TMI Blog2022 (6) TMI 1170X X X X Extracts X X X X X X X X Extracts X X X X ..... f TAQA/the Respondent are situated within the civil appellate jurisdiction of this Court. This contention is not disputed by TAQA. Therefore, there is no doubt that this Court qualifies as a High Court with jurisdiction in terms of the Explanation to Section 47 of the Arbitration Act in an action for recognition and enforcement against TAQA. Whether these proceedings are liable to be rejected on account of the NCLT order? - HELD THAT:- The NCLT is empowered to admit an action for corporate insolvency resolution at the instance of a financial creditor or operational creditor, as defined in the IBC, or the company concerned. As regards these proceedings, the grounds in Section 48 of the Arbitration Act have been held to be exhaustive in cases such as VIJAY KARIA ORS. VERSUS PRYSMIAN CAVI E SISTEMI SRL ORS. [ 2020 (2) TMI 628 - SUPREME COURT ] . Indeed, the Supreme Court held that the court concerned has the discretion to reject the resistance to enforcement if made on grounds which only affect party interest even if one of the grounds under Section 48 are made out. Therefore, the objection on this ground is rejected. In view of the judgment of the Hon'ble Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by raising the question as to which high court may exercise jurisdiction over the questions forming the subject matter of the award, either in exercise of original or appellate civil jurisdiction. In turn, the answer to this question would depend on the location of the: (i) person or entity; or (ii) assets of such person or entity against whom/which the award is sought to be enforced. Whether the recognition and enforcement of a part of the Foreign Award is contrary to public policy, in the peculiar facts and circumstances of this case, is a separate and distinct matter? - HELD THAT:- A significant aspect of the Foreign Award is that it does not provide for a setoff. The reasons for not doing so are not difficult to discern: the monetary claim of the Company was granted but not that of TAQA. On the other hand, the monetary counter claim of NCCIHL was granted against TAQA but not against the Company. The only exception is with regard to the grant of the claim of costs by the claimants, including TAQA, against NCCIHL - If a set-off that enured to the benefit of TAQA had been provided for in the Foreign Award and recognition or enforcement was sought without reckoning such set-o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay a sum of INR 8,500,000/- being the costs awarded to NCC in the arbitral proceedings as per the Foreign Award. Since both these petitions arise out of the Foreign Award and seek the recognition and enforcement thereof, they are considered and decided by this Common Order. 2. A Securities Purchase Agreement (the SPA) was entered into by and between NCCIHL, IL FS Energy Development Company Limited (IEDCL), NCC, TAQA Jyoti Energy Ventures Private Limited (presently known as TAQA India Power Ventures Private Limited (TAQA)/the Respondent herein), Himachal Sorang Power Limited (the Company) and Infrastructure Leasing Financial Services Limited (IL FS). For purposes of these petitions, it is unnecessary to dwell at length on the SPA; nonetheless, the basic details are set out herein. The SPA dealt, inter alia, with the sale of the shares held by NCC and NCCIHL (along with four of its nominees) and IEDCL in the paid up share capital of the Company, and the purchase thereof by TAQA. IEDCL is an entity which had the right to acquire and was in the process of completing the acquisition of 218,300 shares, which were registered in the name of IL FS Engineering Construction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... These counter claims, inter alia, pertained to the wrongful invocation of the security bond; and return of the bank guarantee to NCCIHL or, in the alternative, to pay NCCIHL the amount incurred as commission charges for Security Bond No.1. NCCIHL also counter a sum of INR 90,000,000 towards the balance sale consideration which was withheld by TAQA. The Arbitral Tribunal framed several issues for consideration. Eventually, the proceedings were concluded by the Foreign Award. 6. By the Foreign Award, the Arbitral Tribunal directed NCCIHL to pay INR 904,480,000 to the Company towards cost overrun (after adjusting INR 360,000,000 recovered by TAQA on behalf of the Company by encashing Security Bond - I and INR 62,000,000 paid by NCCIHL towards cost overrun, against the total cost overrun of INR 1,326,480,000). NCCIHL was also directed to pay the Company a sum of INR 287,018,685 towards the BPTA claim. With regard to interest, NCCIHL was directed to pay interest at 12% per annum on INR 904,480,000 to the Company from July 4, 2014 to the date of the Foreign Award and on INR 287,018,685 from December 31, 2014 to the date of the Foreign Award. TAQA was directed to pay NCCIHL a sum o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d appeals were disposed of by judgment dated 29.10.2020 by remitting the issue related to the cut-off date to the Arbitral Tribunal. However, the admitted position is that the parts of the Foreign Award, which are sought to be recognized and enforced through these proceedings, were not the subject matter of challenge before the courts in Singapore. 