delays of a

significant nature, which led to the termination.

28. The Learned Arbitral Tribunal has held that these were not the

only issues that led to dissatisfaction, and the Learned Arbitral

Tribunal took note of the fact that since Trading and Agency had

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negotiated a settlement with the Main Clients and also waived the right

to receive payment of a substantial invoice in order to achieve their

inter se settlement, factoring in Trading and Agency's responsibility for

performance losses, the quantum payable by Ion Exchange to Trading

and Agency was reduced to QAR 4.5 million from Trading and Agency's

claim of QAR 7 million. It would not be possible or legitimate for this

Court to second-guess the adjudication of the Learned Arbitral

Tribunal. There is no fundamental conflict with Indian public policy as

contended by Ion Exchange.

29. In furtherance of his submissions, Mr. Kamdar would rely on the

judgement of the Supreme Court in Chunilal Mehta1, and in

particular paragraph 13 thereof which is extracted below-

"... Clause 14 as it stands deals with one subject only and that is compensation. It does not expressly or by necessary implication keep alive the right to claim damages under the general law. By providing for compensation in express terms the right to claim damages under the general law is necessarily excluded and, therefore, in the face of that clause it is not open to the appellant to contend that that right is left unaffected. There is thus no substance in the alternative contention put forward by the learned counsel."

[Emphasis Supplied]

1 Chunilal V. Mehta And Sons Ltd. v. Century Spinning and Manufacturing Co. Ltd.

- 1962 SCC OnLine SC 57

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30. Mr. Kamdar would also rely on the judgment of the Supreme

Court in Fateh Chand2 in which a Five Judge Bench of the Supreme

Court held that Section 74 of the Indian Contract Act is an attempt to

eliminate elaborate refinements under English Common Law to

distinguish between stipulations for payment of liquidated damages

and stipulations in the nature of penalty. A genuine pre-estimate of

damages by mutual consent is regarded as an identification of

liquidated damages that binds the parties. Paragraph 15 of Fateh

Chand which reads thus :

"15. Section 74 declares the law as to liability upon breach contract where compensation is by agreement of the parties pre- determined, or where there is a stipulation by way of penalty. But the application of the enactment is not restricted to cases where the aggrieved party claims relief as a plaintiff. The section does not confer a special benefit upon any party, it merely declares the law that notwithstanding any term in thé contract predetermining damages or providing for forfeiture of any property by way of penalty, the court will award to the party aggrieved only reasonable compensation not exceeding the amount named or penalty stipulated. The jurisdiction of the court is not determined by the accidental circumstance of the party in default being a plaintiff or a defendant in a suit. Use of the expression "to receive from the party who has broken the contract" does not predicate that the jurisdiction of the court to adjust amounts which have been paid by the party in default cannot be exercised in dealing with the claim of the party complaining of breach of contract. The court has to adjudge in every case reasonable compensation to which the plaintiff is entitled from the defendant

2 Fateh Chand v. Balkishan Dass - 1963 SCC OnLine SC 49

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on breach of the contract. Such compensation has to be ascertained having regard to the conditions existing on the date of the breach."

[Emphasis Supplied]

31. In Maula Bux3, a three-judge Bench of the Supreme Court held

that in every case of breach of contract the person aggrieved need not

prove the actual loss or damage suffered before claiming a decree. The

Court must apply the principle that the phrase "whether or not actual

damage or loss is proved" is intended to cover varying types of

contracts that may come before Courts for enforcement. Mr. Kamdar

would submit that where the Court is unable to assess the

compensation, the sum named by the parties, if regarded as a genuine

pre-estimate, may be taken into consideration as a measure of

reasonable compensation. But the Court may not do so if the sum

named is in the nature of the penalty. The upshot of the submission is

that the Subject Award enforces a penalty.

