Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2020 Supreme(SC) 151

SUPREME COURT OF INDIA
R.F. Nariman, Aniruddha Bose, V. Ramasubramanian, JJ.
VIJAY KARIA & ORS. – Appellants
Versus
PRYSMIAN CAVI E SISTEMI SRL & ORS. – Respondents
CIVIL APPEAL NO.1544 OF 2020 (ARISING OUT OF SLP (CIVIL) NO.8304 OF 2019) WITH CIVILAPPEALNO. 1545 OF2020 (ARISING OUT OF SLP (CIVIL) NO.8435 OF 2019)
Decided On : 13-02-2020

Advocates Appeared:
For the Petitioner(s):Abhishek Manu Singhvi, Nakul Dewan, Moazzam Khan, Bhavana Sunder, Amit Bhandari, Pradhuman Gohil, Taruna Singh Gohil, Ranu Purohit, Ritin Rai, Alipak Banerjee, Brijesh Ujjainwal, Vikash Singh, Advocates
For the Respondent(s):Kapil Sibal, K.V. Viswanathan, Marezban P. Bharucha, Shreya Gupta, Akanksha Banerjee, King Dungerwal, Apoorv Singhal, Anusha Nagarajan, Raghav Tankha, Kunal Vajani, Venkatraman, Mukunda Rao, Eklavya Dwivedi, Advocates

IMPORTANT POINTS
Judgment to refuse recognition is appealable but judgment recognizing foreign award is not appealable.
Contravention with fundamental policy of Indian law by a foreign award shall not entail a review on merits of the dispute.
Burden of proof is now placed on parties objecting to enforcement and not the other way around.
Enforcement of an award can be resisted on ground of jurisdiction of the tribunal such as the arbitration agreement itself not being valid under the law to which the parties have subjected it, or where the subject matter of difference is not capable of settlement by arbitration under the law of India. Secondly, award being against the “public policy of India” such as having been induced by fraud will also be a valid ground for resisting enforcement of the award. However, an award cannot be resisted on ground linked to party interest alone such as a party having been unable to present its case before the arbitrator. A residual discretion remains in the Court to enforce a foreign award.
Inability of a party to present a case must be such so as to render the proceedings violative of the due process and principles of natural justice. Non acceptance of the case put up by a party does not fall in this category.
Expression “was otherwise unable to present his case” would apply at the hearing stage and not after the award has been delivered.
While FERA refers to nation’s policy of policing foreign exchange, FEMA refers to managing foreign exchange. An act violative of FEMA, if rectifiable, would not be void.
Perversity of foreign award is not a ground for resisting enforcement of the award.

Headnote:
(a) Arbitration and Conciliation Act, 1996 - Section 48 r/w section 50, 37 and Article 136, Constitution of India - Recognition of foreign award - Judgment to refuse recognition - Appealable - Judgment recognizing foreign award - Not appealable unlike section 37 in respect of domestic awards - Appeal against judgment of High Court recognizing a foreign award under Article 136 - Should not be used to circumvent legislative policy in respect of foreign awards - Court should be very slow in interfering with such judgments. (Para 24)
(b) Arbitration and Conciliation act, 1969 - Section 48(2) - Contravention with fundamental policy of Indian law - Shall not entail a review on merits of the dispute. (Para 37, 107)
(c) Arbitration and Conciliation Act, 1969 - Section 48 - Burden of proof on parties seeking enforcement - Now placed on parties objecting to enforcement and not the other way around - In the guise of public policy of the country involved, foreign awards cannot be set aside by second guessing the arbitrator’s interpretation of the agreement of the parties - Enforcement cannot be refused on ground outside Section 48. (Para 45, 46)
(d) Arbitration and Conciliation Act, 1969 - Section 48 - Enforcement of an award can be resisted on ground of jurisdiction of the tribunal such as the arbitration agreement itself not being valid under the law to which the parties have subjected it, or where the subject matter of difference is not capable of settlement by arbitration under the law of India - Secondly, award being against the “public policy of India” such as having been induced by fraud will also be a valid ground for resisting enforcement of the award - However, an award cannot be resisted on ground linked to party interest alone such as a party having been unable to present its case before the arbitrator - Word “may” in Section 48 can, depending upon the context, mean “shall” - It means that a residual discretion remains in the Court to enforce a foreign award. (Para 53, 54)
(e) Arbitration and Conciliation Act, 1969 - Section 48(1)(b) - Natural justice - Fair hearing - Inability to present a case must be such so as to render the proceedings violative of the due process and principles of natural justice - Non acceptance of the case put up by a party does not fall in this category. (Para 58)
(f) Arbitration and Conciliation Act, 1969 - Section 48(1)(b) - Natural justice - Fair hearing - Expression “was otherwise unable to present his case” - Would apply at the hearing stage and not after the award has been delivered - Failure of tribunal to consider a material issue would not fall within the rubric of Section 48(1)(b) - However, if a foreign award fails to determine a material issue which goes to the root of the matter or fails to decide a claim or counter-claim in its entirety, it may be set aside on the ground of violation of the public policy of India - Instantly award has addressed basic issues raised by the parties and decided claims and counter-claims of the parties - Enforcement must follow. (Para 76, 77, 78)
(g) Non-Debt Instrument Rules - Rule 21 - FERA and FEMA - Distinction - While FERA refers to nation’s policy of policing foreign exchange, FEMA refers to managing foreign exchange - An act violative of FEMA, if rectifiable, would not be void - Instantly award directing transfer of shares of Indian JV to foreign partner at discounted price - Not void - RBI may choose to direct transfer at market rates - Enforcement of the award cannot be resisted on this ground. (Para 83)
(h) Arbitration and Conciliation Act, 1969 - Section 48 - Counter claim made for the first time at fag end of proceedings after opposite party closed its submissions - Tribunal not dealing with this case - No error. (Para 87)
(i) Arbitration and Conciliation Act, 1969 - Section 48 - Perversity of foreign award - Not a ground for resisting enforcement of the award. (Para 99, 100)
Facts of the case:
The present appeals are filed against the judgment of a Single Judge of the Bombay High Court dated 07.01.2019, by which four final awards made by a sole arbitrator in London under the London Court of International Arbitration Rules (2014) were held to be enforceable against the Appellants in India.
Finding of the Court:
Appellants are indulging in a speculative litigation with the fond hope that by flinging mud on a foreign arbitral award, some of the mud so flung would stick.
Result: Appeal dismissed with cost.

