TMI Blog2019 (1) TMI 1374X X X X Extracts X X X X X X X X Extracts X X X X ..... llenged at the seat or those which being not except for Section 48(1)(e) and Section 48(3). There is no doubt that failure to challenge the award in the seat of Arbitration would in any manner impact the right of a party to resist enforcement in this country. The Arbitration & Conciliation Act, 1996 in its current avatar also does not support the view that resisting enforcement would be subject to a prior challenge at the seat of arbitration. It does not support the view that absent a challenge in the seat of the Arbitration, a party could not resist enforcement of the award in a different jurisdiction. If that were to be so the legislature would have provided for appropriate pre-conditions to resist enforcement of foreign award and justifiably so because if an award were to be set aside in the seat, there may be no occasion to resist enforcement. On the other hand if a challenge at the seat is repelled, a losing party could still resist enforcement on available grounds. In order to succeed on the ground of being deprived of an opportunity of being heard, one has to establish that the tribunal did not offer an aggrieved party an opportunity of presenting their case. In the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of domestic law and the courts are slower to invoke public policy in cases involving a foreign element. The contention that failure to make and averment as to readiness and willingness to perform the contract is fatal since grant of relief in the absence of such mandatory averments would be against the fundamental policy of Indian law is misconceived since the effect of absence of such averments would depend on the facts of a case - In the case at hand, the respondents had not raised this contention before the tribunal. Although in the affidavit in reply one of the contentions taken up was that no oral hearing was granted, this has not been canvassed as an instance of lack of a proper opportunity to present the respondents case probably because written submissions were on the record of the tribunal. No other ground has been canvassed - the objections sought to be raised are in the nature of seeking a review on merits of the lis and calls for appreciation of evidence which cannot be done. The Awards are enforceable against the respondents. The petitioner may proceed in execution of the Awards - Till the Awards are enforced, there will be an order in terms of prayer clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontrol Ravin by appointing three Directors on board and also appoint a Chief Executive Officer in due course. Mr. Vijay Karia was to continue as the Chairman and Managing Director. All the other shareholders were to be treated as one party, represented by the said Karia. On completion of integration period, Vijay Karia would cease to be involved in day to day management of the company and his involvement was to be restricted to internal audit, strategy and business development. Thus, during the integration period, Vijay Karia was to be available for ensuring a smooth transition. Clause 8 of the JVA set out the purpose and the objects. The intention being to conduct the business of the company in the best interests of the company and in accordance with sound professional and commercial principles. The shareholders were to cooperate with the other parties and with the company and shall use its respective best efforts to ensure the success of the company with special focus in the industrial special energy cables and high voltage energy cables markets. 4. Under clause 8.2.3, if any Director or committee member nominated by a shareholder failed to vote in accordance with the terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacture of cable which acquisition would entail that the petitioners parent company would also required majority stake in the Indian subsidiary of the Draka Group known as Associated Cables Private Limited (ACPL). In September 2011, the Board of Directors conferred exclusive powers of day to day management of the company on the CEO appointed by the petitioner. Apparently this was the end of integration period contemplated under clause 12 of the JVA. 6. In November 2011 the company by resolution of its Board appointed Ms. Cinzia Farise, as CEO and empowered her to operate the company's bank accounts. The CEO was also appointed as a non-executive Director of ACPL by the parent company. In November 2011 the CEO Ms. Farise was also empowered to employ and lay off permanent staff. She required prior approval in the event the company intended to hire a new staff. Around this stage, friction between the parties commenced. A lady employee was hired in the Sales team. Apparently her records were not disclosed to the Human Resources Director and it is the petitioners case that her employment was not authorised. In the meanwhile, one Mr. Brunetti was appointed as Chief Financial Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CEO Ms. Farise filed a witness statement in which she disclosed that she was a non-executive director of ACPL. She was not involved in day to day activities and had not disclosed any confidential information in relation to Ravin to ACPL. In or around August 2012, the arbitral tribunal passed an interim order by which Karia was to be continued as Chairman and Managing Director and had powers limited to internal audit, strategy and business development. Thereafter between 4th and 20th September, 2012 both parties served a notice of default since time to rectify had expired. The pleadings were meanwhile completed and procedural orders came to be passed from time to time including