32. In any case, when loss in terms of money can be determined, the

party claiming compensation must prove the loss suffered by such

party. Mr. Kamdar would submit that the analysis in Fateh Chand

and Maula Bux were reiterated by the Supreme Court more recently

3 Maula Bux v. Union of India - (1969) 2 SCC 554

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in the case of Kailash Nath4, which summarized the law in the

following terms :-

"43. On a conspectus of the above authorities, the law on compensation for breach of contract under Section 74 can be stated to be as follows:

43.1. Where a sum is named in a contract as a liquidated amount Payable by way of damages, the party complaining of a breach can receive as reasonable compensation such liquidated amount only if it is a genuine pre-estimate of damages fixed by both parties and found to be such by the court. In other cases, where a sum is named in a contract as a liquidated amount payable by way of damages, only reasonable compensation can be awarded not exceeding the amount so stated. Similarly, in cases where the amount fixed is in the nature of penalty, only reasonable compensation can be awarded not exceeding the penalty so stated. In both cases, the liquidated amount or penalty is the upper limit beyond which the court cannot grant reasonable compensation.

43.2. Reasonable compensation will be fixed on well-known principles that are applicable to the law of contract, which are to be found inter alia in Section 73 of the Contract Act.

43.3. Since Section 74 awards reasonable compensation for damage or loss caused by a breach of contract, damage or loss caused is a sine qua non for the applicability of the section.

43.4. The section applies whether a person is a plaintiff or a defendant in a suit.

43.5. The sum spoken of may already be paid or be payable in future.

43.6. The expression "whether or not actual damage or loss is proved to have been caused thereby" means that where it is possible to prove actual damage

4 Kailash Nath Associates v. Delhi Development Authority And Anr. - (2015) 4 SCC

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or loss, such proof is not dispensed with. It is only in cases where damage or loss is difficult or impossible to prove that the liquidated amount named in the contract, if a genuine pre-estimate of damage or loss, can be awarded.

43.7. Section 74 will apply to cases of forfeiture of earnest money under conditions of a public auction before agreement is reached, Section 74 would hae no application.

[Emphasis Supplied]

33. While the aforesaid extracts are indeed clear declarations of

Indian law, one cannot lose sight of the fact that the four Sub-Contracts

containing the arbitration agreement were not governed by Indian law.

One has to see if the outcome in the Subject Award is fundamentally in

conflict with Indian public policy to bring it within the scope of a valid

objection under Section 48(2)(b) of the Act.

34. The scope of jurisdiction of the Court when presented with a

petition under Part II of the Act is spelt out in a number of judgements

including Renusagar5; Shri Lal Mahal6 and Vijay Karia7 to cite

just three. The limited scope for denial of enforcement of a foreign

arbitral award is set out to indicate that the expression "public policy of

India" is to be construed in a narrow fashion. Indeed, it cannot be given

5 Renusagar Power Company Limited v. General Electric Company - 1994 Supp (1) SCC 644 6 Shri Lal Mahal Limited v. Progetto Grano SpA - (2014) 2 SCC 433 7 Vijay Karia and others v. Prysmian Cavi E Sistemi SRL and others - (2020) 11 SCC 1

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an interpretation so wide as to treat a contract consciously governed by

Qatari law as if it were an Indian law-governed contract.

35. Enforcement of a foreign award is as much a facet of public

policy, much as Mr. Kamdar would contend that the Subject Award

itself is against public policy. In Vijay Karia, the Supreme Court cited

with endorsement the view expressed by a Learned Single Judge of the

Delhi High Court in Cruz City 18, which reads thus:

37. The grounds as set out in Section 48 of the Act for refusing enforcement of the award encompass a wide spectrum of acts and factors as they are set in broad terms. While in some cases, it may be imperative to refuse the enforcement of the award while in some other, it may be manifestly unjust to do so. Section 48 is enacted to give effect to Article V of the New York Convention, which enables member States to retain some sovereign control over enforcement of foreign awards in their territory. The ground that enforcement of an award opposed to the national public policy would be declined perhaps provides the strongest expression of a Sovereign's reservation that its executive power shall not be used to enforce a foreign award which is in conflict with its policy. The other grounds mainly relate to the structural integrity of the arbitral process with focus on inter party rights.

