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2019 Supreme(SC) 190

SUPREME COURT OF INDIA
A.M. Khanwilkar and Ajay Rastogi, JJ.
LMJ INTERNATIONAL LTD. – Appellant
Vs.
SLEEPWELL INDUSTRIES CO. LTD. – Respondent
Special Leave Petition (Civil) No. 540 of 2018 with Special Leave Petition (Civil) No. 5493 of 2019
Decided on : 20-02-2019

Advocates Appeared:
For the Appellant :Mr. A.K. Sinha, Sr. Advocate, Mr. Vikas Sethi, Advocate, Mr. Sanandha Mukherjee, Advocate, Mr. Deepak Goel, Advocate.
For the Respondent:Mr. Shyam Divan, Sr. Advocate, Mr. Rakesh Sinha, Advocate, Mr. Pinaki Addy, Advocate, Mr. Shailendra Jain, Advocate, Mr. Chira Ranjan Addy, Advocate

IMPORTANT POINT
Scheme of Section 48 of Arbitration and Conciliation Act, 1996 does not envisage piecemeal consideration of issue of maintainability of execution case concerning foreign awards.

Headnote:Arbitration and Conciliation Act, 1996 – Section 48 – Implementation of foreign award – Scheme of Section 48 of Act does not envisage piecemeal consideration of issue of maintainability of execution case concerning foreign awards – Scope of interference has been consciously constricted by Legislature in relation to execution of foreign awards – Subject application filed by petitioner deserves to be rejected, being barred by constructive res judicata as has been justly observed by High Court in impugned judgment – Attempt of petitioner was to call upon executing court to have a re-look at award – That cannot be countenanced – Arbitral Tribunal has considered all aspects of matter and even if it has committed any error, same could, at best, be a matter for correction by way of appeal to be resorted to on grounds as may be permissible under English Law by which subject arbitration proceedings are governed – Special leave petitions dismissed with exemplary costs. (Paras 14, 15, 16, 17 and 18)

       Facts of Case:

       Parties had entered into separate contracts for sale of Non-Basmati Parboiled Rice, Thailand origin, on the terms and conditions specified in contracts. Buyer had opened letters of credit on different dates and consignments were shipped by seller. For each single shipment, invoices had been issued by seller in accordance with the addendum to the contract. Shorn of unnecessary details, be it noted that some dispute arose regarding inferior quality of rice and non-release of the payment towards the invoices raised by the seller in respect of certain shipment, which eventually became subject matter of arbitration proceedings. Respondent invoked arbitration clause and eventually appointed Arbitrator. As petitioner failed to respond, respondent requested GAFTA to appoint an Arbitrator on their behalf in accordance with GAFTA Arbitration Rules 125.

       Findings of Court:

       Although we are dismissing special leave petitions, we accede to request of respondent to pass a specific order to direct Registrar (OS), Calcutta High Court to forthwith encash FDs lying deposited in credit of the concerned stated execution case and, after obtaining Reserve Bank of India's permission forthwith, remit entire amount, including interest accrued in US Dollars, to respondent. That shall be done within eight weeks from today and compliance report be submitted in Registry of this Court within two weeks thereafter.

       Result – Special Leave Petitions dismissed with exemplary costs.

JUDGMENT

A.M. Khanwilkar, J.

These special leave petitions emanate from the judgment and orders dated 22nd August, 2017 passed by the High Court at Calcutta in G.A. No. 3306/2016 in E.C. No. 487/2013 and dated 9th July, 2018 in G.A. No. 3307/2016 in E.C. No. 488/2013, respectively. The special leave petitions pertain to two execution petitions filed by the respondent - award holder concerning two separate foreign awards. Since the questions raised in both these petitions are overlapping, the same are being answered together.

2. The parties had entered into separate contracts for sale of Non Basmati Parboiled Rice, Thailand origin, on the terms and conditions specified in the contracts. The contract contained a stipulation that the quantity would be final at the Port of loading as per the official weight certificate issued by SGS at the cost of the seller, meaning thereby the respondent. The consignments were shipped by the seller as per the said contract. The contract was an FOB contract and the goods were meant for the Government of People's Republic of Bangladesh. The contract in "other terms" envisage that on terms and conditions not in contradiction with the stipulated terms of contract shall be governed by GAFTA 48 and disputes to be resolved by Arbitration 125 as per GAFTA 125 in London. The buyer had opened letters of credit on different dates and the consignments were shipped by the seller. For each single shipment, invoices had been issued by the seller in accordance with the addendum to the contract. Shorn of unnecessary details, be it noted that some dispute arose regarding the inferior quality of rice and non-release of the payment towards the invoices raised by the seller in respect of certain shipment, which eventually became the subject matter of arbitration proceedings. The respondent, on 28th July, 2011, invoked the arbitration clause and eventually appointed Mr. R. Barber as its Arbitrator. As the petitioner failed to respond, the respondent requested GAFTA to appoint an arbitrator on their behalf in accordance with GAFTA Arbitration Rules 125. GAFTA duly appointed Mr. R. Eikel as the second Arbitrator on 22nd September, 2011. On 25thJune, 2012 GAFTA appointed Mr. C. Debattista as the third Arbitrator and Chairman of the Tribunal.

3. The respondent filed its claim submissions dated 11th May, 2012 in the two independent arbitration proceedings, concerning contract-I and contract-II, respectively. These claim submissions came to be filed after giving various opportunities to the petitioner. Resultantly, the Arbitral Tribunal passed two separate awards in relation to the concerned contracts, being Arbitration Case No. 14/456 (pertaining to contract-I) and Arbitration Case No. 14/457 (pertaining to contract-II). Be it noted that the Arbitral Tribunal proceeded ex-parte against the petitioner as, despite notice, the petitioner refused to participate in the arbitration proceedings. Neither did it file any statement of defence or counterclaim nor did it adduce any evidence.

4. On 19th November, 2013, the respondent filed two execution cases, being Execution Case No. 487/2013 (pertaining to contract-I) and Execution Case No. 488/2013 (pertaining to contract-II), under Part-II of the Arbitration and Conciliation Act, 1996 (for short "the Act"), before the High Court at Calcutta for enforcement of the foreign arbitral awards. The learned Single Judge of the High Court passed a common order in the said execution cases rejecting the objection purportedly regarding the maintainability of the subject foreign awards vide judgment and order dated 4th December, 2014. The learned Single Judge noted that the petitioner did not file any affidavit or formal application to oppose the execution case, but chose to raise objections orally, only through his counsel, before the Court. The Single Judge noted the objections of the petitioner. The Court also noted that the Court ought to be satisfied that the foreign award was enforceable and



























































































































































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