Procedural Order no.4 by which the petitioners were directed to produce documents. The order came to be passed on 14th November, 2012 but as far as the compliance was concerned, it was met with resistance and the petitioners apparently took a shelter under a letter of ACPL to the effect that the documents could not be submitted on the grounds of confidentiality. The parties were heard on jurisdictional issues including construction of the JVA and issues pertaining to a trademark licence agreement and a tech ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. Vide Procedural Order no.11, further interim measures came to bepassed holding that the respondents had no surviving rights under the JVA and they were directed to cease interfering with the operations and management of the company. In an unexpected development, on or about 23rd June, 2014, the respondents informed the tribunal that they would not be represented by their erstwhile Advocates and requested that communications to be made directly to the respondents at a nominated address and further accused the tribunal of bias. 11. According to the claimants and as canvassed by Mr. DeVitre, theallegations of bias were based on findings of the tribunal which they contended were wrong. On 1st July, 2014 the allegations of bias were rejected by the tribunal. On 29th July, 2014 Vijay Karia addressed an email agreeing to the engagement of Deloitte as valuers and for fixing a valuation date, being a date as close as possible and in any event not later than 30th September, 2014. Since the hearings were fixed on 1st and 2nd October, 2014, the tribunal is believed to have sent email to the respondents enquiring whether the respondents wished to submit any material in respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om proceeding with the valuation and threatening civil and criminal proceedings if Deloitte failed to comply. On 23rd November, 2015 Deloitte published its valuation report determining fair market value of the respondents equity shares at ₹ 71/- after discounting the value by 10%. The Chartered Accountants engaged by the petitioners, however, also carried out the valuation of the shares after taking into Foreign Exchange Management Act (FEMA) requirements. That valuation surprisingly found that the each share was valued at ₹ 16.88. 14. On 30th May, 2016 the petitioner called upon the respondents to sell to them their 49% of the shareholding of the company as per the Third PFA at ₹ 63.90 being higher than the valuation computed by Deloitte. On 6th June, 2016 said Karia declined to transfer of shares. On 8th July, 2016 the petitioners sought a final award from the tribunal as also termination of proceedings. Karia objected to the petitioners application while questioning Deloitte's valuation report. The petitioner refuted the respondents allegations and contending that this was only an attempt to delay the sale of shares and retain control of the company. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id not have jurisdiction to decide the questions raised by the respondents as to who held the rights to register trademarks as also the alleged breaches of the Trademark Licence Agreement and the Technical Assistance Agreement. 17. Mr. DeVitre then drew my attention to the Second PFA, the tribunalheld that in order to constitute the material breach the focus must be on the breach rather than the obligation that had been allegedly breached. Further it must be serious enough to have an adverse effect on an innocent party's interest. The tribunal rejected the case that a material breach would necessarily be a repudiatory breach. It analyzed the various breaches alleged by the petitioner and held that the respondents have committed material breaches of several of the JVA terms. It found that the witnesses examined by the petitioners were honest and that the respondents key witness s evidence as of Vijay Karia did not commend itself to the tribunal as being truthful. The counter claim was rejected and on the basis that none of the alleged breaches were material breaches. Apropos the breach concerning ACPL, the tribunal considered the fact that Karia had in his first reaction to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d required Mr. Vijay Karia and Mr. Piyush Karia to resign as Directors on the transfers being registered and issued a permanent injunction in terms of the provisions of the JVA effectively restrained the Karia's from acting contrary to the JVA. Several other issues have been canvassed by the petitioners including the fact that on conclusion of the oral hearing on 24th May, 2013, the counsel for the respondents had specifically agreed and acknowledged that the respondents had been given a fair opportunity of a full hearing and it was impermissible for the respondent to resist the enforcement of the parties on the ground that non production of documents impaired the respondents ability to present its case. According to the Mr. De Vitre the award was enforceable and there was no occasion to question the enforceability of the award on any legitimate ground. 20. On behalf of respondent nos.1, 5 to 7, 9, 20, 22-23, 25, 27-28, 31 to 34, 36 to 42, 44, 45, 50 to 58, 60, 61, 64 to 66, 73, arguments were led by Mr. Seervai, and on behalf of respondent nos.3, 4, 10 to 18, 46 to 48 and 77 by Mr. Chinoy. Mr. Seervai assailed the award, submitting that although the petition sought enforcem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence to enable respondents to rely on it and enable the party to rely on it and drew an adverse inference against the party who sought production of evidence. This objection relates to unequal treatment of parties but not a review under merits of the ACPL factor. The objections to enforcement on the ground that critical evidence being entirely overlooked and not been dealt with at all and non-consideration of material evidence is a breach of natural justice and thus contrary to the fundamental policy of Indian law. For the aforesaid reasons, it thus reiterated that the award is not enforceable. 