39. Even where public policy considerations are to be weighed, it is not difficult to visualise a situation where both permitting as well as declining enforcement would fall foul of the public policy. Thus, even in cases where it is found that the enforcement of the award may not conform to public policy, the courts may evaluate and strike a balance whether it would be more offensive to public policy to refuse enforcement of the foreign award --

considering that the parties ought to be held bound by the decision of the

8 Cruz City 1 Mauritius Holdings v. Unitech Ltd. - 2017 SCC OnLine Del 7810

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forum chosen by them and there is finality to the litigation -- or to enforce the same; whether declining to enforce a foreign award would be more debilitating to the cause of justice, than to enforce it. In such cases, the court would be compelled to evaluate the nature, extent and other nuances of the public policy involved and adopt a course which is less pernicious.

[Emphasis Supplied]

36. In Shri Lal Mahal, the three-judge bench of the Supreme

Court has held thus:

45. Moreover, Section 48 of the 1996 Act does not give an opportunity to have a "second look" at the foreign award in the award enforcement stage.

The scope of inquiry under Section 48 does not permit review of the foreign award on merits. Procedural defects (like taking into consideration inadmissible evidence or ignoring/rejecting the evidence which may be of binding nature) in the course of foreign arbitration do not lead necessarily to excuse an award from enforcement on the ground of public policy.

[Emphasis Supplied]

37. Under Qatari law, which governed the four Sub-Contracts, the

onus was on Ion Exchange to prove that no loss was suffered by

Trading and Agency or that the losses were exaggerated. Indeed, the

termination led to losses and this has been adjudicated with the

evidence led by the parties. I am afraid one cannot seek to convert a

contract governed by Qatari law to be treated as a contract governed by

Indian law when enforcement of a commercially-reasonable foreign

award is brought to India for recognition and enforcement.

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38. I also note that separately, Trading and Agency had indeed

claimed unliquidated damages for loss of profits as well, and the

Tribunal has in fact rejected such claim. The Learned Arbitral Tribunal

having consciously adjudicated the matter with appreciation of

evidence, and the grounds on how evidence appreciation fell short not

being pressed, in my opinion, there is no scope for interference with the

Subject Award. The limited scope of review by this Court cannot lead

to interference with the Subject Award.

39. Therefore, in my view, the objections raised by Ion Exchange,

although thought-provoking at first blush, are not of a nature that

would lead to recognition and enforcement of the Subject Award being

denied.

Natural Justice:

40. Finally, Ion Exchange also contends that it was not able to

present its case on merits because of the Learned Arbitral Tribunal not

accommodating a request to postpone a hearing scheduled for the

period between July 27, 2021 and July 30, 2021 to a later date. The

adjournment was sought as early as on April 19, 2021, in view of the

nationwide COVID-19 pandemic lockdown restrictions imposed in

India.

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41. Three months in advance, Ion Exchange requested that the

hearing scheduled for July 2021 be postponed to October 2021 or

November 2021. Trading and Agency opposed this request, requesting

that a virtual hearing be conducted. Ion Exchange reiterated the need

for postponing the hearing scheduled for July 2021 with evidence of

newspaper reports worldwide and in India, and orders of Indian Courts

in connection with the COVID-19 pandemic.

42. However, the Learned Arbitral Tribunal confirmed that the

hearing would indeed proceed virtually between July 27, 2021 and July

30, 2021, which Ion Exchange contends, significantly hindered its

ability to prepare for the hearing. For this reason, it is submitted that

Ion Exchange was forced to proceed by video without witnesses which

severely impaired its ability to effectively prosecute its claim and

defend against Trading and Agency's counterclaim.

43. Mr. Jagtiani on behalf of Trading and Agency would submit that

the contention that the principles of natural justice principles have

been violated owing to the conduct of a merits hearing in July 2021, has

been squarely and appropriately dealt with in Procedural Order No.

VII, which would indicate that there has been no breach of principles of

natural justice . The Learned Arbitral Tribunal had taken a view that a

virtual hearing as scheduled in July 2021 would afford both parties

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with a reasonable opportunity to present their case which would be

consistent with Article 22(3) of the ICC Rules. No fault can be found, he

would submit, with the Learned Arbitral Tribunal's view that the extent

of documentation or the complexity of the matter did not warrant a

view that conducting the hearing online would impact the arbitral

proceedings.

