Ittgrani Spa vs Shivnath Rai
2005 Latest Caselaw 1237 Del

JUDGMENT

R.C. Jain, J.

IA 8692/2004

1. This is an application under Section 151 CPC made on behalf of the respondent seeking orders/directions for treating the present proceedings as a suit, fixing the date for framing of issues and for permitting the parties to lead evidence by way of affidavits or otherwise and the consequential cross-examination of the respective deponents of the parties.

2. A petition under Section 49 of the Arbitration and Conciliation Act, 1996 (in short the 'Act') filed by the petitioner herein seeking several reliefs, however, the main relief being for deeming the Appellate Foreign Award dated 21.09.1998 as a decree enforceable by this Court under Part II of the Act. The said petition has been registered as a suit by the Registry. Notice being issued, respondent filed a detailed reply which, inter alia, contains grounds/objections purportedly under Section 48(1) of the Act against the enforcement of the said Foreign Award. Rejoinder was filed by the petitioner to the said reply and the matter was listed for disposal by this Court.

3. The grievance of the respondent is that the procedure adopted by this Court for the disposal of the present proceedings without trial is not in accordance with Part II of the Act because the proceedings must be treated as a suit and tried like a suit within the meaning of the Code of Civil Procedure.

4. Though no reply has been filed, but the petition is opposed on behalf of the petitioner primarily on the ground that proceedings under Part II of the Act cannot and should not be treated and dealt with as suit. Parity is sought to be drawn between the provisions contained in Sections 48 and 34 of the Act and it is urged that since the application under Section 34 of the Act which is for a greater relief, i.e. for setting aside the award, is not to be treated as the suit, there is no question of any petition under Section 49 or for that reason objections under Section 48 of the Act being treated and tried as a suit. In the opinion of this Court, the question is not as to whether the proceedings commenced with an application under Section 49 of the At or after filing of any application or objections under Section 48 of the Act are to be treated as a suit or not within the meaning of the Code of Civil Procedure. Rather the more important question should be as to what procedure should be followed by a Court or judicial authority in relation to the proceedings of Part-II of the Act for the enforcement of the foreign awards.

5. Mr. Rakesh Tikku, learned counsel representing the respondent in support of his contention that the present proceedings be treated and dealt with as a suit, has heavily relied upon a decision of this Court in the case of Fuerst Day Lawson Ltd. v. Jindal Exports Ltd., 1999 II AD (Delhi) 244 where on the face of the facts and circumstances of the case and the controversy raised about the application of the provisions of the old Foreign Awards Regulation Enforcement Act, 1961 or the Arbitration and conciliation Act, 1996, the Court held as under:

"20. I have held that there was no agreement between the parties laying down the date of commencement of the arbitration proceedings contrary to the intention of the provisions of section 85 and section 21. The new Act came into force on 26.1.1996whereas the date of commencement of the proceedings was prior to the said date as request for arbitration was received by the respondent from the petitioner on 20.11.1995 and the petitioner filed their claims with the arbitrators on 18.12.1995, as also the Arbitral Tribunal was constituted on 24.1.1996. Thus, the provisions of FARE Act, 1961 would apply to the enforcement of the foreign awards of the present case. In terms of the said provisions the person who is interested in a foreign award has to appeal to the court having jurisdiction over the subject matter of the award that the award be filed in court and on filing of such a petition a regular suit has to be registered and the court has to direct notice to the parties to the arbitration requiring them to show cause why the award should not be filed. There is a total non-compliance with the provisions of Section 5 in the present case. There is no application by the petitioner in terms of Section 5 seeking for filing of the award in this court, and for making the award Rule of the Court. In my considered opinion, the present petition could not be converted to a petition for filing of the award and making the award a Rule of the Court. If a particular act is required to be done in a particular manner, he same should be done in that manner alone. This is what the Supreme Court has said in several decisions including that of Nazir Ahmed v. King Emperor, AIR 1936 Privy Council 253. In State of U.P. v. Shingara Singh, , it was observed that the rule adopted in Taylor Vs. Taylor is well recognized and is founded on sound principle. It was further observed in the said decision as follows:

"Its result is that if a statute has conferred a power to do an act and has laid down the method in which that power has to be exercised, it necessarily prohibits the doing of the act in any other manner than that which has been prescribed. The principle behind the rules is that if this were not so, the statutory provision might as well not have been enacted."

21. In my considered opinion, no execution proceeding can be instituted by the petitioner in the facts and circumstances of the case without first filing a suit and obtaining an order for filing of the award and making the said award a Rule of the Court.

The proceeding initiated by the petitioner is not maintainable in its present form and is therefore, liable to be dismissed, which I hereby do. During the course of aforesaid proceedings an order was passed for furnishing security which stood furnished for a total amount of Rs.4.24 crores for both the Execution Petitions No.168/1998 and 169/1998. Since it is held that this petition is not maintainable the securities furnished to the extent of Rs.1,74,00,000/- stands released, the balance being retained in pursuance of the order passed today in Ex. No. 169/1998. The petition stands disposed of in terms of this order."