22. The tribunal had stressed upon the fact that the acquisition of ACPL was wholly incidental to and not in material competition with Ravin and therefore, the First PFA holds that the lack of material competition between ACPL and Ravin would be a relevant and important factor. He submitted that the record demonstrates that the respondents had clearly contended that competition with Ravin was their focal point in support of their allegation with regard to the ACPL breach, that there was an overlap between the business of ACPL and Ravin. Both Ravin and ACPL manufacture and sell instrume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case from the petitioners and not having been successful expected the tribunal to draw an adverse inference. This is being urged as a ground in support of the contention that the award is unenforceable. That evidence in the form of invoices, customer lists shows that ACPL was indeed under the control of the Petitioner but this was ignored and the tribunal failed to consider the submission of the respondents that key management personnel of the petitioners had been appointed in senior positions at ACPL. He invited my attention to the fact that ACPL vide letter of 16th November, 2012 declined to provide copies of documents. Procedural Order no.5 had specifically recorded that if the respondents wished to pursue their request for disclosure they must do so at the hearing on merits and the tribunal had limited power over third party s as against the power of the Court. 26. Mr. Seervai submitted that the tribunal's decision was perverse since critical evidence was ignored and being contrary to the evidence of expert witnesses who opined that Ravin and ACPL were competing in the market. He submitted that the petitioners expert witness had admitted that ACPL manufactures and sells ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Communication Consultancy Services Pvt. Ltd. (Jaguar) which had one of its main objects as manufacture, sale, distribution of telecom cables and which is said to be material breach of clauses 21.1, 8.2.1 and 20.1.2 of the JVA. The tribunal, according to Mr.Seervai, failed to consider the merits of the counter claim in respect of Jaguar. Although the petitioner contended that the respondents counter claims were not pleaded since it did not form part of the determination notice of March 2012 and were only raised to respondents closing submissions of August 2013, Mr.Seervai submitted that the tribunal's observation in the Second PFA that the respondents should be restricted to the four corners of the determination notice and the pleaded case and further that the determination notice is clearly limited to a case of ACPL and on direct sales into India, was perverse. Mr. Seervai submitted that incorporation of Jaguar was a concealed breach and critical evidence in respect of the breach came to light only during cross examination of the petitioners witnesses which is why the submissions in respect of the counter claim were only made in the respondents closing submissions. He submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and /or telecom cables. The tribunal's decision he submitted was unsupported by evidence and the award was unenforceable being contrary to the fundamental policy of Indian Law and basic notions of justice. 32. Mr. Seervai submitted that the tribunal also failed to consider the respondents allegation of breach of clause 8 and 20 of the JVA contemplated in the First PFA. The tribunal held that the direct sales could potentially amount to a breach of clauses 8 and 20 but the Second PFA failed to deal with these submissions. Mr. Seervai submitted that the tribunal's decision is perverse since it ignored particular evidence and arrived at a conclusion that there was no material breach of the JVA because the maximum loss through direct sales was Euro 1,30,000 which did not get near to satisfying the threshold to establish a material breach. The tribunal however did not record or deal with the evidence in respect of the subsidiaries and that sales through petitioners subsidiaries amounted to Euro 44 million. 33. The next point urged by Mr. Seervai was that all direct sales of cables in India by the petitioner were in contravention of clause 8, 20 and 21.1 of the JVA. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervai further submitted that the complaint against Deloitte carrying out the valuation exercise could not prevent them from undertaking the valuation and the tribunal was wrong in accepting the petitioners contention that Deloitte took 10 months to produce the report on account of filing of the complaint and consequent delay. It is submitted that the petitioner on the other hand had contributed to the delay in culminating of the sale since it received the Deloitte Report in November, 2015 yet did not apply for a final award till July, 2016. The valuation by Deloitte allegedly resulted in a severe under valuation of the respondents shares by applying valuation as of 30th September, 2014. The tribunal conducted the valuation contrary to one proposed by both parties. The date should have been closest to the date of sale and the tribunal acted in contravention to the principles of natural justice. Therefore according to Mr. Seervai the award was bad. 36. Mr. Seervai then