8. Oral submissions were made on behalf of the respective Petitioner by Mr.R.Murari, learned senior counsel, assisted by Mrs.Hema Srinivasan, learned counsel; and on behalf of the Respondent by Mr.Satish Parasaran, learned senior counsel, assisted by Mr.G.Giridharan, learned counsel. 9. After providing a brief overview of the facts, Mr.Murari contended that NCCIHL seeks recognition and enforcement of the Foreign Award insofar as it directs TAQA to pay a sum of INR 90,000,000 towards part consideration along with interest thereon. The payment of such consideration was conditional upon consent from the Himachal Pradesh Government in terms of Clause 6.6 of the SPA. After considering the question whether such consent was granted, the Arbitral Tribunal recorded its findings in Paragraphs 376 to 378 and 381 of the Foreign Award. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot qualify as an operational creditor of TAQA and that there is no operational debt due from TAQA to NCCIHL. The second contention was that the proceedings before the Hon'ble Delhi High Court were not disclosed before this Court or before the NCLT. The third contention was that the Company was intentionally not joined as a party in view of the fact that the Foreign Award directed the payment of a much larger sum to the Company. The fourth contention was that the action in the Delhi High Court is for the recognition and enforcement of a part of the Foreign Award, which directs the payment by NCCIHL of a much larger sum than the sum sought to be enforced herein, and, therefore, these petitions should not be entertained. The fifth contention of Mr.Satish Parasaran was that proceedings for recognition and enforcement may be taken only before one court although proceedings for execution may be instituted in several courts. By referring to Section 49 of the Arbitration Act, he pointed out that once a court is satisfied that the Foreign Award is enforceable under Chapter - 1 of Part -II of the Arbitration Act, the Award shall be deemed to be a decree of that Court. 12. On the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .'' Thus, the test is whether this Court would have had original civil jurisdiction in respect of the questions forming the subject matter of the Foreign Award if those questions were the subject matter of a suit or whether this Court would have civil appellate jurisdiction over decrees of courts subordinate to it as regards questions forming the subject matter of the Foreign Award. It should be noticed that the expression used is questions forming the subject matter of the arbitral award and not questions forming the subject matter of the arbitration , the latter being the expression used in Section 2(1)(e) of the Arbitration Act. The question as to what constitutes the subject matter of the award was examined by the Hon'ble Supreme Court in Brace Transport Corporation. After noticing that it was an award of money, the Court recorded a finding that the subject matter of the award is money and that the court within the jurisdiction of which the award debtor's money is available would have jurisdiction. The distinction between questions forming the subject matter of the arbitration and questions forming the subject matter of the award was examined in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases such as Vijay Karia v. Prysmian Cavi Sistema Srl (2020) 11 SCC 1. Indeed, the Supreme Court held that the court concerned has the discretion to reject the resistance to enforcement if made on grounds which only affect party interest even if one of the grounds under Section 48 are made out. Therefore, the objection on this ground is rejected. 18. Nonetheless, the Company and TAQA/the Respondent herein have jointly instituted proceedings before the Delhi High Court seeking recognition and enforcement of that part of the Foreign Award which is in favour of the Company. As a result of the prior institution of the said petition, can it be said that the present petition is not maintainable? To put the question differently: is it necessary that a petition for recognition and enforcement of a foreign award should be instituted in only one high court? TAQA contended that proceedings for execution may be instituted in more than one court, but proceedings for recognition and enforcement should only be instituted in one court. TAQA also contended that the Company should have been joined as a party. Therefore, these issues should be addressed. Prior thereto, however, the issue as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and recourse is necessary, in the Indian context, to Sections 36 to 74 of the Code of Civil Procedure, 1908, read with Order XXI thereof in the second stage. 