44. Mr. Jagtiani submits that the Learned Arbitral Tribunal was

entirely reasonable in expressing the view that the adjournment of the

hearing scheduled in July 2021 was being sought as early as April 2021,

even if Ion Exchange would have preferred a physical hearing.

45. Having examined the matter, in my view, the Learned Arbitral

Tribunal was not at all wrong in accepting the view expressed by

Trading and Agency that there could be no guarantee that in October

2021 or November 2021 the situation would have improved rather than

deteriorated. In any case, after the decision not to adjourn was taken,

Ion Exchange actively engaged with the Learned Arbitral Tribunal to

relay the parties' consent on several modalities for the conduct of the

merits hearing on a virtual basis.

46. That apart, Ion Exchange indeed participated in the hearing all

along until the outcome. There is nothing to point to its ability to

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participate being so badly hampered that it would lead to a denial of

natural justice of the nature envisaged in Part II of the Act.

47. In Vijay Karia, the Supreme Court articulated the following:

62. This Court's judgment in Sohan Lal Gupta v. Asha Devi Gupta [Sohan Lal Gupta v. Asha Devi Gupta, (2003) 7 SCC 492] , lays down the ingredients of a fair hearing as follows: (SCC pp. 504-05, para 23) "23. For constituting a reasonable opportunity, the following conditions are required to be observed:

1. Each party must have notice that the hearing is to take place.

2. Each party must have a reasonable opportunity to be present at the hearing, together with his advisers and witnesses.

3. Each party must have the opportunity to be present throughout the hearing.

4. Each party must have a reasonable opportunity to present evidence and argument in support of his own case.

5. Each party must have a reasonable opportunity to test his opponent's case by cross-examining his witnesses, presenting rebutting evidence and addressing oral argument.

6. The hearing must, unless the contrary is expressly agreed, be the occasion on which the parties present the whole of their evidence and argument."

81. Given the fact that the object of Section 48 is to enforce foreign awards subject to certain well-defined narrow exceptions, the expression "was otherwise unable to present his case" occurring in Section 48(1)(b) cannot be given an expansive meaning and would have to be read in the context and colour of the words preceding the said phrase. In short, this expression would be a facet of natural justice, which would be breached only if a fair hearing was not given by the arbitrator to the parties. Read along

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with the first part of Section 48(1)(b), it is clear that this expression would apply at the hearing stage and not after the award has been delivered, as has been held in Ssangyong [Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131 : (2020) 2 SCC (Civ) 213]. A good working test for determining whether a party has been unable to present his case is to see whether factors outside the party's control have combined to deny the party a fair hearing. Thus, where no opportunity was given to deal with an argument which goes to the root of the case or findings based on evidence which go behind the back of the party and which results in a denial of justice to the prejudice of the party; or additional or new evidence is taken which forms the basis of the award on which a party has been given no opportunity of rebuttal, would, on the facts of a given case, render a foreign award liable to be set aside on the ground that a party has been unable to present his case.

This must, of course, be with the caveat that such breach be clearly made out on the facts of a given case, and that awards must always be read supportively with an inclination to uphold rather than destroy, given the minimal interference possible with foreign awards under Section 48.

[Emphasis Supplied]

48. Seen in this light, it cannot be said that Ion Exchange was unable

to present its case. It indeed presented its case. Its request three

months in advance for an adjournment not having been granted; the

hearing in fact being well participated in; and there being no logical or

reasonable link between the Covid 19-based request for adjournment

and the findings in the Subject Award in any cogent manner, this

ground too does not lend itself for acceptance.

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49. In the result, I am satisfied that the Subject Award is enforceable

for purposes of Section 49 of the Act. The Subject Award lends itself for

recognition and for treatment as if it were a decree of this Court.

50. The Subject Award is recognized by allowing prayer clause (a),

which reads thus:

That this Hon'ble Court be pleased to recognise the Award dated 27 October

2022 (Exhibit "A") as a foreign award, enforceable and executable under the

Arbitration and Conciliation Act, 1996.

51. In view of disposal of this Petition, Interim Application (L) No.

20707 of 2024 also stands disposed of.

52. All actions required to be taken pursuant to this order shall be

taken upon receipt of a downloaded copy as available on this Court's

website.

[SOMASEKHAR SUNDARESAN, J.]

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