submitted that the tribunal had adopted an approachthat was different from the stand of both parties. It failed to consider the fact that respondents had challenged the Deloitte Report for not considering the value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceeding and therefore it reflected on the sanctity of the proceeding and clearly demonstrated lack of impartiality. On this basis Mr. Seervai submitted that the petitioner had not provided any explanation as to how one party had come to know of the outcome of the proceeding and the arbitrators rejection of the issue without considering the petitioners case was clearly unwarranted inasmuch as Gilbert Tweed would not have in the normal course come to know of the same unless they were informed of the likely outcome. There was no inquiry made into how the information pertaining to the Second PFA was made available to Gilbert Tweed and merely accepting the apology was not sufficient and it pointed out to the tribunals complicity in the matter. It was then submitted that the consequences of this episode strikes at the very root of the independence of the tribunal which was doubtful. 39. Continuing to support of the allegation of bias Mr. Seervai submitted that the respondents had made an application for recusal which application was not accepted. On 23rd June, 2014 the respondents alleged bias and unfairness in the conduct of proceedings which request was rejected. A further applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. PT First Media TBK vs. Astro Nausantara International B V. (2014) 1 SLR 372 2. Dallah Real Estate and Tourism Holding Company vs. The Ministry of Religious Affairs, Govt. of Pakistan. (2010) 2 WLR 805. 3. Westlaw India Gbangbola vs. Smit and Sherrif (1999) 1 T.C.L.R. 136 4. Malicorp Ltd. vs. Government of Arab Republic of Egypt. [2015] EWHC 361 (Comm) 5. Annie Fox and Ors. Philip Fisher and Anr. vs. Wellfair Limited. 1981 WL 186914 6. Front Row Investment Holdings (Singapore) vs. Daimler South East Asia Pre. [2010] SGHC 80 7. Vikram Greentech India Limited vs. New India Assurance Company Ltd. (2009) 5 SCC 599 8. National Highways Authority of India vs. Som Datt Builders NCC-NEC (JV) FAO(OS) no.427 of 2007 Del HC 9. Oil and Natural Gas Corporation Ltd. vs. Western Geco International Limited. (2014) 9 SCC 263 10. Associate Builders vs. Delhi Development Authority (2015) 3 SCC 49 MR. CHINOY's SUBMISSIONS 41. On behalf of the respondent nos.3, 4, 10 to 18, 46 to 48 and 77, Mr. Chinoy submitted that award in so far as it grants to the petitioners specific performance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not a material breach sufficient to constitute to event of default. That under the First PFA the arbitrator had held that on proper construction of clause 21 the acquisition by the petitioners principals of DRAKA which in turn held 60% of ACPL indicated that it was capable of amounting to an acquisition of cable business in India . In the Second PFA dated 19th December, 2013 the arbitrator held that the breach of clause 21 is not material breach. Although respondents had urged that the breach of clause 21 would go to the root of the JVA and was also in breach of clause 8.2.2(i) of the JVA and Article 318 of the Articles of Association, the tribunal held that it would focus on the materiality of the breach rather than materiality of the obligation, although there might be some overlap. Tribunal held that although in the First PFA it had held in favour of the respondents that acquisition of majority interest in ACPL was contemplated under clause 23, the question whether breach was material one was left open and thereafter the tribunal found that the respondents had fallen short in establishing material breach sufficient to amount to an event of default. 44. Mr. Chinoy submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the tribunal could not justify transfer of shares contrary to FEMA regulations. 46. In conclusion Mr. Chinoy submitted that the scope of review of grounds of public policy under Section 48 of the Arbitration Act has been dealt with in ONGC (supra) and Associate Builders [(2015) 3 SCC 49]. The term fundamental policy of Indian law has been interpreted as (1) one requiring a judicial approach (2) compliance with principles of natural justice and (3) application of mind to the facts and wednesbury principles of reasonableness. By virtue of the Amendment Act of 3 of 2016 the expression public policy in section 34 of section 48 was statutorily defined to include fundamental policy of Indian law. He submitted that this Court in Integrated Sales Service vs. Arun Dev [(2017) 1 Mh LJ 681] has held that interpretation of the expression Fundamental policy of Indian Law is part of the statutory provisions itself and the tests laid down in Western Geco and Associate Builders is applied to foreign Awards as well. 47. Mr. Chinoy further canvassed the point that the observations in the ruling in HRD Corporation v/s. GAIL (2018) 12 SCC 471 relied upon by Mr. De V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s but the respondents delayed agreeing to KPMG terms and in January 2014 respondents informed the petitioner that they had challenged the tribunal's finding as to valuation date in the second PFA under section 68 of the English Arbitration Act. The challenge was not opposed by the petitioner as a result of which it was remanded to the tribunal. 