20. The questions of non-joinder of the Company and whether such proceedings may be instituted in more than one high court in India remain to be answered. As regards non-joinder, the Foreign Award did not grant any relief to NCCIHL against the Company. Therefore, there is no question of any enforcement action against the Company by NCCIHL. As a corollary, the Company is not a necessary party to the petition by NCCIHL. As regards the petition by NCC, costs were directed to be paid by both the Company and TAQA to NCC; therefore, the Company could have been made a party to that petition. However, in an action for recognition and enforcement, the award holder can choose to proceed against one of the award debtors subject to the condition that it cannot recover more than the amount awarded if separate proceedings are subsequently instituted against the other award debtor. Turning to the question of institution of more than one petition, the Explanation to Section 47 clearly does not expressly prevent the institution of proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed in more than one high court in India, the consequence thereof would be that the award would be deemed to be a decree of each high court which recognizes and declares that the award is enforceable. No doubt, this leaves the door open to the possibility, albeit unlikely, of a part of the award being held to be enforceable and not the other, if the high courts concerned take decisions which are not entirely in consonance. In any event, such possibility cannot per se lead to the conclusion that a petition should not be filed in more than one high court. The question whether the part of the Foreign Award which is sought to be recognised and enforced by the respective Petitioner herein, should be recognised and declared as enforceable is addressed next. 22. Section 48 of the Arbitration Act sets out the grounds on which the enforcement of a foreign award may be refused. The said Section is set out 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) the parties to the agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is clear that the grounds set out therein are exhaustive, except to the extent specified in Sub-section 2 thereof. In the case at hand, TAQA/the Respondent did not contend that the Foreign Award should not be enforced on any of the grounds set out under Clauses (a) to (e) of Sub-section 1 of Section 48. For instance, it is not TAQA's case that the portion of the Foreign Award in NCCIHL's favour has not yet become binding. Therefore, it becomes necessary to turn to Sub-section 2. Clause (a) of Sub-section 2 is also clearly inapplicable and the Respondent did not contend that Clause (a) may be invoked. Therefore, the only question is whether the enforcement of the Foreign Award by instituting proceedings in respect thereof in more than one high court would be contrary to the public policy of India. The expression public policy of India, as contained in the Foreign Awards (Recognition and Enforcement) Act, 1961 (the Foreign Awards Act) was interpreted in Renusagar Power Co. Ltd v. General Electric Co 1994 Supp. (1) SCC 644 ( Renusagar ). The said expression received a narrow construction in the said judgment in the context of a foreign award. After the enactment of the Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts were also directed to be paid along with interest thereon. Although the Company and the Respondent herein were joint claimants before the Arbitral Tribunal, the above claims were awarded only in favour of the Company. The cost claim of the claimants, i.e. TAQA and the Company, of INR 18,500,000 was also directed to be paid by NCCIHL in the aggregate to both the claimants. The petition for recognition and enforcement before the Delhi High Court has also been filed jointly by the Company and the Respondent herein against NCCIHL. In addition, the Company has filed an affidavit before this Court confirming that the amounts awarded to it by the Arbitral Tribunal are for the benefit of the Respondent. In effect, the Foreign Award grants significantly higher monetary relief to the Company, and the Respondent herein claims beneficial rights over such amount. By comparison, the amounts awarded to NCCIHL and NCC are smaller. In these facts and circumstances, can it be said that the recognition and enforcement of the part of the Foreign Award in favour of the respective Petitioner, without considering and adjudicating the recognition and enforcement of the part of the Foreign Award in f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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