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2017 (5) TMI 492

Head Note:
Enforcement of the Award - recognition and enforcement of Award made in favour of Docomo - Held that:- As regards the refusal of permission by RBI for the second time, after the Award, the seeking of such permission by Tata was based on its earlier opposition to the Award which was similar to the one raised now by RBI. With Tata having accepted the Award as such, it has withdrawn its objections thereto and consequently its stand in the application made to RBI on 1st July 2013 seeking permission. As long as the Award stands, there is no need for any special permission of RBI for remission by Tata of the amount awarded thereunder to Docomo as damages. The refusal by RBI of such permission which is not required in the first place, or the fact that such refusal has not been challenged, would therefore not affect the enforceability of the Award.

There is no provision in law which permits RBI to intervene in a petition seeking enforcement of an arbitral Award to which RBI is not a party. Its prayer for permission to intervene is rejected.

Validity of the SHA and the Award - Clause 5.7.2 of the SHA was a contractual promise by Tata to find a buyer for Docomo's shares which could always have been performed using general permissions of RBI under FEMA 20. It was held that the promise was valid and enforceable because sub-regulation 9(2)(i) of FEMA 20 permitted a transfer of shares from one non-resident to another non- resident at any price. The AT held that Tata could have lawfully performed its obligation to find a buyer at any price, including at a price above the shares' market value, through finding a non-resident buyer. Its failure to do so was, according to the AT, a breach entitling Docomo to damages.

The SHA, therefore, could not be said to be void or opposed to any Indian law including the FEMA, much less the ICA. FEMA contains no absolute prohibition on contractual obligations. It envisages grant of special permission by RBI. As rightly held by the AT, Clause 5.7.2 of the SHA always was legally capable of performance without the special permission of RBI, using the general permission under sub-regulation 9(2) of FEMA 20.

As far as the Award itself is concerned, the interpretation placed by the AT on the clauses of the SHA was consistent with the intention of the contracting parties and not opposed to any provision of Indian law. There is nothing in the SHA as interpreted by the Award that renders it void or voidable under the ICA or opposed to either the public policy of India or the fundamental policy of Indian law. The AT's interpretation of the various provisions of the FEMA and the regulations thereunder have also not been shown to be improbable or perverse. What was invested by Docomo was US $ 2.5 billion and what it will receive in terms of the Award is only 50% of that amount. The Court finds that no ground under Section 48 of the Act is attracted to deny the enforcement of the Award.

Is the compromise valid? - Held that:- The Court is unable to find anything in the Consent Terms which can be said to be contrary to any provision of Indian law much less opposed to public policy or void or voidable under the ICA. The issue of an Indian entity honouring its commitment under a contract with a foreign entity which was not entered into under any duress or coercion will have a bearing on its goodwill and reputation in the international arena. It will indubitably have an impact on the foreign direct investment inflows and the strategic relationship between the countries where the parties to a contract are located. These too are factors that have to be kept in view when examining whether the enforcement of the Award would be consistent with the public policy of India.

It appears to be a well settled legal position that parties to a suit, or as in this case, an Award, may enter into a settlement even at the stage of execution of the decree or Award.

The Award dated 22nd June 2016 passed by the AT in London in LCIA Case No. 152896 under the LCIA Rules is declared as enforceable in India and shall operate as a deemed decree of this Court.The parties are bound by the Consent Terms and will proceed to take steps in terms thereof.

 


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