49. Mr. De Vitre submitted the fact that Deloitte had been engaged by Prysmian was in the public domain since 2013 and as admitted by the respondents in their email of 25th July, 2016 which forms part of the rejoinder to the reply filed by Vijay Karia. The respondents even threatened to take action against KPMG if they corresponded with the petitioner without the respondents participation. It is in these circumstances that the petitioner had requested the tribunal to appoint Deloitte as the valuers. The petitioner also specifically highlighted to the tribunal that valuation date cannot be an unascertained future date and must be a known date prior to valuation exercise. The respondents therefore did not seriously object to the appointment of Deliotte nor did they make any submissions in relation to the valuation date. Deloitte was app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce he submitted that the respondents had contended that both parties could have been in material breach of the JVA. In the closing submissions the respondents had contested the claimants argument that the party which served a Determination Notice First should be treated as the non defaulting party and that the date of the first breach should be the relevant consideration. The respondents contended that the party who committed the breach first should be considered the defaulting party. The tribunal found that the respondents were in breach and that the claimants were not. As a result it was not necessary to consider the position resulting from both parties being in material breach. The contention that the petitioner cannot be granted specific performance under section 16(c) of the Specific Relief Act since in the absence of a pleading that they were ready and willing to perform was not argued before tribunal. This Mr. DeVitre submitted was evident from the closing submissions exchanged. The Respondents had in fact contended that if the tribunal concludes that both parties had committed breach, specific performance should be granted to the party which committed the later breach. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ward and respondents did not deal with it at all. They ignored the K M report of the petitioners and highlighted the fact that respondents had not dealt with K M report. They ignored the fact that although the FEMA valuation is much lower then the Deloitte valuation the claimant is committed to purchase shares as contractually agreed. The discounted price of 63.93 was worked out in accordance with the contract and is not less than FEMA fair valuation of 16.38. The objections on this ground are therefore misconceived. 55. Mr. De Vitre further submitted that the FEMA presents a shift from the provision of earlier FERA and established a more lenient environment and does not render transactions void for violation. In the light of the respondents contention that the tribunal took into consideration the K M Report which was not contractually provided for. Mr. Devitre submitted that no such case was urged before the tribunal and the final award mentioned that the K M Report was not dealt with by the respondents in their submissions. He submitted that Shri Lal Mahal (supra) has laid down the principles underlying section 48 which entail that an inquiry under section 48 does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poration in the matter of Board of Control for Cricket in India vs. Kochi Cricket Pvt. Ltd [AIR 2018 SC 1549] observing that it was in consonance with the objects of the Act to avoid increased interference by Courts. A contrary view would mean that 2015 amendment is not to be given effect to. Integrated Sales Services (supra) also follows Shri Lal Mahal (supra). Moreover it notes that the 2015 amendment Explanation 2 prohibits the review on merits of the dispute while considering a challenge to the enforcement on the ground that it is in contravention with the fundamental policy of Indian law. Renusagar (supra) lays down the following tests; (a) A Foreign award cannot be resisted on the basis of a challenge on merit. New York Convention tilts towards pre enforcement grounds. (b) Article V of the New York Convention does not include mistake of fact or law by the arbitrator is ground for refusing enforcement. (c) The New York Convention does not permit a review on merits. The award cannot be impeached on merits. (d) Objections to enforcement are limited in its scope and lastly (e) Contravention to some local law will not attract the public policy concept. In other words somet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merits of public policy and also on the ground of justice or morality since otherwise it would result in avoiding the effect of 2015 amendment. No finding of fact can be reversed on the basis that an arbitral tribunal did not consider certain evidence and/or if it had considered such evidence or argument the conclusion may be different. Mr. De Vitre relied upon the following judgments 1. Shri Lal Mahal Limited vs. Progetto Grano SPA (2014) 2 SCC 433 2. M/s. Louis Dreyfus Commodities Suisse S. A. vs. Sakuma Exports Ltd. (2015) SCC Online Bom 5006 3. Sideralba S.P.A. vs. Shree Precoated Steels Ltd. (2015) SCC Online Bom 5056 4. Richmond Mercantile Limited FZC vs. Vinergy International Pvt. Ltd. (2016) SCC Online Bom 4559 5. HRD Corporation (Marcus Oil and Chemical) vs. Gail (I) Ltd. (2018) 12 SCC 471 6. Board of Control for Cricket in India (BCCI) vs. Kochi Cricket Pvt. Ltd. and others (2018) 6 SCC 287 7. Renusagar Power Co. Ltd. vs. General Electric Co. (1994) Supp 10 SCC 644 8. ARK Shipping Co. Ltd. vs. CRT Ship Management Pvt. Ltd. (2007) SCC Online Bom 663 9. POL India Project Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or to resistant enforcement. 