1963 (5) TMI 45 - SC - Indian Laws

The respondent company which was incorporated in New York and carried on business in spices brought a suit in the original side of the Bombay High Court against the appellant for recovery of a sum of Rs. 92, 884-4-10 on the basis of a judgment of the Supreme Court of the State of New York affirming two awards obtained by it and also on the awards in the alternative. - The appellant failed to supply turmeric in terms of the two contracts it entered into with the respondent. The respondent put the matter into arbitration in pursuance of the arbitration clause. The appellant took no part in it. The arbitrators gave the two awards in favour of the respondent for damages. The appellant did not pay. The respondent then took appropriate proceedings and got the awards confirmed by the judgment of the Supreme Court of the State of New York. The single judge of the Bombay High Court who tried the suit held that it was not maintainable either on the foreign judgment or on the awards and (dismissed the suit. The Division Bench on appeal held that the suit was maintainable on the awards though not on the judgment as part of the cause of action had arisen in Bombay and the relevant facts had been proved by the Public documents produced by the respondent and the admissions made by the appellant and decreed the suit. Held (per Dayal and Mudholkar JJ.) The decision of the Single judge of the High Court that the suit was not maintainable on the foreign judgment must be affirmed but on other grounds.

Issues Involved:
1. Whether the awards merged in the judgment made by the Supreme Court of the State of New York.
2. Jurisdiction of the Bombay High Court to entertain the suit.
3. Proof of the arbitration agreement, conduct of arbitration in accordance with the agreement, and validity of the awards according to the lex fori.

Detailed Analysis:

Issue 1: Merger of Awards in the Judgment
The central question was whether the awards merged in the judgment of the Supreme Court of the State of New York, thus losing their individuality and preventing a suit based on them. The judgment discussed the principle stated in Halsbury's Laws of England and Dicey's "Conflict of Laws," concluding that a foreign judgment does not occasion a merger of the original cause of action. This doctrine has been accepted by Indian courts, implying that an award does not merge into a foreign judgment, allowing a suit to be filed on the award. The court held that an award, once confirmed by a judgment, retains its enforceability in another jurisdiction.

Issue 2: Jurisdiction of the Bombay High Court
The Bombay High Court's jurisdiction was questioned based on whether any part of the cause of action arose within its limits. The court examined the facts and found that the contracts, including the arbitration agreement, were concluded within the jurisdiction of the Bombay High Court. Therefore, a part of the cause of action did arise within its jurisdiction, giving the High Court the authority to entertain the suit. The court further noted that the leave of the High Court was obtained, establishing its jurisdiction.

Issue 3: Proof of Arbitration Agreement, Conduct, and Validity of Awards
The court examined whether the necessary conditions for enforcing the awards were met:
- Arbitration Agreement: The court found that the defendants did not specifically deny the passing of correspondence that constituted the arbitration agreement. Thus, the submission to arbitration was deemed admitted.
- Conduct of Arbitration: The defendants did not deny the appointment of arbitrators and the procedure followed, leading the court to conclude that the arbitration was conducted in accordance with the submission.
- Validity of Awards: The defendants did not specifically deny that the awards were made according to the laws of the State of New York. The court held that the awards were valid as per the lex fori where they were made.

The court also considered Exhibit X-9, a certified copy of the judgment of the Supreme Court of New York, which included a certificate from the Consul-General of India. This document satisfied the requirements under Section 78(6) of the Indian Evidence Act, proving the awards were valid according to New York law.

Conclusion:
The court concluded that the awards did not merge into the judgment of the Supreme Court of New York, allowing the suit to be filed on the awards. The Bombay High Court had jurisdiction to entertain the suit as part of the cause of action arose within its limits. The necessary conditions for enforcing the awards were met, both through admissions in the pleadings and documentary evidence. The appeal was dismissed with costs, affirming the High Court's decision to allow the suit based on the awards.

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