Judgement Key Points

Based on the provided legal document, there is no specific discussion or ruling related to patent law, patent rights, or patent disputes. The document primarily pertains to the enforcement of foreign arbitral awards, the procedural aspects of arbitration, and the grounds for resisting enforcement under applicable arbitration statutes. It addresses issues such as jurisdiction, natural justice, public policy, and the interpretation of arbitration clauses, but does not delve into patent law or patent-related matters.

Therefore, the document does not provide any guidance or legal principles directly related to patent rights or patent disputes. If your query concerns the enforceability of patent rights, patent infringement, or patent registration, additional specific legal provisions or case law focusing on patent law would need to be examined.

In summary: - The document does not contain any specific information or rulings on patent law. - Enforcement or validity of patents is not discussed. - The legal principles outlined are centered on arbitration law and the recognition and enforcement of foreign arbitral awards, not patent rights.

If you require advice or analysis on patent law specifically, please provide relevant patent statutes, regulations, or case details for a focused response.

JUDGMENT

R.F. Nariman, J.

1. Leave granted.

2. The present appeals are filed against the judgment of a Single Judge of the Bombay High Court dated 07.01.2019, by which four final awards made by a sole arbitrator in London under the London Court of International Arbitration Rules (2014) (hereinafter referred to as the “LCIA Rules”) were held to be enforceable against the Appellants in India.

3. The brief facts of this case are as follows. The Appellants, i.e. Appellant No.1 Shri Vijay Karia, and Appellants No.2 to 39 (who are represented by Appellant No.1) are individual, non-corporate shareholders of Ravin Cables Limited (hereinafter referred to as “Ravin”). On 19.01.2010, the Appellants and Ravin entered into a Joint Venture Agreement (hereinafter referred to as “JVA”) with Respondent No.1, i.e. Prysmian Cavi E Sistemi SRL – a company registered under the laws of Italy. By this JVA, Respondent No.1 acquired a majority shareholding (51%) of Ravin’s share capital. The material clauses of the JVA are set out hereinbelow:

“8. Purpose and Objectives

8.1 Purpose of the Company and Scope of the Agreement

Subsequent to Closing, the Company shall be a joint venture between Prysmian and the Existing Shareholders for the purposes of undertaking and conducting the business of the company, or for such other activities as may be determined by the Shareholders from time to time, subject to the applicable law. The business of the company shall be conducted in the best interests of the Company, and in accordance with sound professional and commercial principles.”

“12.6. Chairman and Managing Director

12.6.1 Mr. Karia shall be the Chairman of the Board as well as the Managing Director of the Company until:

(i) Expiry of seven (7) years from the Agreement Date; or

(ii) The date of which the Existing Shareholders cease to hold in the aggregate at least ten percent (10%) of the share capital of the Company:

Whichever occurs earlier.

It is hereby agreed that Mr. Karia shall not, during such term, be entitled to be removed as a Chairman and Managing Director by the passing of an ordinary resolution at a general meeting of the Company…”

“12.6.4. Without prejudice to the aforesaid clause 12.6.3, the Managing Director shall continue to remain responsible for the day to day management of the Company in accordance with the Interim Period Policy adopted by the Board on the Closing Date, until the appointment of the CEO of the Company (“Interim Period”)”

“12.6.5 As soon as practicable after the efflux of the Interim Period, a Board shall be convened to resolve upon a new policy, applicable for a period of 6 (six) months thereafter (the “Integration Period”), for the delegation of the powers to the managers of the Company (the “Delegation of Powers Policy”) all powers not delegated to the managers of the Company pursuant to such Delegation of Powers Policy, shall be delegated jointly to the CEO and the Managing Director…”

“12.6.6 Provided however, that subject to the overall supervision of the Board, after the efflux of the Integration Period, the Managing Director shall be directly responsible solely for managing the internal audit as well as the strategy and business development of the Company and present to the Board his findings and analysis for final determination by the Board. Accordingly all the powers which are not delegated to the managers of the Company pursuant to the Delegation of Powers Policy, as may be amended by the Board from time to time, shall be delegated to the Managing Director to the extent such powers fall within his duties as aforesaid.

12.6.7 After the Integration Period, the Managing Director may appoint an internal auditor to assist the Managing Director in his responsibility towards the internal audit of the company. This internal auditor shall report directly to the Managing Director and functionally report to the internal audit departme

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2020 Supreme(SC) 151

Cases Referred (18)