61. Mr. Seervai reiterated that the definitions of public policy and fundamental policy of Indian Law would apply with equal force to objections against enforcement of a foreign award. He relied upon paragraph 35, 38 and 39 of the decision of the Supreme Court in Western Geco (supra) which emphasizes that there must be fidelity of judicial approach and one which cannot be arbitrary, capricious or whimsical manner. A judicial approach ensures that the authorities act bonafide and deals with the subject in a fair, reasonable and objective manner and that the decision is not actuated by any extraneous considerations. A judicial approach would act as a check against flaws and faults that can render the decisions of a Court vulnerable. The fundamental policy of Indian law is a principle that Courts and quasi judicial authorities must decide in accordance with principles of natural justice and apart from ensuring compliance with the audi alteram partem rule one of the facets of the principles of natural justice is that the Court or authority deciding matters must apply its mind to the attendant facts and circumstances while taking a view one way or the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in the instant case the tribunal did not record any disagreement with experts of parties. The testimony of the parties' experts in this regard constituted critical evidence and that the arbitrator's failure to express disagreement with the parties' experts deprived the parties of an opportunity to present their case and renders the awards unenforceable as being contrary to the fundamental policy of Indian Law and basic notions of justice. 64. Mr. Seervai submitted that the arbitrator's failure to consider material evidence is also violative of principles of natural justice and that this principle was enunciated in the case of Front Row Investment Holdings (Singapore) Pte. Ltd. (supra) wherein the challenge was on the basis that the arbitrator had while adjudicating the counter claim, incorrectly found that a party was asserting inducement on the basis of a single misrepresentation and while setting aside the award dealing with the counter claim. The Court held that failure to allow a party to address the tribunal on a key issue is a corollary to allowing the submission and ignoring it altogether whether deliberately or otherwise and in both these cases, the mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nenforceable. Dealing with the respondents contention that merely because the respondents had not challenged the award at the seat of the arbitration did not prevent challenge resistance to enforcement, I have no hesitation in agreeing with that line of reasoning. Chapter I of Part II which deals with New York Convention Awards does not differentiate between enforcement of awards that have been unsuccessfully challenged at the seat or those which being not except for Section 48(1)(e) and Section 48(3). 68. In ARK Shipping Co. (supra) the award was made in Singapore and enforcement was objected to on the basis that there was no valid contract between the parties and that there was no arbitration agreement. The seat of arbitration was Singapore and the proper law of contract was English Law. Further this Court in ARK Shipping (supra) held that there is nothing in the Arbitration Act which gives the power to the Indian Courts to set aside the foreign arbitral award and/or sit over the decision concluded by the tribunal based on the provisions of the Arbitration Act about the existence of the agreement. The Court also observed that where grounds in relation to the existence of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al in Paris against the Government of Pakistan. It was held that neither the New York Convention nor the English Arbitration Act suggests that a person resisting recognition or enforcement in one country had any obligation to seek to set aside the award in the other country where it was made. 71. I have no doubt that failure to challenge the award in the seat of Arbitration would in any manner impact the right of a party to resist enforcement in this country and in this respect I am in agreement with the views expressed in Dallah Real Estate (supra) and PT First Media. The Arbitration Conciliation Act, 1996 in its current avatar also does not support the view that resisting enforcement would be subject to a prior challenge at the seat of arbitration. It does not support the view that absent a challenge in the seat of the Arbitration, a party could not resist enforcement of the award in a different jurisdiction. If that were to be so the legislature would have provided for appropriate pre-conditions to resist enforcement of foreign award and justifiably so because if an award were to be set aside in the seat, there may be no occasion to resist enforcement. On the other hand if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 73. The other ground of challenge is that the award should shock the conscious of the Court is sought to be invoked is on the basis of the arbitrator s ruling in respect of direct sales. The tribunal in its First and Second award had rejected the respondents counter claim allegedly on a incorrect reading of clause 21.1. Although reliance was placed on Vikram India (supra) of the Supreme Court and the decision in Som Datt Builders(supra), I am not able to accept the respondents contention that the interpretation of Rule 21(1) was perverse and unreasonable. Perusal of the award reveals that the arbitrator has dealt with the interpretation of clause 21.1 extensively and threadbare with reasons including those given from paragraph 72 to 115 in the Partial Final Award which dealing with the tribunal s view on the construction of clause 21. 