6. The matter went up to the Supreme Court and the Supreme Court did not approve the view to that extent and held as under:

"31. Prior to the enforcement of the Act, the law of arbitration in this country was substantially contained in three enactments, namely, (1) the Arbitration Act, 1940, (2) the Arbitration (Protocol and Convention) Act, 1937, and (3) the Foreign Award(Recognition and Enforcement) Act, 1961. A party holding a foreign award was required to take recourse to these enactments. The Preamble of the Act makes it abundantly clear that it aims at consolidating and amending Indian laws relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards. The object of the Act is to minimize supervisory role of the court and to give speedy justice. In this view, the stage of approaching the court for making the award a rule of court as required in the Arbitration Act, 1940 is dispensed with in the present Act. If the argument of the respondent is accepted, one of the objects of the Act will be frustrated and defeated. Under the old Act, after making award and prior to execution, there was a procedure for filing and making an award a rule of court i.e. a decree. Since the object of the Act is to provide speedy and alternative solution to the dispute, the same procedure cannot be insisted upon under the new Act when it is advisedly eliminated. If separate proceedings are to be taken, one for deciding the enforceability of a foreign award and the other thereafter for execution, it would only contribute to protracting the litigation and adding to the sufferings of a litigant in terms of money, time and energy. Avoiding such difficulties is one of the objects of the Act as can be gathered from the scheme of the Act and particularly booking to the provisions contained in Sections 46 to 49 in relation to enforcement of foreign award. In para 40 of Thyssen judgment already extracted above, it is stated that as a matter of fact, there is not much difference between the provisions of the 1961 Act and the Act in the matter of enforcement of foreign award. The only difference as found is that while under the Foreign Awards Act a decree follows, under the new Act the foreign award is already stamped as the decree. Thus, in our view, a party holding a foreign award can apply for enforcement of it but the court before taking further effective steps for the execution of the award has to proceed in accordance with Sections 47 to 49. In one proceeding there may be different stages. In the first stage the court may have to decide about the enforceability of the award having regard to the requirement of the said provisions. Once the court decides that the foreign award is enforceable, it can proceed to take further effective steps for execution of the same. There arises no question of making foreign award a rule of court/decree again. If the object and purpose can be served in the same proceedings, in our view, there is no need to take two separate proceedings resulting in multiplicity of litigation. It is also clear from the objectives contained in para 4 of the Statement of Objects and Reasons, Sections 47 to 49 and the scheme of the Act that every final arbitral award is to be enforced as if it were a decree of the Court. The submission that the execution petition could not be permitted to convert as an application under Section 47 is technical and is of no consequence in the view we have taken. In our opinion, for enforcement of a foreign award there is no need to take separate proceedings, one for deciding the enforceability of the award to take separate proceedings, one for deciding the enforceability of the award to make it a rule of the court or decree and the other to take up execution thereafter. In one proceeding, as already stated above, the court enforcing a foreign award can deal with the entire matter. Even otherwise, this procedure does not prejudice a party in the light of what is stated in para 40 of Thyssen judgment."

"33. In the light of the discussion made and the reasons stated hereinabove, the impugned judgment and order are set aside. The case is remitted to a learned Single Judge of the High Court for proceeding with enforcement of the award in the light of the observations made above. The appeal is allowed in terms indicated above. No costs."

7. In the opinion of this Court, having regard to the scheme of the Act and on a true interpretation of the provisions of Part-II of the Act, it is apparent that a foreign award cannot be enforced in India straightway and the machinery for enforcement of such award has been provided under Part-II of the Act. A New York Convention Award as defined under Section 44 of the Act, has to be enforced in accordance with the provisions of Chapter I of Part II while the Geneva Convention Award as defined in Section 53 have to be enforced in accordance with the provisions of Chapter II. For enforcement of an award, an application has to be made under Section 47 to the Court as defined in the explanation to that section. Enforcement is mandatory except in the case set-forth in Section 48(1) and (2). In other words, if the Court is satisfied that there is no valid ground for refusing enforcement of the award and the award is enforceable, the award will be deemed as a decree of the Court and the Court will order enforcement of the award. Sub-section (1) of Section 48 lays down that 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 about the existence of any one or more grounds mentioned in clauses (a) to (e) of sub-section (1) of Section 48 of the Act. It can also be refused if the Court finds any of the grounds mentioned in clauses (a) and (b) of sub-section (2) of Section 48 of the Act.

8. Assuming that the reply filed by the respondent contains ground(s) mentioned in sub-section (1) of Section 48 and that the respondent wants to invoke any of these grounds, the respondent would be called upon to furnish to the Court proof of the existence of any one or more such grounds as mentioned in clauses (a) to (e) of sub-section (1) of Section 48 of the Act. In the opinion of this Court, having regard to the laudable object of enacting the new Act viz. encouraging resolution of disputes expeditiously and less expensively without minimal intervention of the Court or judicial authority and the scheme of the Act more particularly that contained in Part II of the Act, it is not possible to hold that the proceedings filed under Part II are to be treated and tried as a civil suit within the meaning of the Code of Civil Procedure. It would be wholly inappropriate to treat any of these proceedings as suit and to try them by pressing in service all provisions of the Code of Civil Procedure applicable to the trial of suits. However, there cannot be denial of the legal position that the party who wants to convince the Court that the foreign award sought to be invoked against him is not liable to be enforced and the Court should refuse its enforcement is entitled to full opportunity to render the proof envisaged in sub-section (1) of Section 48 of the Act in order to establish one or more grounds mentioned in clauses (a) to (e) of sub-section (1) of Section 48 of the Act. The 'proof' talked of in sub-section (1) of Section 48 of the Act would necessarily imply the establishment of the alleged fact by evidence. The evidence can be oral as well as documentary evidence produced by a party or depositions of witnesses in relation to matters of fact under inquiry. Therefore, even without treating the proceedings under Part II of the Act as a suit, still a party who wants that the Court should refuse the enforcement of foreign award will be well within its rights to lead evidence in support of its grounds/pleas

9. For the above stated reasons, while it is not possible to treat and try the present proceedings as a suit, but all what is necessary in the direction of holding a judicial inquiry, as envisaged by sub-section (1) of Section 48 of the Act, must be adhered to. This Court, therefore, must hold that the respondent is well within its right to lead evidence in support of the purported objections under Section 48 of the Act on the basis of which refusal of enforcement of the foreign award is sought.

10. The application is disposed of accordingly.