74. In my view, in order to succeed on the ground of being deprived of an opportunity of being heard, one has to establish that the tribunal did not offer an aggrieved party an opportunity of presenting their case. In the facts of the case at hand, it is obvious that ACPL declined to submit the documents on the ground of confidentiality. It is anot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmination Notice of 26th March 2012 and the counter claim dated 9th September, 2012 did not allege ouster of the respondents, since Mr. Vijay Karia continued to be in management throughout the period of integration. Considering the nature of the business of the petitioners and its parent company it is but obvious that scale of operations were considerably large and it is one of the fundamental reasons why they proposed the expansion by acquiring to the JVA with the intention of gaining control over Ravin. This is evident from the fact that the petitioner had admittedly paid a control premium to Ravin. 77. As regards the allegation that the counter claims were not considered, the tribunal was the final arbiter of the merits. Allegations of concealed breach and the allegations that the tribunal did not mean any determination in relation to the respondents counter claim alleging attempts at ousting the respondent no.1 also have been dealt with by the tribunal. As already stated, there is nothing in my view that obliged the tribunal to place before the parties of the view that it intended to take and I am unable to find any support from the submissions canvassed at the bar alludin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ond PFA was not revealed prior to its publication. It was submitted that there was no suggestion at any time that the recruitment notice issued by Gilbert Tweed was merely in the regular course to identify potential candidates who could be recruited for Ravin and not otherwise. It was further contended that the reaction of the respondent to the recruitment notice published by Gilbert Tweed was material inasmuch as the respondents merely alleged breach of confidentiality and nothing more and it was not suggested at the material time, that the result of the arbitration was known in advance to other parties including Gilbert Tweed and Associates. The allegation of bias was made for the first time only after the Second PFA and not before. In October 2013 when the respondents did raise the issue about statement made by Gilbert Tweed, it was only on the basis of breach and confidentiality and not of bias. The respondents after alleging bias and filing of application for revocation, changed their Advocates but continued to participate in the arbitration. They sought time from the tribunal on account of change of Advocates, but refused to co-operate with Deloitte and did not furnish them t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... party with his own ideas and if the tribunal tenders an award which has no basis in pleadings or arguments it renders a party unable to canvass its case and therefore is entitled to resist enforcement of an award. According to the respondents had the Arbitrator expressed his views they could have responded and failure to grant an opportunity to deal with the arbitrators views results in the awards being unenforceable and contrary to the public policy of India. 81. I am unable to appreciate the respondents contention that the arbitrator was bound to express his views on expert evidence. It is open for the a tribunal to consider expert evidence without being obliged to express his views on the veracity of such evidence. The arbitrator in the instant case was under no obligation of respond to expert evidence led by the parties. No doubt it was open to the arbitrator to seek clarifications if he felt necessary. The Arbitrator was not bound to do so. More often than not consideration of witness statements, their relevancy, veracity and the impact would be considered not only when the evidence is recorded but that is at a later date prior to making of an award. An arbitrator would gar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingapore on the ground that the arbitrator had breached rules of natural justice by concluding that only one of three grounds of alleged misrepresentations had been relied upon and there was no basis on which it could be concluded that the appellant had given up the rest of the grounds. In that case the arbitrator had dismissed the appellants counter claim without considering the grounds of its counter claim in full because the arbitrator was under a misapprehension that the appellant had abandoned reliance on certain representations. This is once again the decision on facts which does not share anything in common with the instant case. This decision is therefore of no assistance to the respondents. I am therefore unable to accept the contention that omission by the tribunal in the instant case to express his views, on evidence of experts would in any manner qualify as failure to grant an opportunity to present the party s case. 85. In Richmond Mercantile (supra), a Single Judge of this Court while observing the objections to enforcement of the award were on merits also observed that a Court cannot refuse enforcement of an award on the basis of sufficiency of evidence. The Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal . 87. The scope of enquiry under Section 48 did not permit a review on merits and that under Section 48(2)(b) enforcement of a foreign award could be refused only if it is found to be contrary to (i)the fundamental policy of Indian Law; (ii) to the interest of India and (iii) justice of morality. Thus, there being no opportunity for this Court to review a foreign award on merits, in Sideralba (supra) the Court pointed out that there was no substance in the submission that a foreign award cannot be enforced on the ground that the petitioner had not proved actual loss. The Court found on perusal of the award that the tribunal had rendered pure findings of fact and enforcement of the award could not be refused by reviewing the process of adjudication upon the findings of fact recorded by the tribunal. The Court also rejected the contention that the award was contrary to the terms of contract or based on no evidence. The Court also observed that Associate Builders was a decision rendered prior to the amendment of 2015. This Court found that in Shri Lal Mahal (supra) the Supreme Court had considered the expression public policy of India in Section 48(2)(b) and whether it sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court in Associate Builders (supra) and ONGC v/s. Western Geco (supra) were applicable to a foreign award. It is further held that the Supreme Court in Associate Builders (supra) and Western Geco (supra) had affirmed the view in ONGC which dealt with a domestic award under Section 34 of the Act and observed that those principles cannot be extended to a foreign award under Section 48(2(b). Besides the principle laid down in Phulchand Exports Ltd. v/s. O.O.O. Patriot 2011(10) SCC 300 applying the expression public policy as interpreted by the Supreme Court in the case of Saw Pipes (supra) to a foreign award has been overruled in Shri Lal Mahal. 89. The learned Single Judge while deciding the challenge in Sideralba also had occasion to consider the decision of this Court in Pol India Projects Limited which have dealt with various judgments of the Supreme Court including Shri Lal Mahal and quoting from the decision of the Delhi High Court in Penn Racquet Sports v/s. Mayor International Limited ILR 2011 Delhi 181 and observed that in Shri Lal Mahal the Supreme Court had after referring to principles laid down in Renusagar (supra) held that those principles must apply f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verments would be against the fundamental policy of Indian law is in my view misconceived since the effect of absence of such averments would depend on the facts of a case In the case at hand, the respondents had not raised this contention before the tribunal. The respondents case on the other hand was that the respondents, as opposed to the petitioner, were entitled to specific performance as contemplated in clause 23.4 of the JVA. This was canvassed on the basis that if both parties were found to be in breach, the party which committed the later breach would be entitled to specific performance. The respondents contended that if at all the respondents had breached the agreement, its breach was later in point of time and therefore the respondents as against the petitioner was entitled to specific performance. 93. This in my view indicates that the absence of an averment on readiness and willingness was not urged and not a matter in issue before the tribunal but the tribunal was seized of rivals claims on specific performance under clause 23.4. The essence of the relief claimed was therefore pleaded and as contemplated in the observations of the Supreme Court in Syed Dastagir (su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and as highlighted by Mr.DeVitre need not ipso facto operate as a precedent. Mr. Chinoy relied upon a decision of the Full bench of Kaikhosroo Phirozshaw Doctor v/s. State in which the Court considered opinion by the Supreme Court even on a point which does not strictly arises for decision must be accepted by the High Court as laying down statement of law which is followed but the full bench observed that it did not read that particular observation as laying down views of the Supreme Court expressed with emphasis and after due deliberation a casual observation it was submitted did not so operated. In this manner, Mr. Chinoy had sought to contend that the decision in HRD would not qualify as a precedent, with the result that the scope of resistance to enforcement was rendered wider. The fact is that HRD had made reference to the decisions in ONGC v/s. Saw Pipes and ONGC v/s. Western Geco and the observation that both Sections 34 and 48 have been brought back to the position law contained in Renusagar(supra) where public policy will include only two of three things that is fundamental policy of Indian law and justice and morality would prevail. 96. Although Mr. Chinoy may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts of the case even if a law of guarantee could not have been issued in favour of the respondents under provisions of the Foreign Exchange Management (Guarantees) Regulation, 2000 which was acted upon by the parties simplicitor violation of the provisions would not be contrary to the fundamental policy of Indian law. POL India Projects Ltd (supra) followed the Delhi High Court decision in SRM Exploration P.Ltd vs. N S N Consultants [(2012) 4 Company Law Journal 178 Delhi] holding that legislative intent while enacting FEMA is not to void a transaction even if it is in violation. As also of the decision of the Bombay High Court in Vitol SA vs Bhatia International Ltd and Noy Vallencia Engineering Spa Vs Jindal Drugs Ltd (2006) 5 Bom C.R. 155 all of which allowed enforcement of foreign awards held and held that even if guarantees are not issued under FEMA Regulations, violation of the provisions would not be contravention of the fundamental policy of Indian law. In the facts of the case I do not find the objection on the ground of violation of FEMA as canvassed by Mr. Chinoy of substance since on facts, the fair value for the purposes of FEMA was determined at a far lower ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
